Confused about cross-border commuters? - Here is what you need to know.
Norma Reynov
International HR, Global Mobility & Remote Work - worldwide from Switzerland.
Best Practice for HR and Recruiters:
Not all cross-border commuters are the same. - When Google research raises more questions than it answers.
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Case Study
?? A company based in Aargau (Switzerland) wants to hire a new candidate from Germany. The future employee, who lives in Stuttgart (Germany), has googled extensively and now has a lot of questions about the cross-border commuter status, income taxes, and his German health insurance, which he would like to keep for health reasons. A move to Switzerland is not out of question. ??
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Question
?? What does the future employee need to know regarding the cross-border commuter status?
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Solutions
Under the scenario described above, the first step would be a detailed discussion with the candidate to shed more light on his personal situation. Because this is the only way to work out the optimal solution for him. - But first things first. Not all cross-border commuters are the same.
The topics of income taxes and work permits for cross-border commuters must be considered almost separately. It is the same wording in both areas that regularly leads to misunderstandings.
Thus, a cross-border commuter permit does not automatically lead to cross-border commuter taxation. Only the actual circumstances and not the type of permit are decisive for determining the income tax liability.
But let's first highlight the key points without getting lost in the many exceptions.
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?? Work permit
If the employee will regularly work more than 12 hours per week in Switzerland, the so-called cross-border commuter permit (G) can be applied for. This must be done by the employer. The employee is not involved here.
Even with a cross-border commuter permit, the employee could rent an apartment in Switzerland. This would make him a so-called "international weekly commuter". This requires that the employee registers in Switzerland and leaves Switzerland every week.?
If the employee does not want to or cannot leave Switzerland every week, the B permit is also an option. For a B permit, the future employee must take up residence and register in Switzerland.
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?? Health insurance
With the cross-border commuter permit, the employee from Germany has a right of choice regarding health insurance within the first 3 months of taking up employment. He can actively choose to remain in the German health insurance and consequently be exempted from the Swiss health insurance obligation.
The regulations on this are complex (depending on the country of residence). In addition, the possible co-insurance obligation of non-employed family members should be checked for each case individually.
With the B permit, there is no right of choice. The employee would have to take out mandatory health insurance in Switzerland.
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?? Taxes
Attention! The cross-border commuter permit does not automatically lead to cross-border commuter taxation. It is the same terms that cause confusion here. However, the cross-border commuter issue must be considered almost separately regarding work permits and income taxes.
If the employee resides in Stuttgart, the simple commuting distance to the Swiss employer is in any case more than 100 km. This makes the employee a "non-genuine cross-border commuter". This means for the Swiss payroll that the 4.5% cross-border taxation may not be deducted from the employee as in the case of a "real cross-border commuter", but the regular withholding tax rates must be applied.
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?? Social security
Regardless of the type of permit (G or B permit), the employee is only subject to the social insurances in either Switzerland or Germany (special rules on health insurance - see above). Here, the regulations of the so-called 25% rule must be observed, which could result in the social insurance obligation shifting to Germany and, accordingly, German social insurance contributions having to be settled by the Swiss company.
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Conclusion
It is necessary to fully understand the living and working situation of the future employee to find the best solution for his or her individual case. Depending on personal circumstances, the answers regarding work permits, health insurance, and income taxes may vary.
The earlier HR is involved in this process and obtains support from proven experts, the more likely the best solution can be found for the employee and the company.
?? Do you have?more questions? You need detailed advice? Then do not hesitate to?reach out to me.
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