Switzerland - Federal authorities clarifying the Swiss approach on remote working

21/04/21

Following the various experiences during the COVID-19 pandemic and the mandatory work from home requirements, a lot of companies have implemented or are about to implement hybrid policies to further allow home office and remote work.

Remote Work in Switzerland for EU/EFTA nationals

An increasing number of questions on the possiblity to perform remote work in Switzerland has reached Swiss authorities in the last year, in particular for persons working for an employer based abroad and willing to establish in Switzerland in order to perform remote work for an activity not linked in any way to the Swiss labour market.

Swiss authorities approach the need of a work permit based on several criteria and more specifically on the definition of "salaried workers".

EU/EFTA nationals working for an employer based abroad in Switzerland remotely do not qualify as "salaried workers" as per the Agreement on Free Movement of Persons (AFMP). Furthermore, should an activity in Switzerland have an influence or impact on the Swiss economy, then such an employer would need to cover its employees via a secondment set-up (e.g. mandate in Switzerland, contract with Swiss client, etc).

Swiss authorities are, however, of the opinion that EU nationals working from Switzerland for an employer abroad not linked to the Swiss labour market and without any contract with Swiss clients would in principle be eligible for a residence permit (permit without work activity allowed). Each situation should be reviewed on a case by case basis.

Remote work for non-EU/EFTA nationals?

For non-EU nationals, the interpretation is different since the applicable legal framework differs from the AFMP. The interpretation of "salaried worker" is larger and therefore according to Swiss law, any foreigner (non-EU) willing to work on Swiss soil must request a work permit.

It should be noted that Swiss authorities have to grant a quota based on the local and Swiss economical interest principle and that the latter will be difficult to prove for someone performing remote work. Therefore, it is expected that in practice remote work for non-EU nationals could be allowed only under the admission for other grounds such as family reunion or studies (permit without work activity) and mainly for those already admitted in Switzerland.

What about social security and taxes?

The interpretation of work activity is different depending on the applicable legal angle, e.g. immigration law, social security law or tax law.

If from an immigration law stand point the interpretation of salaried worker or work activity is "liberal" for EU nationals, it does not influence how this should be interpreted and considered from a social security or tax perspective. Therefore, the same questions should be asked for each angle to define how someone performing remote work would be considered from a social security and tax point of view.

It is to be noted, for example, that for social security, remote work in Switzerland could modify the applicable regime for the worker, i.e. apply a new place of residence rule (Swiss law) instead of the previous place of work abroad. That would be the case if the remote work in Switzerland makes up more than 25% of the total activity or/and if the employee reaches more than 25% of his or her annual earnings.

Summary

In practice, foreign EU/EFTA workers performing remote work in Switzerland for an employer based abroad not linked to the Swiss labour market and without contacts with Swiss clients or entities are to be qualified as "without work activity" and can thus perform remote work without the need of a formal work permit. They would need to ask for a residence permit and show that they have sufficient financial means to live in Switzerland. The revenues the remote worker would receive as a salary would be taken into consideration in such an assessment of sufficient financial means.

The approach is however different for non-EU workers since they are subject to another legal regime and to quotas. It will thus be difficult in practice to do remote working for those nationals. Very few situations (mainly for already admitted non-EU nationals or cases of family reunion/studies) would allow remote work.

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