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Article Switzerland: Government Proposes Taxation of Telework of Cross-Border Commuters

In its session on March 1, 2024, the Swiss Federal Council, the country’s government, introduced a bill to tax telework performed by cross-border commuters. Double taxation treaties generally provide that income from employment is taxed in the country in which it is physically performed. However, especially since the COVID-19 pandemic, more people perform their work remotely from home, which would shift the right of taxation to the country of residence. The bill would establish a national legal basis to tax telework performed by cross-border commuters from the five neighboring states of Switzerland, meaning Austria, France, Germany, Italy, and Liechtenstein. (Message from the Federal Council, at 16.)

The bill would amend the Federal Act on a Direct Federal Tax (Bundesgesetz über die direkte Bundessteuer, DBG) and the Tax Harmonization Act (Steuerharmonisierungsgesetz, StHG). The amendments provide that Switzerland may tax telework performed by employees without a tax domicile or residence in Switzerland for a company that has its seat, actual administration, or permanent establishment in Switzerland if the tax treaty in question provides Switzerland with that right. (DBG, art. 5, para. 1, letter abis (proposed); StHG. art. 4, para. 2, letter abis (proposed).) So far, the tax treaties with France and Italy have been amended in that regard. (Message, at 26.)

The amendments, once approved by the parliament, would be subject to an optional referendum before they can enter into force. (Swiss Constitution, art. 141.)

Background to the Amendments

Switzerland has many more employees without a tax domicile or residence in Switzerland than Swiss employees who commute to neighboring states for work. More than half of the cross-border commuters (around 220,000 persons) are from France. (Message, at 4; Federal Statistical Office, Cross-border Commuters.) The main goal of the amendments is to preserve Swiss tax revenue. Furthermore, in the opinion of the government, less commuting will result in less environmental pollution and help with work-life balance. (Message, at 5, 25.)

Jenny Gesley, Foreign Law Specialist
April 17, 2024

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Chicago citation style:

Gesley, Jenny. Switzerland: Government Proposes Taxation of Telework of Cross-Border Commuters. 2024. Web Page. https://www.loc.gov/item/global-legal-monitor/2024-04-16/switzerland-government-proposes-taxation-of-telework-of-cross-border-commuters/.

APA citation style:

Gesley, J. (2024) Switzerland: Government Proposes Taxation of Telework of Cross-Border Commuters. [Web Page] Retrieved from the Library of Congress, https://www.loc.gov/item/global-legal-monitor/2024-04-16/switzerland-government-proposes-taxation-of-telework-of-cross-border-commuters/.

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Gesley, Jenny. Switzerland: Government Proposes Taxation of Telework of Cross-Border Commuters. 2024. Web Page. Retrieved from the Library of Congress, <www.loc.gov/item/global-legal-monitor/2024-04-16/switzerland-government-proposes-taxation-of-telework-of-cross-border-commuters/>.