The correct calculation of withholding taxes should not be underestimated, as it does not always work “automatically”, because the settings and stored data in the payroll programme must be correctly recorded. This in turn requires that the facts are clear. In order to obtain a clear state of affairs, information is necessary.
Practice shows that many companies have not yet realised that they need to have more information than they would expect. The recommendation is also that concrete arrangements are made with the employees, be it in the area of detailed recording of physical work or in a directive or a set of regulations.
This is illustrated in more detail by an example of teleworking by a cross-border worker from France.
Facts of the case:
An employee, an accountant, lives in France and works in the canton of Basel City for a private company with a workload of 100%. She is allowed to work from home 2 days a week. She spends the rest of the week at the company’s head office and submits a certificate of residence which confirms the cross-border commuter status in principle.
Only by chance does the HR department become aware that she spends part of these home office days in the Black Forest (D), where she owns a holiday flat (2 days each month).
How should this employee be treated in the payroll?
She cannot be treated as a genuine cross-border commuter in France.
The agreement of mutual understanding of 22 December 2022 between Switzerland and France on telework clarifies the concept of cross-border worker in relation to home office/telework.
This home office must in principle take place in the state of residence, in this case in France.
This term includes a maximum of 10 cumulative days of “missions temporaires” per year in the country of residence or in a third country. This refers to business or official trips. If the cross-border commuter works in her holiday flat in Germany, it is neither a home office in the country of residence nor a business trip in a third country.
Therefore, this person cannot continue to be considered a cross-border commuter within the terms of the 1983 agreement, even if she works less than 10 days per year in her holiday home. Consequently, she falls outside the cross-border commuter regulation and under the provisions of the DTT.
Thus, despite the residency certificate, the company must account for full withholding taxes and correctly segregate the working days abroad.
In addition, there is the risk that the company will be fined if it does not appoint a tax representative in France and settles withholding taxes for France on the home office days in France. From Switzerland’s point of view, this requires a permission because the action is not permitted for a foreign state (Criminal Code).
In addition to the question of the correct calculation of withholding taxes from the Swiss perspective, other legal issues must be considered.