Switzerland

Individual - Significant developments

Last reviewed - 27 January 2021

The State Secretary for International Finance has negotiated special agreements with France, Germany, and Italy regarding the tax consequences for cross-border commuters during the period affected by COVID-19. These agreements are expected to stay in place until the end of June or August 2020, but not longer than until 31 December 2020. For Germany, the agreement will stay in place at least until 31 March 2021. 

They may be terminated pre-mature by the competent authorities of the involved countries. Also, cantonal tax authorities are considering how they will allocate employment income for the period during which employees could not work where they usually would have. Employees should therefore review their individual situation for 2020. Depending on their personal situation, they may need to apply for wage tax correction by 31 March 2021 at the latest. It is strongly recommended to review one's own tax position for 2020 to tackle any double taxation issues as early as possible.

On 1 January 2021, the revision of the Withholding Tax Ordinance will come into force. The purpose of this is to take account of recent case law and technical developments. It is also intended to increase legal certainty for employers and employees. 

As the debtor of the taxable amount, the employer is legally required to withhold and pay the withholding tax (WHT), which is why the new regulations and clarifications in the Ordinance mainly affect employers. Particularly noticeable are the major changes with regard to the settlement canton or adjustments to the tariffs. However, there may also be a need for action in the case of part-time employees; in addition, questions relating to the 'de facto employer' are likely to become increasingly relevant.

Switzerland and Italy signed a new agreement on the taxation of cross-border commuters and a protocol amending the double taxation agreement (DTA) in Rome on 23 December 2020. The new agreement replaces the previous agreement dating from 1974.