The agreement between Switzerland and Italy regarding the treatment in withholding taxes for telework will (most likely) remain in force until further notice.
The FTA had published in July 2022 that the COVID agreement would also be extended for non-Covid cases until at least October 2022. This means that the fiction of the place of work in Switzerland can be continued for telework in the country of residence.
For details, please refer to the blog: https://www.zulaufgmbh.ch/en/on-22-7-2022-the-fta-published-a-joint-declaration-by-switzerland-and-italy-regarding-the-extension-of-the-covid-agreement-in-the-area-of-taxation/
Shortly before the expiry date, the question arises as to what happens next. So far, it has not been announced that the agreement has been terminated by either party.
No termination means that the agreement will continue to be valid at least until the end of December 2022. Thus, especially for cross-border workers from Italy, no foreign working days will have to continue to be eliminated under the 1974 special agreement. This procedure has been confirmed by various cantonal withholding tax offices for cases since summer 2022. It is also still applicable for international weekly residents with foreign working days due to teleworking in the country of residence.
Ratification of the new cross-border commuter agreement by Italy is still pending. If this is done before the end of the year, it could come into force on 1 January 2023. The content of the new agreement has been known for some time, but it would be a challenge for employers. In the given case, they should deal with which withholding tax rates would have to be applied to which employees from January 2023.
Employers with their registered office or place of business in the cantons of Ticino, Valais and Grisons with employees to whom the cross-border commuter agreements apply would be affected by these changes.
The transitional arrangement for cross-border commuters under former law (persons who work or have worked in the cantons of Graubünden, Ticino or Valais on the day the new cross-border commuter agreement enters into force or between 31 December 2018 and the day the new agreement enters into force) provides that they will continue to be fully taxed in Switzerland, but no longer than until 2033. The cantons concerned will pay financial compensation amounting to approx. 40% of the revenue from the withholding tax to the municipalities of residence of the Italian cross-border commuters up to and including 2033. From the 2034 tax year onwards, Switzerland will no longer make any compensation payments and will thus retain the entire tax revenue.
For cross-border commuters who become cross-border commuters after the agreement enters into force (so-called “new cross-border commuters“), the State of employment levies a withholding tax. However, the withholding tax may not exceed 80% of the total amount of withholding tax normally levied.
Conclusion: It must be clarified which tariff codes are valid for which cross-border commuters and how the annual declarations must be prepared for companies that have not yet implemented the ELM Standard 5.0.
With regard to the special agreement between Switzerland and France, it was published on 27 October 2022 that the mutual agreement of 18 July 2022 on the taxation of telework between Switzerland and France will remain in force until 31 December 2022.
Link to the mutual agreement (only in French): https://www.estv.admin.ch/dam/estv/de/dokumente/international/laender/france/fr-dba-aa-20221027.pdf.download.pdf/fr-dba-aa-20221027.pdf
Taxes are only one part of a wide range of regulations for telework/home office. It is recommended to always include all aspects, such as applicable labour law, special provisions for home office work, social insurances, business premises, work permits etc..
I conduct various seminars on the many topics in German: https://www.zulaufgmbh.ch/veranstaltungen-workshops/
Novelties at the turn of the year can be booked in English.
Actualities for employers in Switzerland at the turn of the year 2022/2023 on 09.01.2023 from 17.00 – 18.30 Swiss time: https://www.zulaufgmbh.ch/en/course/actualities-for-employers-in-switzerland-at-the-turn-of-the-year-2022-2023/