Zurich Cantonal Tax Authorities announce position on the taxation of home office days spent abroad during COVID-19 - Tax and Legal blog

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Following announcements made by the OECD and the Swiss Federal Tax Administration, the Zurich Cantonal tax authorities have now also announced how COVID-19 will impact taxes for cross-border employees working in Zurich. Namely, Zurich will tax employees in Zurich irrespective of where work was performed except for cases where prior to COVID-19, the employee was already regularly working from home (to be proven).

This approach applies retroactively from 24 February 2020 and is limited until 31 December 2020 the latest. 

Due to COVID-19, employees who reside outside of Switzerland but normally work in Switzerland, have been forced to work from home due to office and border closures. These employees and their employers alike have been asking the question whether this will result in a possible change in their tax situation.

As a reminder, preventive double taxation agreements state that salaried employees are taxed based on the country where they work. In cases where an employee lives outside of Switzerland and works in Switzerland, Switzerland only has the right to tax income related to the Swiss working days. Working days spent outside of Switzerland are generally subject to taxation in the country of residence. In other words, if a working day is spent in a foreign home office, this day is in principle subject to taxation in the country of residence.

Although such cases are generally clarified based on the applicable double taxation treaties, it has been increasingly discussed whether the normal rules provided in these treaties would still apply during COVID-19. The Swiss government is in the process of concluding bilateral agreements with its neighboring countries to address this situation (we refer to our Blog on the New mutual agreement between Switzerland and France for cross-borders commuters)

However, the Canton of Zurich is now the first canton in Switzerland to officially announce its position regarding the taxation of foreign home office workdays. The position means that despite international agreements, foreign working days spent at home are to be considered subject to Swiss taxation (unless already stipulated in an employment contract). By doing so, the Canton of Zurich unilaterally imposes continued Swiss taxation on workdays spent outside of Switzerland which otherwise (without COVID-19) would have been spent in Switzerland. This order applies retrospectively from 24 February 2020 and is limited to 31 December 2020 at the latest.


Deloitte’s View:

Considering that Zurich’s position is a unilateral decision, going against the rules stated in the double taxation treaties concluded by Switzerland, a strict application of it could lead to double taxation of a cross-border employee’s employment income unless other countries enter into an agreement similar to the one concluded with France.

Our recommendation for employers in the Canton of Zurich is to continue calculating and withholding taxes as usual without making any adjustments for “forced home office” workdays. We would also suggest that Zurich employers consider informing their cross-border employees of this situation and provide support to them for minimizing the risk of double taxation).


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Key contacts


Renaat Van den Eeckhaut – Partner, Global Employer Services Leader Switzerland and EMEA

Renaat leads the Global Employer Services (GES) Practice for Deloitte Switzerland. He specialises in international assignment and cross-border employment matters and advises on tax, social security and international mobility policies. Renaat has 22 years of experience with Deloitte Belgium and Switzerland and has worked with many companies across a broad range of industries. Renaat holds a Master in Law and Accounting Law and has authored several publications on international taxation.


Dominique Frison110x110

Dominique Frison – Manager, Global Employer Services

Dominique works as a Manager in the Global Employer Services (GES) Practice for Deloitte Switzerland. He has more than 10 years of experience as an individual tax specialist and focuses on tax at source as on payroll and shadow payrolls topics. Before he joined Deloitte, he worked as a tax commissioner for the tax authorities of the canton of Zurich. Dominique is a certified fiduciary and holds an Executive MBA in international individual taxation.


Anna Petrova-Baleri 110x110

Anna Petrova-Baleri - Senior Consultant, Global Employer Services

Anna is a Senior Consultant in the Global Employer Services Practice for Deloitte Switzerland. She is part of the core GES team with main focus on the withholding tax field. Before joining Deloitte, Anna had studied and worked in both the UK and US and holds a Master’s Degree in International Business.



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