CONVINUS Global Mobility Alert - Week 12.2024

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BEST PRACTICE CROSS-BORDER COMMUTERS OR INTERNATIONAL WEEKLY RESIDENTS IN SWITZERLAND – WHICH REGULATIONS APPLY? FRIEDERIKE RUCH, <strong>CONVINUS</strong> In practice, one is often faced with the question of whether people who are employed in Switzerland but reside abroad are cross-border commuters or international weekly residents. Depending on this, different regulations sometimes apply. The distinction between real and fake cross-border commuters is also often mentioned in this context. What does this mean from a tax perspective? A cross-border commuter is, in the truest sense, an employee who is employed in a country but does not live in that country. But lives in a neighboring country and commutes to his place of work every day. Depending on the existing double taxation agreement, it is possible to claim a certain number of days on which the person can spend the night in the country of work without being denied crossborder commuter status. If the number of these overnight stays is exceeded or if the person does not commute every day or lives outside the relevant distance between home and work, one speaks of a false cross-border commuter. An international weekly resident is a person who is employed in a country and who also has their main residence not in this country but in another country, but who stays in the country of employment from Monday to Friday during the week and rents an apartment there. The above-mentioned distinction is based on the tax perspective; the other areas of law (including licensing and social security law) do not follow this distinction in the same way. Situation Lars van der Varten lives with his partner and their two children in Hamburg (Germany). He is a Dutch citizen. Lars works at Swiss Pharma AG in Zug (Switzerland). His total annual compensation is CHF 240,000. His employer keeps trying to convince him that he should move to Switzerland with his family. His partner works as a lawyer in a German law firm in Hamburg and does not want to give up her job there. For this reason, moving to Switzerland is out of the question. Lars and his partner bought a house in Hamburg two years ago for EUR 3 million, which they own equally. The house is rented, and the rental income generated is EUR 120,000 annually. 6 convinus.com
BEST PRACTICE Lars has therefore rented an apartment in Zug and usually flies to Switzerland on Monday mornings and back to Hamburg on Friday evenings. He works from home every now and then, but it's not regular. Due to his role, he also works for the branch in the Netherlands. To do this, he must be onsite in the Netherlands for at least 2 to 3 days every month. What is the assessment of this matter? Work Permit From a permit perspective, Swiss Pharma AG has obtained a cross-border commuter permit for Lars because he lives in Germany and works in Switzerland. As an EU citizen, he only has to commute between the country of employment and the country of residence once a week, even within the framework of the cross-border commuter permit. However, it may be that the municipality “takes away” the cross-border commuter permit when registering and issues a B permit instead. The reason for this is that he has to register in Switzerland as he regularly stays in Switzerland during the week. Depending on the municipality involved, the handling of the question of whether the cross-border commuter permit can be kept or not varies. Health insurance If he can keep his cross-border commuter permit, he can choose from a health insurance perspective whether he would like to insure himself in Switzerland or Germany. If he prefers German health insurance, he must make this decision within three months. The three-month period begins when you start working as a cross-border commuter. Social security Due to his employment in Switzerland, he is subject to social security contributions in Switzerland. For him to remain subject to social security contributions in Switzerland, he is not allowed to work more than 24.9% in Germany. The reason why the new teleworking regulation (max. 49.9% home office activity) does not come into effect is that he regularly works on-site in the Netherlands. Tax Lars' salary is subject to withholding tax in Switzerland. The regular withholding tax rate applies here. However, Swiss withholding tax may only be deducted on days of work physically performed in Switzerland. Either Lars presents his working days to his employer every month, with a note in which country he worked and when so that the employer can take this into account when calculating the withholding tax, or Lars must independently correct the withholding tax about the non-payment in the following year. Apply for Swiss working days. 7 convinus.com
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CONVINUS Global Mobility Alert - Week 12.2024

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