Complicated: Cross-border Commuters and Home Office

I work a 100% part-time job in Aargau and live in Baden-Württemberg. Before Corona, I practiced home office only sporadically. During the pandemic, I enjoyed it so much that I would like to work from home 4 out of 5 days. Like many of my Swiss colleagues do.

But my boss won't allow me more than one day. “It is terribly complicated for cross-border commuters”, he says. Is he right?

Meike P.

In the case of home offices for cross-border commuters, the fundamental question is: Which country's law applies with regard to taxes, social insurance and jurisdiction? This depends on the duration of the home office and the activity there. That is why many employers are cautious about how much home office they allow cross-border commuters.

For More than 25% Home Office, the Social Security Law of the State of Residence Applies

As long as Meike worked only single days in the home office in Germany, she was subject to the social security law of the place of work, i.e. Switzerland. However, this would change if she worked at home for more than two days. If cross-border commuters from EU and EFTA countries work more than 25% in their country of residence, their salary is subject to the social security law of that country.

The social security contributions would therefore have to be paid by Meike and her employer in Germany. This can be advantageous or disadvantageous for both parties.

Exceptional Situation due to the Pandemic

During the pandemic, lockdowns and home office recommendations meant that it was not possible to do anything other than work in a home office, so this regulation was not applied. Cross-border commuters from EU and EFTA countries who temporarily worked from their country of residence continued to be subject to Swiss social security legislation.

This continued to be the case until June 30, 2023.

Relief for home office up to 50%

In the meantime, Switzerland has signed an agreement with various countries which allows home office up to 50% (maximum 49.9% of the working time) with regard to social insurances still as in the pandemic. Thus, the responsibility for social insurances remains in Switzerland up to this workload.

The agreement was signed by our neighboring countries Germany, France, Austria and Liechtenstein as well as other EU and EFTA countries such as Belgium, the Netherlands, Norway, Poland or Spain.

From 60% Home Office a Second Place of Jurisdiction Exists

If a cross-border commuter does a substantial part of her or his work in the home office, there is a compulsory place of jurisdiction at her or his place of residence. According to common doctrine, a “substantial portion” corresponds to around 60%.

Thus, if Meike worked three or four days in Germany in her home office, her place of residence would be the place of jurisdiction in the event of labor law disputes.

However, Meike and her employer have the option under international law to continue to subject the employment contract to Swiss law.

The Home Office May Qualify as a Permanent Establishment

If certain conditions are met, the home office of a cross-border commuter can be qualified as a permanent establishment of a Swiss company abroad. This would have tax consequences for the company. It would become liable for taxation abroad.

• The conditions for qualifying a home office as a permanent establishment are manifold:
• The home office must be used permanently or for a certain period of time – legal practice assumes a minimum of twelve months – the company's activities must be carried out in the home office on a permanent basis or over a certain period.
• The premises must be permanently available to the company.
• The decisive factor is whether the home office was ordered or is at the request of the employee. If she or he is not provided with a workplace in the company, the company assumes that she or he works in the home office. Thus, her or his office can be qualified as a business facility and consequently a permanent establishment.

Proper Clarification Can Make Home Office for Cross-border Commuters Possible

Meike's boss is right: cross-border commuters and home offices are a complicated legal issue. However, since it is unfair that employees who live in Switzerland are allowed to work more in their home office than cross-border commuters, Meike is advised to talk to her boss. If the employer clarifies everything and clearly regulates the home office, then Meike should also be able to work from home more than just one day.