Remote working and taxes : new rules from 1 July 2023

Because of the restrictions imposed by the pandemic, the European social security rules, as set out in the Agreement on the Free Movement of Persons between Switzerland and the EU (FMPA) and the EFTA Convention, were applied flexibly until 30 June 2022. This flexibility has been extended for a transitional period until 30 June 2023. 

Until that date, people such as cross-border commuters working from home will continue to be subject to Swiss social security legislation, regardless of the proportion of their work that is carried out from home in their country of residence (EU/EFTA). 

New social security rules, announced by the Federal Social Insurance Office, will come into force on 1 July 2023. These new provisions establish two distinct regimes that will henceforth be applicable. 

New agreement extending remote working options 

From 1 July 2023, there will be no change of jurisdiction in the case of teleworking of less than 50% in relation to the States that have signed the multilateral agreement. 

Switzerland, along with certain EU and EFTA countries, is preparing to sign a multilateral agreement that derogates from the usual rules on tax liability in order to facilitate teleworking beyond 30 June 2023, in the interests of the workers concerned and their employers. 

The agreement stipulates that people working in one country for an employer whose registered office is in that country may carry out up to 50% cross-border telework (maximum 49.9% of working time) from their country of residence, mainly using IT resources, while maintaining the jurisdiction of the country where the employer's registered office is located in terms of social insurance.  

Let's take the example of an employee who lives in Germany and usually works in Switzerland (where his employer is based). This employee may telework from Germany for a maximum of 49.9% of his or her total working time, while remaining affiliated to the Swiss social security system. However, if he exceeds this limit, he will be subject to German social security for all his activity, including that carried out from Switzerland. To benefit from this agreement, the parties to the employment contract will have to request an A1 certificate from the Swiss compensation fund, and its application will not be automatic. 

This derogation only applies to situations involving two States that are signatories to the agreement. 

To date, in addition to Switzerland, the following States have indicated their intention to sign the agreement: Austria, Belgium, the Czech Republic, Estonia, Finland, Germany, Hungary, Ireland, Lithuania, Luxembourg, Malta, the Netherlands, Slovakia, as well as Liechtenstein and Norway. 

This list will be regularly updated. If you have any questions about the position of a State that is not on the list, please contact our teams or the authorities of the State concerned directly. 

Special cases 

The multilateral agreement concerns persons to whom the FMPA or the EFTA Convention applies. It does not apply to : 

• Persons who also carry out an activity other than teleworking in their State of residence that is a signatory to the agreement (e.g. visiting clients, self-employed secondary activity). 
• Persons who also carry out an activity in the EU or EFTA outside their State of residence which is a signatory to the agreement and Switzerland. 
• Persons working for another employer located in the EU or EFTA in addition to their work for their Swiss employer. 

• Self-employed persons. 

Cross-border commuters employed by Swiss employers who telework up to 50% from Germany, Austria or Liechtenstein will be allowed to maintain their insurance cover in Switzerland from 1 July 2023. 

Similarly, cross-border commuters resident in Switzerland who telework less than 50% for an employer (or several employers) based in Germany, Austria or Liechtenstein will be subject to their employer's social insurance. 

There will be no change of jurisdiction and the ordinary rules will apply in relations with all EU/EFTA States where cross-border teleworking is less than 25%. 

The multilateral agreement will apply to cross-border telework between 25% and 49.9% of working time. However, the ordinary rules and procedures will continue to apply for cross-border telework below 25%, even if it is carried out in a signatory state of the agreement. 

Return to the application of ordinary social security rules 

From July 1st 2023, if the telework is carried out in a State which has not signed the multilateral agreement or for an employer whose registered office is in a State which is not a party to the agreement, the ordinary rules and procedures applicable before the pandemic will once again be in force for the A1 certificate application. In this case, the competent institution in the country of residence will determine whether the employee is subject to social insurance. It will be possible to carry out cross-border teleworking of up to 25% (maximum 24.9%) without any impact on social insurance.  

Let's take the example of an employee living in France and usually working in Switzerland (where his employer's head office is located). This employee may telework from France for a maximum of 24.9% of his or her total working time, while remaining affiliated to the Swiss social security system. However, if they exceed this limit, they will be subject to French social security for the whole of their activity, including that carried out from Switzerland. 

These rules will apply to all EU/EFTA countries that have not signed up to the new agreement. At present, France and Italy have not expressed any intention of signing the agreement. 

Taxation 

This communication focuses exclusively on social security. As far as taxation is concerned, the agreement of 22 December 2022 between Switzerland and France authorises cross-border workers to telework up to 40% of their working time, without changing the state that collects income tax. 

To sum up 

If the employer's head office and the employee's home are in a country that has signed the new agreement, teleworking may be carried out up to 49.9% of working time. 

If the employer's head office or the employee's home is in a country that has not signed the new agreement, teleworking may be carried out for up to 24.9% of working time. 

All our teams are at your disposal to answer any questions you may have about this new agreement.