The Swiss newspaper, Le Matin Dimanche, published an article on 9 August commenting on the return of French cross-border workers to Switzerland. The article has been summarized in short as follows:
After six months of exceptional circumstances due to the COVID-19 crisis, cross-border workers staying at home will be deterred once again as of 1 September. For most cross-border workers working in offices – the forced shift to working from home due to the COVID-19 crisis led to a better quality of life.
However, for such employees living in Haute-Savoie or Ain, the debate on the introduction of new working methods incite by these two months of home stay will come to an end on 1 September.
The exceptional state that has suspended the obstacles with respect to remote working for cross-border commuters since mid-March, supported by an “amicable agreement” set up between Paris and Bern dated 14 May, will end in three weeks. On 16 July, it was decided to not extend the agreement beyond 31 August, except in case of a second wave of COVID-19. A similar agreement signed with Germany was extended until the end of the year.
But the French coffers are empty. As Anthony Petiot, from the Lyon office of the auditing and consulting firm Ernst & Young (EY), notes, “France has a financial interest – in terms of tax revenue and social security contributions – in seeing this agreement come to an end.” The Groupement transfrontalier européen, which defends the interests of more than 30,000 border residents, states that it has tried to “extend the agreement until the end of the year”. But to date, “the Franco-Swiss authorities have not budged from their position”.
If an employee works more than one day a week at home over the border in France, social security contributions will have to be paid in France. The money will go to the French URSSAF rather than the AHV: the employer’s contribution rises to over 40% of the gross salary, four times more than in Geneva.
Introduced by the Macron government last year, the income tax reforms – and the shift to collection at source – applies to anyone who works even one day on the territory of France. “A Swiss employer is therefore obliged to collect the taxes due in France at the source for the period of remote working, which means that they must register with the French tax authorities in order to pay them,” says César Da Silva, Senior Manager at EY’s Geneva office.
“This is a major obstacle to the implementation of a flexible working system in companies where a significant proportion of employees are cross-border workers,” admits Elsa Gardel. Senior Manager at EY Lausanne. The stakes are high. Of the 87,000 cross-border commuters working in Geneva – and 34,000 in the canton of Vaud – more than 10,000 work in the finance, teaching, architecture or engineering sectors, activities that are more suited to working from home.
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. Read more here about how EY can help.