Effective 1 January 2025, Swiss employers of employees teleworking from France face new reporting obligations.
The double taxation agreement concluded between France and Switzerland in 1966, in its article on the allocation of taxing rights to employment income, provides that French cross-border employees working for Swiss employers are subject to tax in Switzerland. The two countries entered into a special bilateral agreement on 11 April 1983 that provided an exception to the general rule for the taxation of employment income of cross-border commuters. Under the 1983 agreement, in the case of French cross-border employees who work for employers resident in specified cantons -- Basel-City, Basel Land, Bern, Jura, Neuchâtel, Solothurn, Vaud, and Valais -- the taxing rights to employment income are allocated to France.
Switzerland and France on 27 June 2023 signed a supplementary agreement that sets forth new and permanent taxation rules for employees working from home. This agreement allows employees that reside in France to perform teleworking employment activities in France for up to 40% of their annual working time, without changing or jeopardizing their current cross-border commuter status and country of taxation of their employment income. The supplementary agreement also imposes new certification obligations on Swiss employers if an employee teleworks from their country of residence.
Effective 1 January 2025, a new form that ensures uniform certification of teleworking will be required.
In the France-Switzerland context, “cross-border commuter” means a person resident in one state who carries out paid work for an employer based in the other state. In principle, a cross-border commuter returns from the state where the employer is based to the country of residence every day after finishing work.
According to the 2023 supplementary agreement, employees who fall under the special regulation for cross-border commuters can work from home in France for up to 40% of their total annual workload. The same provision applies when a cross-border commuter works from home in Switzerland. In principle, the special status as a cross-border commuter is not questioned if the limit for home office work is not reached. There are, however, tolerance values that must be considered separately if, in addition to home office work, employees also perform business travel days or work-related non-return days.
To ensure the proper functioning of the bilateral regulations on cross-border commuters concluded on 27 June 2023, Swiss employers are now obligated to certify the remote work performed by the employee. The certificate must be issued at the employee's request and must confirm specifically:
The 40% home office work threshold also applies to cross-border employees between France and Switzerland who do not qualify under the 1983 regime on cross-border commuters (for example, if the Swiss working place is located outside the enumerated cantons).
In conclusion, a French tax resident can work up to 40% in his home office for a Swiss employer and these days will generally count as Swiss working days for tax purposes. This arrangement led to an amendment of the Swiss Federal tax code effective 1 January 2025 that created a legal basis for the taxation of non-Swiss working days for tax residents in France, which was not known so far.
For more information on this reporting obligation, please consult your regular BDO contact or the author of this article.
Dejan Milosevic
BDO in Switzerland
Background
The double taxation agreement concluded between France and Switzerland in 1966, in its article on the allocation of taxing rights to employment income, provides that French cross-border employees working for Swiss employers are subject to tax in Switzerland. The two countries entered into a special bilateral agreement on 11 April 1983 that provided an exception to the general rule for the taxation of employment income of cross-border commuters. Under the 1983 agreement, in the case of French cross-border employees who work for employers resident in specified cantons -- Basel-City, Basel Land, Bern, Jura, Neuchâtel, Solothurn, Vaud, and Valais -- the taxing rights to employment income are allocated to France.Switzerland and France on 27 June 2023 signed a supplementary agreement that sets forth new and permanent taxation rules for employees working from home. This agreement allows employees that reside in France to perform teleworking employment activities in France for up to 40% of their annual working time, without changing or jeopardizing their current cross-border commuter status and country of taxation of their employment income. The supplementary agreement also imposes new certification obligations on Swiss employers if an employee teleworks from their country of residence.
Effective 1 January 2025, a new form that ensures uniform certification of teleworking will be required.
In the France-Switzerland context, “cross-border commuter” means a person resident in one state who carries out paid work for an employer based in the other state. In principle, a cross-border commuter returns from the state where the employer is based to the country of residence every day after finishing work.
According to the 2023 supplementary agreement, employees who fall under the special regulation for cross-border commuters can work from home in France for up to 40% of their total annual workload. The same provision applies when a cross-border commuter works from home in Switzerland. In principle, the special status as a cross-border commuter is not questioned if the limit for home office work is not reached. There are, however, tolerance values that must be considered separately if, in addition to home office work, employees also perform business travel days or work-related non-return days.
New Rules
To ensure the proper functioning of the bilateral regulations on cross-border commuters concluded on 27 June 2023, Swiss employers are now obligated to certify the remote work performed by the employee. The certificate must be issued at the employee's request and must confirm specifically:
- The number of teleworking days or teleworking quota;
- Working days in the form of temporary assignments in the country of residence;
- Working days in the form of temporary assignments in third countries; and
- Overnight stays in Switzerland for employees.
The 40% home office work threshold also applies to cross-border employees between France and Switzerland who do not qualify under the 1983 regime on cross-border commuters (for example, if the Swiss working place is located outside the enumerated cantons).
In conclusion, a French tax resident can work up to 40% in his home office for a Swiss employer and these days will generally count as Swiss working days for tax purposes. This arrangement led to an amendment of the Swiss Federal tax code effective 1 January 2025 that created a legal basis for the taxation of non-Swiss working days for tax residents in France, which was not known so far.
For more information on this reporting obligation, please consult your regular BDO contact or the author of this article.
Dejan Milosevic
BDO in Switzerland