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Old 23.08.2009, 01:31
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UK employee, but living in Switzerland working from home. How does that work??

Hi there,

My wife works (as an employee) for a relatively small UK company based in London. She works exclusively from home, and once a month or so visits the office in London.

How would it work from a taxation and work permit perspective if she wanted to live and be resident in Switzerland?

Can she just continue to be employed, but pay Swiss tax and insurance?

Or does she have to set up a company or become self employed?

I've searched in vain for a thread on this, but can't find a similar question.

Many thanks for any ideas on this.
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Old 23.08.2009, 05:10
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Re: UK employee, but living in Switzerland working from home. How does that work??

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Hi there,

My wife works (as an employee) for a relatively small UK company based in London. She works exclusively from home, and once a month or so visits the office in London.

How would it work from a taxation and work permit perspective if she wanted to live and be resident in Switzerland?

Can she just continue to be employed, but pay Swiss tax and insurance?

Or does she have to set up a company or become self employed?

I've searched in vain for a thread on this, but can't find a similar question.

Many thanks for any ideas on this.
Switzerland is laragely but not completely bound by EU law on this through the treaties, and through a web of tax and totalization agreements covering income tax and NICs/AVSs.

Within in limits you can contrive the result you want. If you are careless, you risk being deemed dual resident which means you need to file tax declarations in two countries as resident and claim double tax relief in one.

The general rules are these: you are resident in the place where your family lives and where you visit at least every weekind, in principle. And wsork is performed in the country where you are located at the time, and this is true even if you "telecommute".

The most advantageous system acceptable to both tax regimes given the facts you have stated would seem to be that she declares her employment in Switzerland. For convenience the Swiss will probably treat her as self-employed. (HMRC does this and the result is that less NICs are paid.) If it is unlikely that she will at the end of her career have accumulated 30 years of Class 1, 2 or 3 NIC contributions to qualify her for a full UK pension, then she ought to pay voluntary contributions for enough years (voluntary class 3 contributions can be paid up to six years in arrears, but the rate used is the curren one, about GBP 400 a year entitling one at retirement age to a standard state pension (not incluidng earnings-related additions) of over GBP 100 p.w. The full rates are onj the HMRC Web site each year. It is almost always a bargain. Your benefits are inflation proofed, with COLA, so long as you live when retired in the EU/EEA/Switzerland/USA. Otherwise (in Canada, Australia, S AFrica, for ex. you lose the COLA).

The Swiss system is far less subsidised by general funds. You get an annuity, based on actual contributions and not particularly adjusted to benefit the lower paid (as the UK and US and to some extent the Canadian systems do).

Depending on your status (nationality especially), domicile, number of days spent in the UK, etc. other matters (think of the non-domiciled persons tax legislation; of IHT, of the law of trust taxation and the law on capital gains) may affect you. If you have particular issues like those, consult a cross-border tax specialist. Or at least give some hint of them here.
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Old 23.08.2009, 12:42
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Re: UK employee, but living in Switzerland working from home. How does that work??

Thanks Andy, that is very helpful. Very good advise about NI as we completely overlooked that.

When you say, 'for the convenience, the Swiss will probably treat her as self-employed', is this done at the local Canton tax/immigration office when we register our residence? or is this a form that we need to fill in before arriving?

Tx
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Old 23.08.2009, 19:32
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Re: UK employee, but living in Switzerland working from home. How does that work??

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Thanks Andy, that is very helpful. Very good advise about NI as we completely overlooked that.

When you say, 'for the convenience, the Swiss will probably treat her as self-employed', is this done at the local Canton tax/immigration office when we register our residence? or is this a form that we need to fill in before arriving?

Tx
The social-security authorities (AHV in German, AVS in French) grant the status of "self employed". Various criteria must be fulfilled. Those are discussed in other threads.
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Old 07.05.2010, 12:16
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Re: UK employee, but living in Switzerland working from home. How does that work??

This is really interesting as I am about to be in the same position.

I am moving to Zurich but my uk based employer (a charity) wants me to continue to work for them on a consultancy basis for 7 days per month - 4 travelling back to UK and 3 from home. I would become self employed. I will be living in Zurich for a few years but do plan to return to the UK.

I too am really curious about Tax implications for this situation or any advice - so the previous answer was helpful. In short I am keen to know to whom am I liable for tax on earnings - UK or Switzerland.

If anyone has any further advice I would be helpful.

Thanks
Catriona C
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Old 07.05.2010, 16:36
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Re: UK employee, but living in Switzerland working from home. How does that work??

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This is really interesting as I am about to be in the same position.

I am moving to Zurich but my uk based employer (a charity) wants me to continue to work for them on a consultancy basis for 7 days per month - 4 travelling back to UK and 3 from home. I would become self employed. I will be living in Zurich for a few years but do plan to return to the UK.

I too am really curious about Tax implications for this situation or any advice - so the previous answer was helpful. In short I am keen to know to whom am I liable for tax on earnings - UK or Switzerland.

If anyone has any further advice I would be helpful.

Thanks
Catriona C
Under the tax treaty it is the country of residence which taxes professional income unless the worker maintains a permanent establishment in the other country: http://www.admin.ch/ch/f/rs/0_672_933_61/a14.html

There may also be residence issues; these arise if you spend more than 90 days on average, or 183 days in any one year, in the UK. More on that is here: http://www.hmrc.gov.uk/cnr/faqs_general.htm Being dual resident is a nuisance.
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Old 07.05.2010, 19:38
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Re: UK employee, but living in Switzerland working from home. How does that work??

Fantastic - thanks for saving me hours of time tracking this information down. That's really clear
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Old 09.05.2010, 19:47
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Re: UK employee, but living in Switzerland working from home. How does that work??

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Under the tax treaty it is the country of residence which taxes professional income unless the worker maintains a permanent establishment in the other country: http://www.admin.ch/ch/f/rs/0_672_933_61/a14.html
That's the US treaty, right? I guess the UK version is similar, but the one from my home country explicitly specifies what's included in "professions libérales", which implies that not all kinds of self-employment would fall under that part of the treaty...
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Old 09.05.2010, 20:21
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Re: UK employee, but living in Switzerland working from home. How does that work??

im doing my tour of all the offices tomorrow.
Belgian citizen , living in Switzerland and work for a UK based company which will start their company branch here......cant wait for tomorrow and fill out everything ugh ill let you know how that goes!
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Old 10.05.2010, 12:03
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Re: UK employee, but living in Switzerland working from home. How does that work??

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That's the US treaty, right? I guess the UK version is similar, but the one from my home country explicitly specifies what's included in "professions libérales", which implies that not all kinds of self-employment would fall under that part of the treaty...
Sorry, I was too quick to copy the link. Yes, the rule is the standard OECD one, and the UK-Switzerland provision is here: http://www.admin.ch/ch/f/rs/0_672_936_711/a11.html

Before the generalisation of totalisation treaties for social security (national insurance, state pension) contributions there could be double liability for certain payroll taxes, but almost never for income tax (for which there would be a credit anyway).

It may still be to your advantage to pay Voluntary Class III NICs (it almost always is beneficial, up until the point where you have 30 years' credits because the UK (and US for that matter, but not Switzerland so much) skews benefits in favour of the low-paid). http://www.hmrc.gov.uk/payinghmrc/class3nics.htm

Switzerland interprets (or applies) its EU totalisation treaties to no longer allow voluntary AVS contributions for EU residents. But unlike the UK there is no minimum number of years you have to contribute (11 in the UK) to get partial benefits.
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