Switzerland and France have reached agreements for the daily cross-border population as well as for the weekly commuters: As of 1 January 2023, French residents working for Swiss employers can work up to 40 % of their time in France without impact on the current rules on personal income taxation between the 2 countries.
For the daily cross-border commuters between France and the cantons Bern, Solothurn, Basel-Stadt, Basel-Land, Vaud, Valais, Neuchâtel and Jura: up to 40 % of their work can be performed from home without jeopardizing their cross-border status, nor impacting the taxation rights of the country of residence. The authorities mentioned that more details will follow on this.
For the weekly commuters as well as the daily commuters who are not in the scope of the special agreement with the 8 cantons mentioned above: up to 40 % of the work can be performed from home without impacting the taxation rights of the country of employment. Concretely, this means that, for example, a Geneva employer can continue to withhold Swiss tax on 100% of their cross-border worker’s remuneration as long as the employee works 60% of their time in Switzerland. An addendum to the double tax treaty will be published towards mid-2023. The authorities have agreed to apply this 40 % rule on a provisional basis until the ratification process is completed.
The update to the French tax at source regime that has in the meantime been voted by the French Parliament and is expected to be fully finalized next week is becoming less relevant as it will only apply to employees who have more than 40 % of their working time taxable in France.
In exchange for this 40 % home office threshold, a financial compensation for the country of residency is foreseen.
Given that the social security authorities have extended the flexible application of the EU coordination rules until 30 June, 2023, French residents who are in the scope of these EU coordination rules will therefore have the option to work from home up to 40 % of their time without creating either a personal income tax or a social security obligation in France for their Swiss employer.
Deloitte's View
The exact text of the agreement is yet to be published and the practice of the authorities will need to be closely monitored. In the meantime, the agreements seem to bring a clear and harmonized solution for employers and employees.
This is welcome news and responds to the expectations of many employees for a flexible working environment. It however also means that employees are expected to be back in the office 3 days per week to avoid unwanted tax and social security consequences in the country of residence for their employer. We recommend reviewing existing arrangements in place with your employees residing in France. The expectation of the French tax authorities in terms of documentation and clear calendar records might increase.
If you would like to discuss more on this topic, please do reach out to our key contacts below.
Key contacts
Michelle Hug-Fahrni
Partner, Global Employer Services
Céline Wehrle
Director, Global Employer Services
