Switzerland recently announced the extension of a flexible approach to the application of the international social security rules with Italy during the COVID-19 pandemic until 31 October 2020. The verbal agreement reached between the social security authorities of Italy and Switzerland stipulates that, in the context of COVID-19, daily cross-border commuters who were unable to exercise their employment in their habitual place of work shall remain subject to the social security regime they were subject to before COVID-19 measures were introduced.
The Federal Social Insurance Office (FSIO) in Switzerland, on 26 August, announced the extension of the extraordinary measures related to the flexible application of the international social security rules during the COVID-19 pandemic with Italy until 31 October 2020.1 These measures are especially important for cross-border commuters working from home during the COVID-19 pandemic.
The flexibility shown by the social security authorities in Switzerland and Italy should bring welcome relief to frontier workers and cross-border commuters (and their employers) who may have been anxious about the continuing effect of the coronavirus pandemic on their work-from-home/work-outside-the-host/work-country arrangement in terms of the application of existing social security regulations to them. The renewed agreement will temporarily “normalise” their situation with the extended application of the rules as if the worker were to be still working in the country-of-work but for the coronavirus pandemic.
The verbal agreement reached between the social security authorities of Italy and Switzerland stipulates that, in the context of COVID-19, daily cross-border commuters who were unable to exercise their employment in their habitual place of work shall remain subject to the social security regime they were subject to before COVID-19 measures were introduced.
This flexibility introduced in March that was applicable for a limited period of time has now been officially extended until 31 October 2020.
As a general principle and according to European Union (EU) Regulation 883/2004, a cross-border worker from an EU or European Free Trade Association (EFTA) member state2 who only works in one state is subject to the social security regime in the country of his or her formal employment. One of the exceptions to this rule is when a cross-border worker performs a substantial amount of the employment activity (defined as more than 25 percent of the work time or remuneration) in his or her home country. In such a case, the coordination rules may dictate that the social security regime switches to the country of residence.
Based on these rules a cross-border commuter obliged to work from his or her foreign home office during a period when COVID-19 public health measures are in place could be considered a multistate-worker under the EU/ EFTA regulation and his or her social security position could potentially switch to the social security regime of the country of residence.
The social security authorities in Switzerland and Europe are aware of this potential issue and have reached an understanding that they will not apply a strict interpretation of the social security rules. Instead, they will take a flexible approach for some or all cross-border commuters.3 Italy and Switzerland have therefore agreed that home office days in the country of residence do not have to be considered when determining the correct social security regime and those cross-border workers working from home will not be considered as multi-state workers in the context of Art. 13 of EU Regulation 883/2004. The Swiss social security authorities confirmed on 28 August to extend this understanding until 31 October 2020.4
1 See the website for the FSIO at: https://www.bsv.admin.ch/bsv/fr/home.html . Also, see the Swiss social security site (in German, French and Italian): https://www.bsv.admin.ch/bsv/it/home/assicurazioni-sociali/int/basi-e-convenzioni/int-corona.html .
2 Switzerland did not ratify the inclusion of third-country nationals, therefore in a Swiss context only EU/EFTA nationals fall under the EU regulation 883/2004.
4 See the Swiss social security site (in German, French and Italian): https://www.bsv.admin.ch/bsv/it/home/assicurazioni-sociali/int/basi-e-convenzioni/int-corona.html .
* Please note that KPMG LLP (U.S.) does not offer immigration services or labour law services. However, KPMG Law LLP in Canada can assist clients with U.S. immigration matters.
The information contained in this newsletter was submitted by the KPMG International member firm in Switzerland.
To subscribe to GMS Flash Alert, fill out the subscription form.
© 2021 KPMG Holding AG/SA, a Swiss corporation, is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with ational Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.