Working in Multiple Countries: Tax Challenges for Mobile Expats

International mobility is increasingly part of everyday life for many professionals: assignments abroad, cross-border projects, remote work from the home country, or living as a cross-border commuter. But this flexibility has a tax dimension — because as soon as income is earned in more than one country, complex questions arise about tax liability, income allocation, and the avoidance of double taxation.

Important note: This article describes the legal situation as of 2025/2026. Cross-border tax situations are always case-specific and should be discussed with a tax adviser at an early stage. Key legal bases: DFTA / DBG (SR 642.11), THIA / StHG (SR 642.14), OECD Model Tax Convention.

Tax Residence: The Fundamental Question

Residence in Switzerland

A person is considered tax-resident in Switzerland if they:

• have a permanent place of residence in Switzerland, or
• are present for at least 30 days with gainful activity or at least 90 days without gainful activity (Art. 3 DFTA)

Residence means unlimited tax liability: worldwide income must be declared in Switzerland — regardless of where it was earned (Art. 6 para. 1 DFTA).

Multiple Residence: The Tie-Breaker

Anyone who is simultaneously considered resident in multiple states can in theory be subject to unlimited tax liability in both countries. Tax treaties (DTTs) resolve this conflict through a tie-breaker clause, which works through a clear hierarchy:

1. Permanent home: Residence where a permanent home exists
2. Centre of vital interests: If homes exist in both states, the deciding factor is where the closer personal and economic ties are
3. Habitual abode: Where the person ordinarily stays
4. Nationality: As the final criterion
5. Mutual agreement procedure between tax authorities: If even nationality does not resolve the matter

Practical tip: When moving from Switzerland abroad or vice versa, it is crucial to establish exactly when residence in the previous state ends and in the new one begins. Thorough documentation of the centre of vital interests (rental contracts, schools, club memberships, medical records) is strongly recommended.

Income from Multiple Countries: Allocation and Attribution

The Principle of the Place of Work

Employment income is generally taxed in the country in which the work is physically performed (place-of-work principle; Art. 15 OECD Model Tax Convention). Anyone who splits working days across different countries must allocate their income accordingly.

Time-Proportional Allocation by Working Days

The allocation is generally based on the actual working days per country:

Formula:
Share of State X = (working days in State X) ÷ (total working days) × annual income

Example: An expat works 200 days in Switzerland and 60 days in Germany. Their annual income of CHF 180'000 is split:

• Switzerland: 200 / 260 × CHF 180'000 = CHF 138'460 (taxable in Switzerland)
• Germany: 60 / 260 × CHF 180'000 = CHF 41'540 (taxable in Germany)

Important: Not all days are treated equally. Travel days, sick days, and holidays are treated differently depending on the applicable DTT. The precise rules depend on the specific treaty.

The 183-Day Rule: Exception to the Place-of-Work Principle

When an employee is temporarily present in another state, the state of residence often retains the right to tax — provided three conditions are simultaneously met (Art. 15 para. 2 OECD Model):

• Stay in the other state under 183 days (in the tax year or in a rolling 12-month period, depending on the DTT)
• Employer is not resident in the other state
• Costs are not borne by a permanent establishment in the other state

Warning: The 183-day rule must not be treated as a blanket exemption. The precise wording of each DTT is decisive — some count calendar days, others tax years, others rolling periods. A simplistic application must be avoided.

Double Taxation Agreements (DTTs): Protection Against Double Taxation

Switzerland's DTT Network

Switzerland has DTTs with more than 100 states (source: State Secretariat for International Finance, sif.admin.ch). These agreements are based on the OECD Model Tax Convention and specify, for each type of income, which state has the right to tax.

Methods for Avoiding Double Taxation

There are two main methods:

• Exemption method: The state of residence exempts income earned abroad from taxation but takes it into account when determining the applicable tax rate (progression reservation). Example: A Swiss resident earns income in Germany. Switzerland does not tax this directly but includes it when calculating the Swiss rate on remaining income.
• Credit method: The state of residence taxes worldwide income but credits the tax paid abroad against the domestic tax liability.

No DTT — What Then?

In countries without a DTT with Switzerland, genuine double taxation can arise. Switzerland grants unilateral relief in such cases (Art. 3 THIA; unilateral measures), but these fall short of a full treaty. Third countries without a DTT (e.g., certain countries in Southeast Asia, South America, or Africa) represent a particular risk for mobile expats.

