CONVINUS Global Mobility Alert - Week 5.2025

BEST PRACTICEVarious

BEST PRACTICEVarious aspects need to be considered when preparing the salary certificate:Determination of Tax Residency and Tax LiabilityA key aspect in preparing a salary certificate is determining in which country the employee is taxresident. For short-term assignees (typically assigned for less than 183 days), the question arises asto whether the employee remains subject to taxation in Switzerland or whether the employmentincome is taxable in the host country.The first step is to check whether a tax obligation exists in Switzerland and/or in the host countryaccording to national law. The second step is to examine whether a double taxation agreement(DTA) exists between Switzerland and the host country and to determine which country is grantedtaxation rights under the agreement. In many cases, employees on a short-term assignment (183-day rule or economic/actual employer) remain subject to Swiss taxation.Solution for our example: According to the double taxation agreement between Switzerland andthe U.S., the 183 days are calculated within a 12-month period. Consequently, from 1 August 2024,Anna Meier will be subject to tax on her employment income in the U.S., even if she spends fewerthan 183 days in the USA in the 2024 calendar year.This also means that, from 1 August 2024, a shadow payroll must be set up in the U.S., and U.S. taxesmust be deducted from her remuneration.However, as she retains her residence in Switzerland, she will still require a Swiss salary certificatefor the entire 2024 period. Consequently, an additional sheet should be created for the salarycertificate, detailing which remuneration components are already subject to taxation in the U.S.and the amount of U.S. tax paid.It is also possible to issue two salary certificates: one for the period from 1 January to 31 July andanother for the period from 1 August to 31 December.The reason for splitting or adding an additional sheet to the salary certificate is to ensure that AnnaMeier does not have to pay tax twice on the same income—both in the U.S. and in Switzerland. Theresponsible Swiss tax officer requires the relevant information on income already taxed abroad tomake a proper assessment. In Switzerland, the income taxed in the U.S. will only be considered fordetermining the tax rate.6convinus.com

BEST PRACTICECalculation of the Correct Social Security ContributionsThe correct allocation of social security contributions (AHV/IV/EO in Switzerland) for short-termassignees is another challenge. In addition to the national legal provisions of the involvedcountries, possible intergovernmental regulations (bilateral or multilateral agreements) must alsobe examined.Solution for this example: A social security agreement exists between Switzerland and the USA,allowing Anna Meier to remain insured in Switzerland and be exempt from social securitycontributions in the USA.ConclusionThe preparation of a salary certificate for short-term assignees from Switzerland requires a preciseunderstanding of tax and social security regulations in both Switzerland and the host country.Companies must ensure compliance with both national and international regulations.The administrative burden and complexity increase due to the need to consider differentcurrencies, legal frameworks, and tax obligations.7convinus.com