Memorandum of Understanding between Switzerland and France on cross-border home office
Tabea Lorenz
According to media releases from the Federal Tax Administration (FTA) and the Federal Department of Finance (FDF) dated December 22, 2022, Switzerland and France have agreed on a solution for the taxation of home office income, which will apply from January 1, 2023. According to this, up to 40 percent of the working time per year can be performed in the home office without this having any impact on the state of taxation of income from employment - especially for cross-border commuters.
With regard to employed persons covered by the agreement reached in 1983 between the Swiss Federal Council, acting on behalf of the cantons of Bern, Solothurn, Basel-Stadt, Basel-Landschaft, Vaud, Valais, Neuchâtel and Jura, and the government of the French Republic, France and Switzerland agreed that teleworking limited to 40 percent of working hours would have no impact on the cross-border commuter status, nor on the related income taxation arrangements from employment in the employee's country of residence. The provisions will be specified in the course of a mutual agreement that will enter into force on January 1, 2023.
With regard to other employed persons covered by the regulations of the agreement signed in 1966 between Switzerland and France for the avoidance of double taxation in the field of taxes on income and assets, an agreement on sustainable regulations was also reached between the two states, which will be implemented in the form of an addendum to the amendment of the agreement. This provides that taxation will remain in the employer's permanent establishment state if the telework performed in the state of residence does not exceed 40 percent of the working time. In return for retaining the right to tax income from employment in the employer's state, appropriate compensation is provided for in favor of the employee's state of residence. The provisions of the supplement to the agreement are expected to apply from January 1, 2023. However, the entry into force of the addendum depends on its signature and subsequent ratification by the two states. The text will be published in the course of the signing, which is scheduled for the end of the 1st half of 2023. Until then, France and Switzerland have agreed to apply the provisions of the addendum regarding home offices under a mutual agreement. If the addendum is signed by June 30, 2023, the agreement can be applied by December 31, 2024 at the latest, taking into account the ratification process.
The relevant memorandums of understanding are available here .
The media releases of the FTA are available here .
The FDF's media release is available here .
.
