Bern and Paris comply with the tax rules for cross-border commuters in the home office

Switzerland and France have found a solution for taxing the income of employees who work from home. From 2023, up to 40 percent of the workload can be done at home. The regulation is especially important for cross-border commuters.

According to the State Secretariat for International Finance (SIF), the agreement on sustainable tax arrangements for the home office on Thursday is the result of talks that also involved Switzerland and France, along with the affected cantons.

Up to 40 percent

If telework is limited to 40 percent of the workload, this will not affect the status of cross-border commuter. This amount of working from home also has no influence on the income tax scheme from paid work in the country of residence.

An addendum to the double taxation agreement between Switzerland and France stipulates that taxation remains in the country where the home worker’s employer has the business. However, financial compensation is planned in favor of the state in which the cross-border commuters reside.

For the time being, a mutual agreement applies

When this additional agreement can enter into force depends on its signature and ratification, the SIF continues. But to allow cross-border commuters to work at home, the mutual agreement will be applied for the time being.

The mutual agreement is a result of the Covid-19 pandemic. In May 2020, France and Switzerland agreed that the protective measures against the pandemic – including working from home instead of the office – should not change the tax consequences. However, this agreement was temporary.

The two states agreed last June to work on a lasting settlement that should be in the best interests of the affected workers and of both countries.

Agreement with Italy ends

Also on Thursday, the Federal Tax Administration (ESTV) announced that the mutual agreement between Switzerland and Italy on the home office of cross-border commuters will expire on January 31, 2023. There are no longer restrictions on the free movement of people due to Covid-19, as the reason was given.

Rome and Bern signed an agreement on the taxation of cross-border commuters in December 2020, after years of negotiations. It was approved by the federal parliament in March. According to the free trade agreement, it is not yet in force.

This expressly stipulates that Switzerland and Italy regularly consult with each other about whether amendments or additions to the additional protocol or mutual agreements are necessary in connection with home office. (SDA)