Cross-Border Commuters: Country-Specific Rules (As of 2025)

Cross-border commuters — persons who live in one state, work in a neighbouring state, and regularly return to their place of residence — are subject to entirely different rules in Switzerland depending on their country of origin:

Neighbouring countryTaxation rightCH withholding taxKey featuresGermanyGenerally GermanyMax. 4.5% (with certificate of residence Gre-1)Max. 60 non-return days; revised DTT applies from 1.1.2026FranceFrance (border cantons BE, BL, BS, JU, NE, SO, VD, VS) / Switzerland (other cantons)CH receives 4.5% compensation from FranceMax. 45 non-return days; max. 40% home office permittedItalySwitzerland levies 80% of withholding tax ("new" commuters from 17.7.2023); old: CH levies, passes 40% to ItalyCantonal tariff ratesResidence within 20 km of border; "new" commuters additionally taxed in ItalyAustriaSwitzerland (place-of-work principle)Standard withholding tax tariff; CH passes 12.5% to AustriaHome office leads to tax liability in Austria

Certificate of residence: For the reduced withholding tax (e.g., 4.5% for German cross-border commuters), a valid certificate of residence from the home country's tax authority must be submitted to the Swiss employer (form Gre-1 / renewal Gre-2 for Germany).

Telework and Home Office: The New Legal Situation from 2025

Federal Act on the Taxation of Telework (in force since 1 January 2025)

The Federal Council brought the Federal Act on the Taxation of Telework in International Situations into force on 1 January 2025. This Act is of central importance for all expats and cross-border commuters who regularly work from home:

• Basic principle: Home office work is physically performed where the person is sitting — without a legal basis, Switzerland could not levy taxes on home office work performed abroad.
• New right: Switzerland gains a domestic tax base for telework carried out abroad by cross-border commuters for a Swiss employer.
• Applies to five neighbouring states only: Germany, France, Italy, Austria, Liechtenstein.
• Documentation obligation for employers: Maintaining a working-day calendar, reporting home office days to the cantonal tax authorities.

Home Office Quotas by Country (Tax Thresholds)

Cross-border commuters can work from home up to the following quotas without losing their tax cross-border commuter status:

Neighbouring countryPermitted home office quota (tax)Legal basisGermanyNo impact on cross-border commuter status (home office ≠ non-return day)DTT CH-DEFranceMax. 40% of annual working timeDTT CH-FR, supplementary agreement in force from 24.7.2025ItalyMax. 25% of annual working timeCross-border commuter agreement CH-IT (from 1.1.2024)AustriaHome office leads proportionally to taxation in AustriaDTT CH-AT (place-of-work principle)

Social Insurance: The 49.9% Rule

Separate from the tax question is the social insurance affiliation. From 1 July 2023, a multilateral agreement applies to EU/EFTA states:

• Up to max. 49.9% telework in the state of residence: Social insurance obligation remains with the employer state (Switzerland) — no switch to the state of residence.
• From 50% telework in the state of residence: Social insurance obligation switches to the state of residence. The employee loses membership in the Swiss system (AHV, BVG, UV).
• Proof required: A1 certificate (to be applied for by the Swiss employer when 25–49.9% of work is performed as home office).

Important: Tax law and social insurance law run in parallel, but not in sync. A quota that is unproblematic from a tax perspective may have social insurance consequences — and vice versa.

Permanent Establishment Risk for Employers

A frequently overlooked risk: if an expat works from abroad on a permanent basis and with a degree of autonomy for a Swiss company, this can create a taxable permanent establishment for the Swiss employer in the foreign country — meaning the company becomes taxable there.

• Triggers: Regular management decisions, contract conclusions, or fixed facilities abroad
• Threshold: Varies by country and DTT — no uniform figure
• Consequence: Corporate tax liability abroad; extensive compliance requirements

Recommendation: Employers should carry out an early risk assessment when employees work remotely abroad on a permanent basis.

Social Insurance for Activities in Multiple Countries

EU/EFTA Expats: The Single-State Principle

Thanks to the Agreement on Freedom of Movement (AFMP) and EU Regulation 883/2004, the single-state principle applies to EU/EFTA expats: a person is always subject to social insurance in one state only. Which state that is depends on the place of residence and the proportion of work performed there:

• Less than 25% of work in the state of residence: Social insurance obligation at the employer's location (Switzerland)
• 25–49.9% of work in the state of residence (telework): Social insurance obligation remains in Switzerland (multilateral agreement from 1.7.2023)
• 50% or more in the state of residence: Social insurance obligation switches to the state of residence

Non-EU/EFTA Expats

For nationals from third countries, bilateral social security agreements apply. Without an agreement, there is a risk of genuine double contribution burden: contributions may have to be paid in both countries. Individual advice is essential in these cases.

