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Tax regime
Swiss and French authorities recently reached an amendment of the current double treaty to make secured and sustainable the remote work for cross-border workers. It institutes a permanent framework for the taxation of remote work from home in France and business trips to 3rd countries.
As a reminder, before the agreement was put in place, any remote working day spent in France or on a business trip in a 3rd country was normally taxable in France from day 1.
For employees working in Geneva and other cantons not subject to the derogatory regime (employees taxed at source in Switzerland), the new agreement has the following impact:
- They can work from home in France for up to 40% and remain fully taxable in Switzerland.
- If the 40% is not reached, up to 10 business trip days can also be included, up to a total of 40% working time.
- It is a double limit – no business trip days beyond 10 can be included even if the 40% threshold is not reached by remote work.
- Any business trip days beyond 10 or beyond those that can be included within the 40% are taxable in France.
For employees working in Vaud, Basel, Bern, or other cantons subject to the derogatory French regime (employees taxed only France), the impact is as follows:
- These employees will remain fully taxable in France unless they:
- Exceed the limit of 45 business trip days and nights in Switzerland (added together), or
- Have 3rd country business trip days or French remote workdays beyond the 40% remote work / 10-day business trip double limit.
- If these limits are exceeded, they will become subject to the regime outlined above and will have to have tax at source withheld in Switzerland.
This agreement was implemented to allow cross-border workers to continue working remotely without impacting their taxation, but it has particular complexities regarding its application to workers ordinarily fully taxed in France as well as the inclusion of 3rd country business trip days.
Attention must be paid to frontier workers that must travel out of Switzerland for business, as the travel days beyond the first 10th are taxable in France, and might request actions to be compliant (e.g. adjust Swiss tax at source in payroll in-year or via the tax at source correction filing in year +1, and report properly in the annual French tax return). If that rule is a finding for lot of people, it turns out that it does exist since 1966 and the entry into force of the Swiss/French double tax treaty! As such, days spent out of employment country (CH) are always taxable in the residency country (FR). The teleworking provisions does exit sine 2023 to neutralize that taxation rule and make it practicable.
Social security regime
On a separate channel, both countries opted into the new social agreement aiming to introduce more practicable arrangement to determine the social security position of cross-border teleworkers in the EU/EFTA as of July 1st, 2023, increasing the annual 25% limit up to 50% of working time.
Employers will need to apply for a A1 form, applicable for 3 years and renewable with their AVS/AHV fund via the ALPS portal. Applications filed by June 30, 2024 will automatically cover the backdated period. That’s only applicable to facilitate remote work from home! For employees traveling by instance in multiple EU/EFTA countries, so-called “multi-state workers”, the threshold of 25% maximum spent on the residency country’ soil remain applicable.
Connected to teleworking matters, countries applying social security coordination rules made an agreement on the possibility going forward to post a worker in his residency country where she/he will telework at 100%, for a certain period of time, lasting maximum to 24 months, whether it is for private or business reason (ex. taking care of a sick relative; personal medical reason, offices closed for renovation or to telework at a leisure venue, as listed by the Swiss authorities). A1 must be filed to the AVS/AHV fund as per regular posted worker process. No extension beyond 24 months is possible for home country teleworking.
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Stay tuned as a comprehensive webinar will be proposed soon, to get the practical application of those new rules when it starts giving a headache, notably to HR people and business traveler frontier workers!
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As there are some practical challenges to tackle, we would be glad to assist you in understanding the challenges surrounding new French-Swiss remote work agreement and help you implement remote work policies compliant with the tax regime in place in your canton. Please feel free to reach out to our Global Employer Services team to catch-up at:
