Cross-border workers: 7 key points HR should consider Cross-border workers: 7 key points HR should consider

As we start 2022 with home office restrictions and continued uncertainty, Swiss and French authorities have extended the relaxation of tax rules for cross-border workers into 2022. The temporary relaxation of the rules due to the COVID-19 situation does not mean that the cross-border issues have gone away, they are still very much the object of great debate.

Even though the relaxation of rules has been extended, employers should be reviewing their policies and communicating with their cross-border workers on a regular basis. Have a look at the following 7 key points you should be addressing from an HR perspective:

As a minimum, identifying the employees working outside of Switzerland as well as the relevant countries to determine the correct social security position. 

This rule only applies for international social security according to the relevant countries. 

The extension should be regularly monitored by Swiss employers as it is often changing due to the pandemic situation. 

Without a COVID-19 agreement, here is an example of the tax at source computation for a frontalier / cross-border employee working in Switzerland 4 days per week and in France 1 day per week based on a gross monthly salary of CHF 10'000:

• Switzerland computation : CHF 10'000 / 20 working days x 16 working days = CHF 8'000 (taxable amount) X Swiss tax at source rate based on an income of CHF 10'000 = Swiss withholidng tax deduction
• In principle, a French withholding tax computation should be performed by the Swiss employer considering the 4 working days of this employee in France. This French computation should be performed based on the French requirements. 

In general, the legal employer (meaning the Swiss employer) has the obligation to register, compute and report to the foreign tax authorities the required information to comply with the foreign local requirements based on the effective number of days performed in the relevant country. 

Yes, your Swiss organization is exposed to the risk of permanent establishment in the foreign country. It means that the foreign tax authorities may recognize a taxable amount due by the company depending on the activity of the employees in the foreign country/ies. 

The Swiss employer would need to assess the relevant compliance items which should be monitored by HR. In addition, issue specific policies such as flexible work could be developed to reduce your own potential exposures related to your workforce. 

Any further questions? We are happy to advise you on the points above from both a Swiss and international perspective and work with you determining your strategy and policy with regards to cross-border workers.