On 17 December 2024, the FTA (federal tax authorities) published the following announcement (free translation)
FTA – Memorandum of Understanding between Switzerland and France
Bern, 17.12.2024 – The State Secretariat for International Financial Matters SIF announces that a new mutual agreement on the taxation of cross-border teleworking was concluded between Switzerland and France on 17 December 2024. This agreement extends until 31 December 2025 the transitional arrangement of 22 December 2022, according to which cross-border teleworking is possible up to 40% of annual working hours without giving rise to international tax rulings. The transitional arrangement would otherwise have expired on 31 December 2024.
The supplementary agreement of 27 June 2023 to the bilateral double taxation agreement, which contains permanent rules for the taxation of cross-border teleworking, has not yet entered into force. This supplementary agreement was approved by the Federal Assembly on 14 June 2024. In France, the procedure for approving the supplementary agreement has not yet been completed. In these circumstances, the extension of the transitional arrangement ensures the legal certainty required to continue the practice of cross-border teleworking in 2025.
The extension of the transitional regulation until 31 December 2025 has the following consequences:
– In 2025, as in 2023 and 2024, the employers and employees concerned can agree to telework up to 40% of working hours.
– Employers are not obliged to certify the percentage of teleworking of their employees in 2025 as part of the automatic exchange of salary data (as was already the case in 2023 and 2024). However, the obligation to provide the tax authorities with a certificate from the employer stating the percentage of teleworking hours or the number of teleworking days remains in place (as was already the case in 2023 and 2024).
– The automatic exchange of information on salary data will not relate to data from 2025, but to data from 2026 at the earliest, provided that the supplementary agreement enters into force before the end of 2025. In this case, the first exchange of information will take place in 2027.
What does this mean for companies that have employees resident in France?
If France ratifies the supplementary agreement in 2025, the data exchange with France will not take place for another year. The data for 2026 would then have to be transmitted to the relevant cantonal authorities at the beginning of 2027.
The following information is required: (free translation into English)
- a) Surname(s) and first name(s) of the person, date of birth, postcode of the place of residence and, if available, other details that facilitate the identification of the person (address, place of birth, marital status, tax number);
- b) Calendar year in which the income was earned;
- c) Number of teleworking days or teleworking rate in per cent;
- d) Total amount of gross remuneration paid.
However, due to the entry into force of the amendment to the Withholding Tax Ordinance on 1 January 2025, companies must issue a detailed certificate with the relevant information on the dependent gainful employment in the event of a departure during the year from 1 January 2025 in accordance with Art. 127 para. 3 DBG (direct federal tax law).
These are in accordance with Art. 5a QStV (Withholding Tax Ordinance): (free translation into English)
- Surname, first name and address of the employee at the time of leaving;
- Period of limited tax liability during employment in the calendar year;
- average degree of employment in per cent in the period according to letter b;
- Number of working days in the form of temporary assignments in the country of residence in the period referred to in letter b;
- Number of working days in the form of temporary assignments in third countries in the period referred to in letter b;
- Number of teleworking days or teleworking rate in per cent in the country of residence in the period referred to in letter b, excluding temporary assignments in accordance with letters d and e;
- Number of overnight stays in Switzerland for employees who are subject to the agreement of 11 April 19832 between the Swiss Federal Council and the Government of the French Republic on the taxation of the income of cross-border commuters.
I also refer to the previous blog: https://www.zulaufgmbh.ch/en/information-regarding-the-certificate-in-the-event-of-termination-of-employment-during-the-year-for-employees-resident-in-france-published/
The FTA’s communication (see above) reminds us that, at the request of the tax authorities, a certificate from the employer regarding the percentage of teleworking hours or the number of teleworking days must be kept available. The obligation to provide information to the cantonal tax authorities was already in place for 2023 and 2024.
What does this mean in concrete operational terms for employers?
- The very detailed information for the above-mentioned data in accordance with the Withholding Tax Ordinance should be recorded so that it can be made available to the employees concerned on request when they leave the company.
- As in previous years, checks should be carried out to ensure that the key figures for 40% teleworking, which are known to include a maximum of 10 travel days, are adhered to. The explanations in accordance with the mutual agreements of 30 June 2023 regarding the consequences of exceeding the values remain valid.
- Possible foreign working days, e.g. when travelling to third countries, should be excluded from payroll depending on the circumstances. The complexity of calculating the foreign working days to be excluded will remain.
- If the provisions on teleworking are not complied with (the whole year is taken into account, even if there are several employers), Switzerland has to exclude all days worked abroad. The possible consequences of the French regulations should not be underestimated (withholding tax liability in France for the French state, which however cannot take place without the authorisation of the competent authorities in Switzerland).
- The question remains as to the country in which social security contributions must be processed. The tax regulations regarding teleworking are not identical to the social security regulations.
In various workshops with companies, I realised that too little attention is paid to these different rules.There is the question of the basis for applying the materiality threshold in connection with situations in which the CH-EU Agreement on the Free Movement of Persons applies (in relation to France, these are Swiss or EU citizens). For employees who are regularly working outside of Switzerland and the EU, the possibility of dependent activities in the country of residence is thus reduced, as only dependent activities within Switzerland and the EU may be considered for the calculation of the percentage. A change of the social security status to France leads to a complexity for companies in payroll that should not be underestimated and causes further costs (staff costs and processing costs).
Other activities and special provisions relating to special categories, such as civil servant status, must be taken into account depending on the specific situation. - In addition, regular employment in France, the country of residence, leads to at least a split of the social security status for all other nationalities (non-Swiss and non-EU citizens).
A comprehensive regulation regarding teleworking / home office should therefore always take social security provisions into account.
I will hold a two-hour seminar on tax regulations with France on 7 January 2025 (10.00 – 12.00) in English.
The next date for comprehensive training in the area of social security in an international context is 12 March and 14 March 2025 from 13:30 to 17:00 in German.
Link to the registrations in English: https://www.zulaufgmbh.ch/en/events-and-workshops/
Link to the registrations in German: https://www.zulaufgmbh.ch/veranstaltungen-workshops/
