In light of the recent announcements of the lapse of the mutual international tax and social security agreements between Switzerland and its neighboring countries as of 31 August with France and 31 December with Germany, it is important for companies to manage the safe and compliant return of their workforce, but also reflect on their strategy for flexible cross-border working in the future.

These new announcements have come much sooner than many expected, especially in light of the significant lack of alignment in the implementation of COVID-related measures at the local and international level. So how can companies manage the complex landscape of compliance risks vs. the risks of their workforce returning to an environment where the infrastructure may be inadequate to enforce the safety guidelines? How can companies realize the opportunity to transform their organizational structure to implement a ‘new normal’ of increased flexible working aligned with local and international legislation? Many hope that the countries will continue discussions and review the European legislation with respect to remote working –  expanded greatly during this global pandemic – in order to develop a pragmatic approach for now and in the long term.

Recap of the latest compliance updates related to COVID-19


  • Mutual agreements relating to tax for daily cross-border workers for France will lapse on 31 August and for Germany on 31 December 2020.
  • Italy has not yet confirmed when the mutual agreement will lapse.


  • As of 20 July 2020, in addition to the other EU/EFTA and Schengen countries, the usual entry requirements will apply again if coming from the below mentioned countries. Therefore entering as tourists or business travelers will be possible: Algeria, Andorra, Australia, Bulgaria, Canada, Croatia, Cyprus, Georgia, Ireland, Japan, Morocco, Monaco, New Zealand, Rwanda, Romania, San Marino, South Korea, Thailand, Tunisia, Uruguay, Vatican / Holy See.
  • Entry from other countries without a valid Swiss (work) visa or permit is still not allowed, i.e., for holiday or for non-urgent business meetings. Exceptions are made for important business meetings that cannot be postponed and which require personal presence (e.g., contract negotiations and signings, business inspections or other important representative assignments).
  • Persons entering Switzerland and who, at any time within 14 days prior to entry have been into a state or territory with increased risk of infection with the COVID-19 virus, are obliged to immediately and directly go to their home or another suitable accommodation after their entry to Switzerland. They must stay permanently there for 10 days after their arrival (quarantine). Anyone who is required to be quarantined under this regulation must report his/her entry within two days to the competent cantonal authority and follow the instructions of this authority. The up to date list from the Swiss Federal Office of Public Health with the concerned countries/areas can be found here.

Social security

  • Mutual agreement for flexible approach relating social security (25%-rule) with France and Austria will cease on 31 August 2020 and for Germany on 31 December 2020.
  • After these dates the further procedure is jointly determined according to the development of the health situation.
  • From a Swiss perspective, the flexible interpretation of the subordination rules in relation to other countries (incl. Italy) continues to apply until otherwise agreed.

Key considerations in view of remote working across borders now and beyond

Since this topic is on the priority list of many Swiss companies due to a high population of cross-border workers, it is imperative that companies review their long-term strategy on how to best approach their employees from a compliance perspective as well as the employees’ reality. We have seen that, in the vast majority of cases over the last 5 months, the impact of remote/flexible working has been highly successful with increasing productivity and better work-life balance for the employees.

Income tax and payroll

Companies must be fully aware of their cross-border population to ensure that any additional reporting requirements, local or international, are taken into account. Working remotely can give rise to a new host of challenges for companies, including additional payroll reporting and taxation for the employee and employer.

Social Security

Are you tracking the number of days that your employees are working outside Switzerland? In order to remain subject to the social security scheme of the country where the employer is located, an employee is allowed to work <25% in the country of residence. This applies if the employee in question is an EU or CH national and has only one employer. What is your company’s strategy to handle these cases if this threshold is exceeded and are your employees aware of what happens next?

Corporate tax

Employee activities can increase the risk of creating a permanent establishment (PE) for their employer. When employees work across borders for an extended period, the risk of a PE could increase and could create a corporate tax liability for the company which would result in a significant increase in costs and complexity of tax for the employer.


Permits differentiate between residents, cross-border employees and even weekly commuters and therefore your employees must be fully aware of the regulations associated with their permits.


Employment contracts are usually concluded in the country where the work is performed. However, depending on time spent working outside of the country of employment and the country’s specific regulations, you may be required to include additional provisions and even an additional employment contract. Are you familiar with the data privacy regulations across borders and how this allows you to track your employees?

Culture and leadership

In virtual working experiences, culture will be paramount in giving employees a sense of community and ensuring well-being. The leadership’s development and growth will be key in driving employees in a more flexible environment, and continuing to ensure proactivity and engagement.

Organizational design

How can your company ensure it supports more flexible ways of working? Which function is responsible for flexible working and do you have a flexible working policy in place?

So, what is next?

What are your company’s priorities? Company priorities differ according to the nature of the business, the location of employees, existing culture, and technological capability. Identifying your priorities will lead to building your business case for flexible cross-border working.

For more information on how we can support you and our service offering, please click here.

For more information on the most recent Swiss taxation, social security, and immigration guidance please read our key observations.

Click here to read the newest update on COVID-19 Mobility and Workforce Management.


Global tax updates due to COVID-19, read more here.

Global labor/employment law updates due to COVID-19, read more here.

Global immigration updates due to COVID-19, read more here.

Specific global mobility updates due to COVID-19, read more here.

Please note that the above information reflects the situation at the time of this publication. We are constantly monitoring the situation and are in close contact with the Swiss authorities to be able to provide further guidance as changes are announced.