France and Switzerland have agreed on a tax regime for working from home. Cross-border commuters are particularly affected. (archive image)
Switzerland and France have found a solution for taxing the income of employees working from home. From 2023, up to 40 percent of the workload can be done at home. The regulation is particularly important for cross-border commuters.
According to the State Secretariat for International Finance (SIF) on Thursday, the agreement on sustainable tax regulations for the home office is the result of talks in which Switzerland and France were also involved, along with the cantons concerned.
Up to 40 percent
If telework is limited to 40 percent of the workload, this has no impact on cross-border commuter status. Likewise, working from home to this extent has no impact on the income tax regulations from gainful employment in the country of residence.
An addendum to the double taxation agreement between Switzerland and France stipulates that taxation remains in the country in which the employer of the home office employee has the business. However, financial compensation in favor of the state in which the cross-border commuters live is planned.
For the time being, a mutual agreement applies
When this supplementary agreement can come into force depends on its signing and ratification, as the SIF further writes. However, so that cross-border commuters can continue to work from home, the mutual agreement will be applied for the time being.
The mutual agreement is a consequence of the Covid-19 pandemic. In May 2020, France and Switzerland agreed that the protective measures against the pandemic – which included working from home instead of in the office – should not change the tax consequences. However, this agreement was temporary.
The two states agreed last June to work towards a sustainable settlement that should be in the interests of the workers affected 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 end on January 31, 2023. There are no longer any restrictions on the free movement of people because of Covid-19, it was said as a reason.
Rome and Bern signed an agreement on the taxation of cross-border commuters in December 2020, after many years of negotiations. It was approved by the federal parliament in March. According to the FTA, it is not yet in force.
It expressly provides that Switzerland and Italy consult each other regularly on the question of whether changes or additions to the additional protocol or mutual agreements are necessary in relation to home office. (SDA)