BY NORMA REYNOV, CONVINUS However, to obtain the Certificate of Coverage from the USA, patience is required above all (in addition to the correct application). Once the application has been submitted, it can take a solid 5-8 months for the certificate to be issued and then sent by post to a US address. Income Taxes (183-day rule and de facto employer) If the employee is present in Switzerland for a maximum of 8 days per month, i.e. a maximum of 96 days per year, it is easy to jump to the conclusion that the 183-day rule does not trigger any tax liability in Switzerland. However, this is too short-sighted, as the other two aspects of the 183-day rule must also be taken into account. In simple terms, these are: no assumption of costs in Switzerland or no transfer of costs to Switzerland and no payment of salary in Switzerland. However, even if all three points of the 183-day rule are fulfilled, in the present case of the CFO with overall responsibility for the Swiss group of companies, we have to deal with the construct of the de facto employer. This states that an employer in Switzerland is to be assumed if the service provided constitutes an integral part of the business activities of the Swiss company. In other words, a de facto employer exists if, among other things, the activity of the employee from abroad is extremely important for the Swiss company. Due to the activities of the US American CFO for the entire group of companies, it must be assumed that there is a de facto employer in Switzerland. This also means that the employee is subject to withholding tax in Switzerland for each Swiss working day, and the Swiss working days must be calculated to the exact day. The 183-day rule no longer applies in the case of the CFO, as his activities are of significant importance to the Swiss organization, and it can be assumed that he makes far-reaching and significant decisions for the group of companies. Work Permits The CFO from the U.S. requires a work permit to work in Switzerland. Due to his decision-making powers and frequent stays in Switzerland, it cannot be argued that he is “only” in Switzerland for meetings. 12 convinus.com
BY NORMA REYNOV, CONVINUS The simplest solution is, therefore, to obtain a 120-day permit for the CFO. Here, the further restriction that he also requires a Schengen visa in connection with the 120-day permit must be taken into account. This ultimately allows him to stay in the Schengen area (including Switzerland) for up to 90 days within 180 days and up to 120 working days in Switzerland in a 12-month period. Payroll The main payroll, including salary payments, is managed by the CFO in the USA. Due to the Swiss working days, a so-called “shadow payroll” must be maintained in Switzerland for the calculation of Swiss withholding tax. This is then used to calculate the Swiss taxes and paid by the Swiss company to the relevant withholding tax office. Payment of remuneration does not take place in Switzerland. Conclusion For business trips from the USA to Switzerland, a number of administrative aspects must be taken into account, depending on the employee's specific situation. While occasional, short business trips by employees without far-reaching decision-making powers are not particularly complex, several additional aspects must be taken into account for higher-ranking employees in management positions. Not only must a work permit be obtained on a regular basis, but also the “Certificate of Coverage” for the social security subordination. It is also essential to keep a travel calendar in order to be able to correctly account for and pay Swiss withholding tax as part of a shadow payroll. Companies are, therefore, well advised to deal with the various administrative aspects of business trips from abroad to Switzerland and to seek appropriate support for the administrative points that they cannot or do not wish to handle themselves. 13 convinus.com
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