CONVINUS Global Mobility Alert - Week 7.2024

BEST PRACTICE
Due to the complexity and country-specific characteristics, in most cases, this cannot be managed
by the foreign employer alone but requires the help of an experienced international payroll
provider, who not only prepares the foreign payslips but also carries out the registration with the
tax authorities and the monthly calculation of the tax burden.
Due to the Swiss employer in our example, the Swiss withholding tax must be calculated for each
occasional working day in Switzerland and remitted to the relevant withholding tax office.
To coordinate the Swiss withholding tax and the taxes owed at the foreign place of residence and
work, the respective country-specific regulations must be observed. This can result in different
procedures depending on the country (e.g. monthly deduction of effective Swiss withholding tax,
definition of a lump-sum withholding tax deduction and correction at the end of the year,
deduction of effective withholding tax at the end of the year).
Due to the considerable effort and legal restrictions, double taxation is only avoided in very few
cases via the payroll (e.g. Germany). In many cases, we only see the correction as part of the annual
income tax return (e.g. France, Poland, or the UK).
Version II: Remote work as a short-term activity abroad
If, on the other hand, remote work is merely a short-term activity abroad and the employee goes
abroad for a few days, weeks or even months, companies tend to be very interested in avoiding
foreign tax liability to minimize the administrative burden.
It is typically possible to avoid foreign tax liability for short-term foreign assignments if all aspects
of the so-called 183-day rule from the respective double taxation agreement (DTA) are observed. In
simple terms, this means that
the employee may not spend more than 183 days per calendar year or 12-month period in the
foreign country in question;
no costs may be borne by the foreign organization (including partial costs such as meals or
accommodation);
no salary may be paid abroad.
In addition, there must be no de facto or economic employer abroad. The definition of this
theoretical construct is country-specific.
7
convinus.com