CONVINUS Global Mobility Alert - Week 30.2023

Best Practice
Since in Switzerland the conclusion of a daily sickness benefit insurance is not mandatory, Drinks LLC may consider this. If no
daily sickness benefits insurance is taken out, it would be necessary to agree on the obligation to continue to pay wages in
the event of illness by one of the tables.
Since Drinks LLC is based in the USA, it is difficult to find a pension fund in Switzerland that will accept Drinks LLC and the
employee. As a rule, the only remaining option is the catch-all institution.
Taxes
As Drinks LLC is based in the USA, Drinks LLC is not obliged to deduct the withholding tax of Mrs. Kumar's canton of
residence. Mrs. Kumar must declare her earned income independently in her tax return in Switzerland and then pay tax on it
accordingly.
Even if the spouses have not had to file a tax return so far, as neither of them has earned more than CHF 120,000 each, the
filing of the tax return is necessary when they start working for Drinks LLC.
However, if Mrs. Kumar has to go to Drinks LLC in the USA for a few working days a year, then the appropriate earned income
for these days would be taxable in the USA.
Permanent establishment
As a general rule, in these situations, one should always at least make a brief analysis of the risk of establishing a permanent
establishment through an employee's work abroad. Mrs. Kumar’s activity as a software developer does not give rise to a
permanent establishment risk in Switzerland.
Payroll
It is possible that Drinks LLC does not commission anyone with the management of payroll accounting in Switzerland but
leaves the payment of insurance contributions and administration to the employee.
Because most of the forms / information are only available in the cantonal language, as well as the fact that the subject
matter is not very simple and that there is a high risk in the event of an incorrect declaration, it is advisable to commission a
specialized company (fiduciary / tax consultant) in Switzerland with this task.
CONCLUSION
The employment of Mrs. Kumar at Drinks LLC is possible but requires a great deal of effort on the part of Drinks LLC. From an
administrative point of view, employment via the Swiss company is the simpler way.
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