Switzerland: Social Security and Cross-Border Workers, As of 1 July 2023, a New Treaty Provides that Cross-Border Workers from Certain EU/EFTA States Who Work Remotely from Their Country of Residence for Less than 50% Stay Subject to Swiss Social Security
Due to the restrictions related to COVID, the EU social security subordination rules were flexibly applied until 30 June 2022. The flexible application of the subordination rules was extended until 30 June 2023. Up to this date, cross-border worker will continue to be subject to Swiss social security legislation, irrespective of how many days they work remotely from their country of residence (EU/EFTA). For the period after July 2023, Switzerland and certain EU and EFTA countries have signed a multilateral agreement which provides that persons may perform up to 49.9% remote work from their country of residence whilst the social insurance laws of the employer’s state of domicile remains applicable.
The treaty is only applicable to workers to whom the Agreement of Free Movement of Persons with the EU (AFMP) or the EFTA Convention applies. It is not applicable to:
- Persons who, in addition to remote work, perform other activities (e.g. visiting clients, self-employed secondary employment) in the country of residence;
- Persons who, in addition to remote work in their country of residence, carry out an activity in another EU or EFTA State;
- Persons who, in addition to working for their Swiss employer, also work for an employer in the EU or in an EFTA State;
- Self-employed persons.
Furthermore, the treaty is only applicable to situations involving two states that have signed the agreement. So far, in addition to Switzerland, the following countries have signed the treaty: Germany, Austria, Belgium, Estonia, Finland, Hungary, Ireland, Lithuania, Luxembourg, Malta, the Netherlands, Slovakia, the Czech Republic, Liechtenstein and Norway.
With Germany, Austria and Liechtenstein, three countries neighbouring Switzerland have signed the treaty. In contrast, France and Italy have not yet expressed their intention to join the treaty. Therefore, as of 1 July 2023, cross-border workers who are employed by a Swiss employer and who work remotely for a maximum of 49.9% of their total working hours from Germany, Austria or Liechtenstein remain subject to Swiss social security.
In order for the agreement to apply, Swiss employers must apply for an A1 certificate from their AHV compensation fund via the ALPS platform (Applicable Legislation Portal Switzerland). ALPS is currently being updated to automate the processes and the issuance of the A1 certificate as much as possible.
For cross-border commuters from countries that have not signed the multilateral treaty, the pre-pandemic agreement automatically applies. This means that there is no change of social insurance responsibility for remote work if it involves less than 25% of the working time in the .country of residence.
Please note that the treaty only covers social security and not tax issues, which should be looked at separately.
We will of course keep our clients informed regarding the further developments around the treaty and its signatory countries. In the meantime, if you need assistance with cross border workers, please do not hesitate to contact us.