On 22 December 2022, France and Switzerland reached an agreement on the taxation of home office income. Thus, the declaration of 29 June 2022 on the introduction of a provisional agreement on telework applicable to cross-border workers was revised and has resulted in amendments on sustainable tax arrangements for home office in existing agreements, which entered into force on 1 January 2023.
The main changes concern two agreements:
1.) The agreement concluded in 1983 between the Swiss Federal Council, acting on behalf of the cantons of Bern, Solothurn, Basel-City, Basel-Country, Vaud, Valais, Neuchâtel and Jura, and the government of the French Republic is extended to include the following:
Telework limited to 40% of the annual working time has no effect on:
2.) The agreement signed in 1966 between Switzerland and France for the avoidance of double taxation for taxes on income and assets contains the addendum that (in practise the employees who are not covered by the cross-border status):
The entry into force of the addendum is subject to signature and subsequent ratification. In the meantime, France and Switzerland have agreed to apply the terms and conditions in connection with telework by mutual agreement. This agreement can be applied until 31 December 2024 at the latest if the amendment is signed by 30 June 2023, and whilst taking into account the progress of the ratification process.
Article 3 of the 2023 Finance Bill provides for an adjustment of withholding tax for foreign employers with employees resident in France for tax purposes. It will particularly help cross-border workers to use teleworking. The regulation will apply to income received from 1 January 2023.
General rule from 1 January 2019
Adjustment to the PAYE system
-are not subject to the compulsory French social security system (EU social security regulations or bilateral agreement). In practise, this concerns employees residing in France and receiving remuneration from a foreign employer for an activity carried out in France for less than 25% of their total working time, or
-are dependent on a compulsory French social security scheme in accordance with the provisions of article I L. 380-3-1 of the social security code. Therefore, this simplification also applies to cross-border commuters living in France and working in Switzerland who have opted to join the compulsory social security system in France.
Obligation of the foreign employer
Failure to comply with the obligation to report will be punishable with fines ranging from EUR 500 to EUR 50,000 per declaration, corresponding to the following amounts:
The fine does not apply if there has been no breach of the duty to declare during the three years preceding the year in which the declaration should have been made and the person concerned has spontaneously corrected their errors by the end of the same year.
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