CONVINUS Global Mobility Alert - Week 42.2025

BEST PRACTICEThe base

BEST PRACTICEThe base salary and all remuneration elements will continue to be paid from Germany. Mr. Kleinerwill remain subject to social security contributions in Germany during his assignment inSwitzerland and will be liable for tax in Switzerland. Since Mr. Kleiner works in Switzerland and thecosts of his assignment are passed on by his employer, Consult AG in Munich, to the Swisssubsidiary, he is subject to withholding tax in Switzerland. This means that the Swiss subsidiarymust set up a shadow payroll for him.Expat allowanceOne of the most important allowances is the expat allowance. It is usually paid in recognition of thewillingness to work abroad for a certain period of time. This allowance is intended to compensatefor the personal and family restrictions associated with an expatriate assignment. It is usuallycalculated as a percentage surcharge on the base salary.Mr. Kleiner receives an expat allowance of EUR 2,500 gross per month.Social security assessment (Germany): The amount is defined as a lump sum and is subject toGerman social security contributions. Since the amount is defined as a gross amount, theapplicable employee contributions are deducted from this amount.Tax assessment (Switzerland): The amount is defined as a lump sum and is subject to Swisswithholding tax. Since the amount is defined as a gross amount, the withholding tax incurred isdeducted from this amount.Cost of living allowanceThe cost-of-living allowance is also known as COLA. This compensates for differences in the cost ofliving between the home country and the host country. In countries where the general price level issignificantly higher than in the home country, the allowance is increased to maintain theemployee's previous standard of living. The calculation is often based on international cost of livingindices, which are adjusted regularly.Mr. Kleiner receives a cost-of-living allowance of 5% of his base salary. This amounts to EUR 7,500per year and is paid in 12 equal instalments of EUR 625.Social security assessment (Germany): The amount is defined as a lump sum and is subject toGerman social security contributions. As the amount is defined as a gross amount, theemployee contributions are deducted from this amount.applicable6convinus.com

BEST PRACTICETax assessment (Switzerland): The amount is defined as a lump sum and is subject to Swisswithholding tax. As the amount is defined as a gross amount, the withholding tax incurred isdeducted from this amount.Housing allowance / rent allowanceThe housing allowance is also of great practical importance. Since rent and real estate pricesabroad can vary greatly compared to the home country, many employers cover the costs ofadequate accommodation or provide company housing. Alternatively, a flat-rate monthly paymentis often agreed upon to compensate for the higher housing costs.Mr. Kleiner receives a rent allowance of EUR 5,000 gross per month.Social security assessment (Germany): The amount is defined as a lump sum and is subject toGerman social security contributions. Since the amount is defined as a gross amount, theapplicable employee contributions are deducted from this amount.Tax assessment (Switzerland): The amount is defined as a lump sum and is subject to Swisswithholding tax. As the amount is defined as a gross amount, the withholding tax incurred isdeducted from this amount. If Mr. Kleiner has not given up the apartment in Munich where helived before his assignment in Switzerland, and if it is not sublet and the employer would paythe actual rent for a reasonable apartment directly, this could be paid out tax-free.School expense reimbursementIn addition, expatriate employees with school-age children often receive a school allowance. Thiscovers the costs of international schools or other suitable educational institutions in the hostcountry. It is intended to ensure that the children can continue their education during theassignment without placing an excessive financial burden on the family.Mr. Kleiner is reimbursed for the actual school costs for his children.Social security assessment (Germany): The reimbursement of school costs for children in thecontext of an assignment is generally not subject to social security contributions, provided thatthe assumption of school costs is exclusively due to the assignment.7convinus.com