The number of people working from home increased significantly during the recent global pandemic, and this is now considered to be an established trend. As a result, Switzerland and France have agreed a new tax arrangement for cross-border home office work (also referred to as “Telework” by the authorities). The agreement was signed in December 2022.
From 01 January 2023, workers living in France and who are engaged by Swiss companies, can work remotely for up to 40% of their total activity per year without a tax impact for either them, or their employer.
- Employers will continue to deduct Swiss withholding tax as if the activities carried out by the remote worker in France (the employee’s country of residence) had been carried out from the employer’s premises in Switzerland.
- However, if the period of remote work exceeds the 40% limit, the portion of remuneration corresponding to the remote working, is taxable in France from the 1st day of remote work.
Frequently asked questions for remote workers based in France working for companies in Switzerland.
Q: if I work 20% remotely in France, does my employer have to tax my entire salary at source?
A: in this case 100% of your salary will be subject to Swiss withholding tax.
Q: if I work part time, does the agreement still apply to me?
A: yes, and this will be in proportion to your activity rate. For example, when working 50% an employee can work remotely for 1 day per week.
Q: if I am an employer, how do I prove that the 40% remote work limit has not been exceeded?
A: the percentage of remote work time granted to the employee must be evidenced by a contractual document between the employer and the employee. This could be, for example, a provision in the employment contract, or a remote work agreement signed between the employer and the employee.
Q: does the plan apply if I work remotely from my second home?
A: yes, as long as the secondary residence is located in the main country of residence, in this case France.
Q: what happens if I work more than 40% remotely?
A: the provisions of the convention for the avoidance of double taxation between Switzerland and France dated 09 September, 1966 apply from the first day of remote work. This means:
- The portion of the cross-border worker’s remuneration linked to activity carried out at the domicile in France (and not at his usual place of work in Switzerland) – is taxable in France and not in Switzerland.
- This means that if the employer were to grant the cross-border worker the possibility of working remotely – for example, for 3 days a week (60% for a full-time equivalent), 60% of his remuneration would then be taxable in France.
Obligations of the Employer
From 01 January 2023, if the employer authorises remote working for more than 40% of the total work time the employer
must reduce the income subject to Swiss withholding tax for the days worked outside Switzerland – i.e. reduce the tax base of the remote worked part.
An example of this with 40% remote work:
- Total employee salary CHF8’000.
- 20 work days total with 3 days per week worked remotely.
- 8 days in Switzerland – CHF3’200 falls under Swiss source tax.
- According to ART271 CP of the France fiscal regulations, the portion worked remotely, falls under France’s fiscal obligations.
- If the employer were to grant the cross-border worker the possibility of working remotely for 3 days a week for example (60% for a full-time equivalent), 60% of the total remuneration would then be taxable in France.
It is up to employers to keep a list of remote days and to be able to certify these.
Frequently asked questions for employers engaging cross border workers resident in France.
Q: if I employ cross-border workers who work remotely for more than 40% of their activity rate, what are the consequences for the management of my payroll?
A: in terms of payroll management, the employer must now reduce the income subject to Swiss withholding tax by the portion relating to the days of remote working in France. It is therefore up to the employer to keep a list of these days and to be able to certify them. It is also advisable to approach the French tax authorities to clarify the methods of taxation of the portion of remuneration linked to days worked remotely. Adjustments to the salary software could depend on this.
Q: if I work remotely from France for more than 40% of my activity rate on behalf of a Swiss employer, am I taxable in France for the days “worked remotely”, although I am a Swiss national?
A: from 2023, if you are employed in the private sector and work remotely more than 40% of your activity rate, your days of working remotely from your home in France will be taxable in France, your nationality having no impact on the terms of taxation of your remuneration. If, on the other hand, you are employed in the civil service and you have Swiss nationality, your days of working remotely from your home in France will remain taxable in Switzerland.
The new laws regarding home working have been introduced to match market and society trends. If you are an employer or an employee and have further questions, we refer you in the first instance to the following:
- https://www.ge.ch/actualite/imposition-du-teletravail-frontaliers-22-12-2022
- www.swissadmin.ch
Accurity is SECO licensed with a 20+ year enviable reputation as a trustworthy, reliable and transparent partner for companies of all sizes including SMEs, contractors and recruitment agents. We also work with cross border workers living in France and working in Switzerland Our core services include Employer of Record or EOR and ANobAG for contractors and international and domestic clients wishing to engage contractors. Our pricing system is fair and transparent. We are based in Switzerland and have excellent local knowledge and connections. Contact our team to see how we can help you.
