To combat the spread of Covid-19, employers are advised to encourage their employees to work from home wherever possible.
However, the place of work is decisive when it comes to withholding tax on foreign residents.
This principle remains applicable in today’s extraordinary circumstances, since teleworking does not call into question the employee’s usual place of work. Thus, income from gainful employment paid by an employer in Switzerland for days worked temporarily at the employee’s home abroad is taxable in Switzerland. This exceptional regime, which was due to expire at the end of August, has been extended until the end of the year.
In fact, on March 19, 2020, France informed that “An increase in the time spent on French territory due to the increased use of teleworking (usually limited to 25%) will have no impact in terms of social coverage; the frontier worker will continue to enjoy the social security of his or her State of activity (Switzerland).”
Questions and answers
1. For health reasons, I have exceptionally authorized one of my cross-border employees to telework from home. Do I have to deduct withholding tax from the employee’s entire salary?
Yes, because of the particular health context, teleworking does not affect the employee’s usual place of work. An amicable agreement between France and Switzerland to this effect was signed on May 13.
2. For how long is this measure valid?
By mutual agreement between Switzerland and France, the December 31, 2020 deadline has been extended to June 30, 2021.
On November 25, 2020, the Federal Social Insurance Office announced that, during this exceptional health situation linked to the Coronavirus, France and Switzerland have agreed that the exceptional regime has been postponed until June 30, 2021. This means that cross-border commuters remain subject to Swiss social security regardless of the rate of teleworking carried out at home.
For information, the general rule is as follows:
Swiss or EU nationals (cross-border commuters) who are simultaneously employed or self-employed in several countries (Switzerland and the EU) are, in principle, subject to the social security system of their country of residence. However, if the employees do not work in the country of residence, or do so only to an insubstantial extent (< 25% of the activity or salary), they are subject to the social security system of the country (Switzerland or EU) where the employer’s head office is located, or, in the case of self-employed workers, of the country where the center of their activities is located.
OR :
Where a person pursues an activity as an employed person in the territory of several Member States, he or she is deemed to pursue his or her entire professional activity in the territory of a single Member State, which is determined as follows:
> Affiliation in the Member State of residence if she carries out a substantial part of her activity in that Member State (at least 25% of the working time or remuneration, 13,1,a regulation 883/2004).
