HR update innovations 2024/2025

Swiss salary certificate and Guideline to complete the salary certificate

Up to the present time, it is not yet known whether the Guideline to complete the salary certificate will be adjusted for the upcoming tax year 2025. For the tax year, the version valid as of January 1, 2024, is to be used.

As of August 1, 2024, the «Frequently asked questions (FAQ)» to the Guideline has been adjusted. The changes are limited to an update on the treatment of leased company cars. For the calculation of the private use, the value of the vehicle specified in the leasing contract must be used and not the purchase price paid after expiry of the leasing contract.

Teleworking: Supplementary agreement to the double taxation agreement (DTA) with France

Since 1 January 2023, French cross-border commuters were already allowed to work up to 40% of their time from home in France in the form of teleworking by means of mutual agreements, without having any impact on withholding tax or cross-border commuter status in Switzerland. Those mutual agreements will only be applicable until December 31, 2024. It is likely that the entry into force date of the supplementary agreement to the double taxation agreement will be January 1, 2025, however, currently the respective signature of France is still missing.

As of the entry into force date, the number of home office days or the home office rate as a percentage must be documented. Employers are required to report this information to the tax office, so that it is forwarded to the relevant tax authorities in the other country. Consequently, a detailed travel calendar is crucial for these employees to calculate and submit the telework percentage/days at the end of the year.

Additionally, on January 1, 2025, the Federal Department of Finance's Ordinance on Withholding Tax will come into force. This ordinance provides legal certainty for cases where the employment relationship with a Swiss employer ends before December 31 for employees residing in France. In such cases, the following information must be provided:

• Employee's name, first name, and address as of their leave date

• Period of limited tax liability and average percentage of employment during the calendar year

• Number of working days in the country of residence (split into home office workdays and business trip workdays) and business trips in third countries during the period of limited tax liability

Taxation of telework

The Federal Council, in its meeting on October 16, 2024, enacted the Federal Act on the Taxation of Telework in International Relations, effective January 1, 2025. This act establishes the basis for taxing cross-border commuters even when they perform telework abroad.

The Federal Act on the Taxation of Telework in International Relations is a result of international developments in telework with France and Italy. It ensures that Switzerland can tax the income of employees who work in their country of residence for an employer based in Switzerland, provided that Switzerland has the right to tax under international tax treaties. The legislation is limited to Switzerland's five neighboring countries and was approved by Parliament on June 14, 2024.

Revised Double Tax Treaty (DTT) between Switzerland and Germany

In June 2024, the Federal Council has adopted a dispatch on an amendment of the Double Tax Treaty (DTT) between Switzerland and Germany. The changes of the articles 15 and 15a of the protocol, which focus on cross-border employees, are mainly relevant for employers. Some points such as the number of actual working days that shall be considered in tax allocations, the definition of the place of work, non-return days, garden leaves and severance payments etc. have been clarified in this context. The enter into force date is currently unclear.

Payments in kind

Except from the maximum deduction for travel costs (which has been increased from previously CHF 3’200 to CHF 3’300), the amounts for the valuation of payments in kind remain unchanged.

Withholding tax rates 2025

The Federal Tax Administration (FTA) published the new withholding tax rates (direct federal tax) for the 2025 tax year on 8 October 2024. Various deductions will be slightly increased as a result of cold progression (list not exhaustive):

In addition, the median value of effective salary income will be increased from CHF 5’725 to CHF 5’775 per month. This is based on the average median value of dependent income per person (men and women). The cantons are free to determine the rate for the rate-determining income of the other spouse for rate code C.

Teleworking: «Framework Agreement» - Updates

The «Framework Agreement», which has entered into force on July 1, 2023, has in the meantime also been signed by Ireland, Italy and Lithuania and may therefore also be applied for employees with telework in those countries as of the signing date.

Until the end of June 2024, it was possible to obtain A1 certificates for teleworking employees backdated to the date when the framework agreement entered into force with the respective country. However, since July 1, 2024, only a past period up to three months can be covered when applying for an A1 certificate. Further information can be found on our blog «Cross-border homeoffice work».

We would be pleased to advise you on your individual cases.

Gradual increase in the retirement age for women

The reform to stabilize old-age and survivors' insurance (AHV 21) went into effect on 1 January 2024. Starting on 1 January 2025, the retirement age -now called the «reference age» - for women will increase gradually by three months for each group, beginning with those born in 1961. Further information can be found in our blog «AHV21: Changes in 2025».

Increase of family allowances

The Federal Council has decided to increase the federal minimum rates for child and education allowances starting January 1, 2025. The child allowance will increase from CHF 200 to 215 per month, while the education allowance will increase from CHF 250 to 268 per month. This is the first adjustment since the Family Allowances Act came into effect in 2009. The Family Allowances Act sets a minimum rate per child and month for family allowances paid in the cantons, with the current rates being at least CHF 200 for child allowance and CHF 250 for education allowance. The minimum rates for family allowances are adjusted for inflation at the same time as the pensions of the Old Age and Survivors' Insurance (AHV), with the next adjustment taking place on January 1, 2025. In cantons that apply the federal minimum rates, the increase will automatically lead to an increase in family allowances. However, cantons may pay higher or additional allowances. The cantonal allowances may be found on our flyer «Family allowances» which will be updated as soon as the numbers are known.

Occupational pension - minimum interest rate

The minimum interest rate for occupational benefits insurance will remain at 1.25% as of 1 January 2025. This was decided by the Federal Council at its meeting on 9 October 2024.

Occupational pension plan limits (BVG)

The the maximum annual OASI/DI pensions will increase in 2025 from CHF 29’400 (2024) to CHF 30’240.

Outsourcing of payroll services

For our outsourcing of payroll services, we can present the ISAE 3402 Type II certificate in accordance with the «International Standard of Assurance Engagements». The annual report is available in summer of the following year. We are happy to provide the current 2023 report on request.

With this certificate, we provide you as the responsible party and decision-maker with the assurance that our payroll outsourcing services have an adequate internal control system and that all relevant business processes are monitored. This audit report confirms that we have established all necessary controls and implemented them over a defined period of time.

Provide your auditors with our ISAE attestation. This can support the planning of the audit and have a positive impact on costs, as audit procedures in connection with outsourced payroll accounting can be reduced. We will be happy to send you the document on request and answer any questions you may have.

On-site support

If you need support with payroll processing in the event of short or long-term absences such as maternity/paternity/carer's leave, illness, accident or fluctuation, we will be happy to provide you with on-site or remote support. Depending on the job profile, we will provide you with the right person from our team of payroll experts. As part of a staff leasing programme, they will take care of payroll processing on site and support your payroll managers as required.

Abacus payroll software

If you use Abacus Business Software for payroll accounting, we can show you how you can make your payroll processing more efficient, for example with suitable wage types, tables, automation, time management tool (also to record and monitor the telework/home office days) or interfaces.

Employment Solutions Services: Advice on all aspects of employer compliance

We are always up-to-date with the latest developments in the areas of tax, social security, immigration, labour law, etc. and our Employment Solutions Team are happy to support you with questions on employer compliance. For example, we are happy to deal with your special cases relating to retroactive withholding tax reporting, cross-border employment set-ups or policies and show you the associated employer obligations. Or perhaps you have already asked yourself whether your expense regulations are still up to date - we are also happy to help you with this.

Our experts are personally available to you on all of the above topics. We look forward to hearing from you.