Practical Examples

Example 1: Project Work in Two Countries

An Indian expat with residence in Zurich works for a Swiss company and spends three months on a project in Italy. Switzerland remains his state of residence. The income attributable to Italy (approx. 25% with even distribution) may be taxed by Italy under the DTT CH-IT as the country of activity. Switzerland exempts this income or credits the Italian tax against Swiss tax (depending on the DTT method). Documentation of working days is essential.

Example 2: Remote Work from Abroad (Non-Cross-Border Commuter)

A British national is resident in Switzerland and works for a Swiss employer. She spends 5 months in the United Kingdom (not as a cross-border commuter, as she does not commute daily). Income earned while physically working in the UK is in principle taxable there (place-of-work principle; DTT CH-UK, Art. 15). Switzerland retains the right to tax work performed in Switzerland. Her Swiss employer also checks whether her regular presence in the UK has inadvertently created a permanent establishment. Note: The Federal Act on the Taxation of Telework applies only to the five neighbouring states, not to the United Kingdom.

Example 3: Classic Cross-Border Commuter Germany–Switzerland

A German engineer lives in Constance and works four days a week in Zurich and one day a week from home in Constance. He returns to his German place of residence each day and has not stayed overnight more than 60 working days per year (non-return days). Taxing rights lie principally in Germany. Switzerland levies a withholding tax limited to 4.5%, which is credited against German income tax. The home office day in Constance does not constitute a non-return day and does not jeopardise cross-border commuter status. He needs the certificate of residence (Gre-1) from the German tax authority. New from 1.1.2026: The revised DTT CH-DE (signed 21.8.2023, in force from 27.11.2025) is to be observed.

Example 4: Expat with Multiple Residences

A manager has both an apartment in Geneva and one in Singapore, spending approximately 5 months in each country. The tie-breaker clause of the DTT CH-SG first examines where she has a permanent home (both). Then: where is her centre of vital interests? The decisive factors are where family, social environment, and main economic activity are located. The outcome determines which state may tax her worldwide income. The other state taxes only source income.

Common Mistakes and Tips

Common Mistakes

• No documentation of working days: Day-accurate records (working days per country, travel days, home office days) are the basis of every correct tax return — and in a dispute, the only available evidence.
• Assuming "only the state of residence taxes": The place-of-work principle is the standard under the OECD Model; the state of residence retains taxation rights primarily for short stays abroad (183-day exception).
• 183-day rule applied too simplistically: Whether calendar year or tax year, whether days of presence or working days — this depends on the applicable DTT and must be examined individually.
• Confusing social insurance and tax: Different quotas and rules, different authorities, different deadlines. Both aspects must be clarified independently of each other.
• DTT not checked: Switzerland does not have a DTT with every country. Without a DTT, stricter rules apply and genuine double taxation is possible.
• Permanent establishment risk ignored: Permanent remote work from abroad can trigger tax and compliance obligations for the employer in the foreign country.

Tips for Mobile Expats

• Keep a working-day calendar: For each country, each month: office days, home office days, travel days, vacation and sick days. Daily — not from memory in March.
• Clarify before starting work abroad: Which country has the taxation right? Is there a DTT? Does a cross-border commuter rule apply? Which social insurance quotas apply?
• Inform the employer: Many tax and social insurance obligations fall primarily on the employer (withholding tax deduction, A1 certificate, reporting obligations). Transparency protects both parties.
• Apply for the certificate of residence in good time: For cross-border commuters (especially Germany), this certificate is a prerequisite for the reduced withholding tax. Without it, the full cantonal rate applies.
• Seek professional advice early: For assignments, dual residence, or a significant portion of income from abroad, a tax adviser with international expertise is indispensable.

Conclusion

Mobile expats working in multiple countries must act simultaneously on three levels: establish tax residence, allocate income correctly, and apply DTT rules accurately. Added to this since 2025 is the new Federal Act on the Taxation of Telework, which regulates home office activities for cross-border commuters in new ways, as well as the 49.9% rule in social insurance law. Consistent documentation of all working days, proactive communication with the employer, and early tax advice are not a luxury — they are the only effective protection against double taxation, back payments, and legal risk.