Can home office employees abroad cause a foreign tax liability?
Due to the border closures, many foreign employees of Swiss companies, especially from Germany, Italy and France, are forced to work from abroad. Because cross-border commuters are unable to visit Swiss offices, the question arises as to whether international assignments trigger a change in the taxation situation or social security treatment of employees. Fortunately, for the time being, this question can be answered with "no".
On May 14, 2020, France and Switzerland reached a mutual agreement stating that the existing tax treaties will remain valid during the period of application of the COVID-19 derogations. Accordingly, the taxation of cross-border commuters between France and Switzerland will remain unchanged despite corona and home office.
In addition, the OECD has stated in a publication that temporary home office activities by employees should not in principle lead to any changes in taxation and, in particular, should establish any foreign permanent establishments. However, the organisation also draws attention to the unilateral laws of other countries, which may provide for different regulations under certain circumstances (e.g. lower requirements for the establishment of a foreign permanent establishment or place of administration).