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WORKING IN SWITZERLAND

EXPLAINED: The rules that cross-border workers shouldn’t break in Switzerland

There are a number of restrictions imposed on G-permit holders — people who are working in Switzerland but living in neighbouring countries.

Published: 25 November 2022 11:42 CET
EXPLAINED: The rules that cross-border workers shouldn't break in Switzerland
Cross-border workers can't use their personal car for professional purposes in Switzerland. Photo by Samuel Foster on Unsplash

Who are the Swiss cross-border workers?

Cross-border commuters are, according to the State Secretariat for Migration (SEM) “foreign nationals who are resident in a foreign border zone and are gainfully employed within the neighbouring border zone of Switzerland”.

SEM defines the term “border zone” as the countries with which Switzerland shares a border — that is, France, Italy, Germany, and Austria.

The 360,000 G-permit holders who cross the border into Switzerland each day are subject to certain restrictions that the other 1.718 million foreign nationals residing permanently in Switzerland under C, B, or L permits are not.

These are some of the rules pertaining specifically to cross-border commuters.

Restrictions concern the use of vehicles

For instance, under the current rules, cross-border commuters are allowed to drive to and from jobs in their vehicles registered abroad, but they can’t use their personal cars for professional reasons.

Instead, they must use a vehicle provided by their Swiss employer.

However, a parliamentary motion, supported by the Federal Council, calls for changes to this regulation, arguing that it limits employment opportunities for certain workers.

This is the case, for instance, in the cleaning sector, where it is customary for employees to go to the place of work directly from home, bringing the necessary material with them.

However, “due to the regulations in force, this way of proceeding is not allowed for cross-border commuters,” according to MP Martin Schmid, who filed the motion now being debated in the parliament.

By the same token, if you receive a company car registered in Switzerland from your Swiss employer, you can use it only to commute to work and back, as well as for professional activities. 

However, EU customs regulations prohibit private use of the Swiss company car in your EU home country.

But that’s not all: if you live in an EU state, never borrow cars registered in Switzerland and drive them abroad. That is because EU residents are banned from driving a Swiss car in an EU country — unless the Swiss owner of the car is sitting next to you and can vouch that this is their vehicle and you are just driving it on their behalf.

Residence rules

There are other restrictions imposed on G-permit holders as well, mostly concerning residence rights.

For instance, cross-border commuters must return to their main place of residence abroad — if not each day, then at least once a week.

While a person with a G permit can’t purchase Swiss property to be used as their main residence (since they don’t have a permanent resident status), they are allowed to  buy a secondary residence, but only in the vicinity of their Swiss employer.

This means that, if, for instance, you live in the Haute-Savoie region of France and work in Geneva or Vaud, you can’t buy a house 230 km away in Zermatt.

Also, while you are allowed to own this property, you can’t rent it out.

READ MORE: EXPLAINED: Who can work in Switzerland but live in a neighbouring country

Be aware of taxes

Cross-border workers should be aware of tax rules so they don’t inadvertently break them. The specific rules all depend on which country employees are travelling from. 

For instance, there’s an agreement between Switzerland and France, Italy, and Germany authorises cantons to subtract withholding tax (also known as taxation at source) from cross-border workers’ wages.

This system is different from the one used by resident workers, who declare their income and pay taxes in monthly instalments throughout the year.

The taxes that cross-border workers pay in Switzerland are deducted from their tax liability in their country of residence.

To determine the withholding tax rate, the total gross income from all employment, including supplementary earnings such as benefits from invalidity or accident insurance, are calculated. 

Employers then forward the levied amounts to cantonal tax authorities. 

READ MORE: What cross-border workers should know about taxation in Switzerland

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WORKING IN SWITZERLAND

The pitfalls of Switzerland’s social security system you need to avoid

In most cases, Switzerland’s social benefits system functions well. But there are also some loopholes you should know about.

Published: 24 April 2024 13:37 CEST
The pitfalls of Switzerland's social security system you need to avoid

The Swiss social security system has several branches: old-age, survivors’ and disability insurance; health and accident insurance; unemployment benefits, and family allowances.

This is a pretty comprehensive package, which covers everyone who pays into the scheme for a wide variety of ‘what ifs’.

As the government explains it, “people living and working in Switzerland benefit from a tightly woven network of social insurance schemes designed to safeguard them against risks that would otherwise overwhelm them financially.” 

But while most residents of Switzerland are able to benefit, at least to some extent, from this system, others don’t.

What is happening?

If someone becomes ill or has an accident, Switzerland’s compulsory health insurance and / or accident insurance will cover the costs.

However, a prolonged absence from work can become costly.

That is especially the case of people employed by companies that don’t have a collective labour agreement (CLA), a contract negotiated between Switzerland’s trade unions and employers or employer organisations that covers a wide range of workers’ rights. 

READ ALSO: What is a Swiss collective bargaining agreement — and how could it benefit you?

It is estimated that roughly half of Switzerland’s workforce of about 5 million people are not covered by a CLA.

If you just happen to work for a company without a CLA, your employer is not required to pay your salary if your illness is long.

You will receive money for a minimum of three weeks – longer, depending on seniority — but certainly not for the long-haul.

You may think that once your wages stop, the disability insurance (DI) will kick in.

But that’s not the case.

The reason is that DI can be paid only after a year after the wages stop. In practice, however, it sometimes takes several years of investigations and verifications to make sure the person is actually eligible to collect these benefits, rather than just pretending to be sick. 

In the meantime, these people have to use their savings to live on.

What about ‘daily allowance insurance’?

Many companies (especially those covered by a CLA) take out this insurance, so they can pay wages to their sick employees for longer periods of time.

However, this insurance is optional for employers without a CLA is place.

As a result, small companies forego it because it is too much of a financial burden for them.

And people who are self-employed face a problem in this area as well: insurance carriers can (and often do) refuse to cover people they deem to be ‘too risky’ in terms of their age or health status.

Critics are calling the two situations —the length of time it takes for the disability insurance to kick in and gaps in the daily allowance insurance—”perhaps the biggest failures of the social security system.”

Is anything being done to remedy this situation?

Given numerous complaints about the unfairness of the current system, the Social Security and Public Health Commission of the Council of States (CSSS-E) will look into the “consequences of shortcomings and numerous dysfunctions in long-term illness insurance.”

But not everyone in Switzerland sees a problem in the current situation.

According to the Swiss Insurance Association (ASA), for instance, “making it compulsory to maintain wages beyond the legal minimum would not have the desired effect. Due to false incentives, this would only accentuate the upward trend in costs and premiums.”

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