Switzerland and France extended their mutual telework taxation agreement for the period 1 January 2025 until 31 December 2025. This extension ensures legal certainty from a tax perspective for cross-border teleworkers and employers, preserving the 40% telework threshold and deferring the implementation of new reporting obligations.
What: The cross-border telework tax agreement has been extended by 12 months.
Why: To maintain legal clarity and support flexible work arrangements while awaiting the ratification of the permanent framework and to continue with the conditions as applied already since 2022
Conclusion: This extension ensures continuity for businesses and employees while adapting to evolving work trends.
Background of the extension
On 17 December 2024, the Swiss Federal Tax Administration (ESTV) announced that the transitional agreement on cross-border telework taxation with France would be extended until 31 December 2025. Originally introduced on 22 December 2022, this agreement allows cross-border employees to telework for up to 40% of their total working time without triggering international tax reallocation.
The extension comes as the bilateral supplementary agreement to the double taxation treaty (DTT), which establishes permanent rules for cross-border telework taxation, has not yet entered into force. While the Swiss Parliament approved the supplementary agreement in June 2024, France's ratification process remains ongoing.
Under these circumstances, the extension guarantees legal stability for both employers and employees in 2025, ensuring that the current telework practices can continue without disruptions.
Key objectives and benefits
What the extension means for 2025
The 12-month extension of the transitional telework agreement has several important consequences:
- Continuation of the 40% Rule: Employees can continue to telework for up to 40% of their annual working time without triggering cross-border tax reallocations (the 40% includes a maximum 10 business trips).
- Simplified reporting obligations: Employers are not required to certify the percentage of telework hours for employees in 2025 as part of the automatic exchange of wage data. However, they must still provide documentation upon request from tax authorities, similar to the requirements for 2023 and 2024.
- Deferred data exchange: If France ratifies the supplementary agreement in 2025, the automatic exchange of wage data will only apply to income earned from 2026 onwards. This means the first data exchange would occur in 2027.
- Stability for businesses and employees: By maintaining the current rules, the agreement reduces uncertainty and administrative burdens, allowing employers and employees to focus on their work without fear of unexpected tax complications.
This extension underscores the commitment of both countries to adapt tax policies to modern work trends while awaiting a permanent framework.
"The extension provides much-needed stability for cross-border telework arrangements, ensuring legal clarity and continuity into 2025."
Looking ahead: Toward a permanent solution
The path to a long-term change in the double taxation treaty between France and Switzerland
While the extension addresses immediate concerns, the ultimate goal remains the implementation of the bilateral supplementary agreement to the DTT. This agreement, approved by Switzerland but still awaiting ratification in France, aims to provide a robust and permanent solution for cross-border telework taxation.
Key aspects to consider going forward:
- Enhanced clarity: The supplementary agreement defines the applicable tax rules for the special group of cross-border teleworkers, ensuring long-term legal certainty.
- Automatic data exchange: Once in force, employers will need to certify telework percentages for employees, facilitating more efficient and transparent tax administration. An issue that still raises many questions.
- Consideration of social security laws: It is important to highlight that the supplementary agreement only covers tax aspects. For social security implications see below.
In the meantime, businesses and employees should continue to monitor developments and ensure compliance with the transitional framework agreement.
Practical tips for employers
What employers need to do in 2025
Employers should take note of the following key points to remain compliant under the extended agreement:
- Document telework hours: Maintain accurate records of telework percentages or number of teleworking days for employees, as tax authorities may request this information.
- Monitor the 40% threshold: Ensure employees do not exceed the 40% telework limit to avoid triggering cross-border tax reallocations (the conditions and consequences with tax liability in France are rather complex).
- Joiners and leavers during the calendar year: Detailed reporting obligations (according to Art. 5a withholding tax ordinance) may be required when a French resident employee terminates their working relationship with a Swiss employer, based on the adjustment of the withholding tax ordinance as from 1 January 2025. In case of new joiners during the year, the remote work pattern and data needs to be considered by the new employer as per the full year to determine the correct percentage of work days in France. Plan for future changes: Anticipate the potential implementation of the supplementary agreement and prepare for the new reporting obligations (to have all required data available).
- Coordinate with payroll teams: Ensure payroll processes account e.g. for any foreign workdays, travel days, third country working days or temporary assignments to maintain compliance with Swiss and French tax regulations. Keep in mind, that for social security, different rules apply (e.g. split subordination in case the employee is neither a Swiss nor an EU-membership-state national) and therefore specific evaluation for each case is recommended.
By proactively addressing these requirements, employers can minimize administrative burdens and avoid potential penalties.
