According to a European ruling which entered into force in 2012, Swiss employers may find themselves paying French social charges on their employees’ salaries – backdated to 2012! Although in force since 2012, the French authorities have only recently started to enforce it by approaching Swiss employers with retro-active invoices. As French social charges are much higher than their Swiss equivalent, the difference could even threaten the going concern of the employers.
French social charges may be due on all the employee’s income if he/she lives in France and any of the following apply:
- The employee has another job in France alongside his/her Swiss job;
- The employee is receiving unemployment benefit in France at the same time as receiving a Swiss salary;
- The employee works at home for the Swiss employer at least 25% of the time.
French social charges would also be due by an independent worker living in France who works partly in France and partly in Switzerland.
The ramifications of this change in tactic by the French authorities are multiple and complex – Swiss employers may find themselves dealing henceforth with two different sets of rules, twice the bureaucracy and, especially, a much larger bill for its French-resident employees. In theory, the contributions paid to Swiss social institutions should be refunded however this development is still so recent that the details need still to be worked out.
In implementing this ruling, the French may well be shooting themselves in the foot. For one thing, Swiss employers will think long and hard about hiring a French resident, which will have a negative impact on regional unemployment.
Aware of the possible negative ramifications on both sides of the border, the Swiss authorities are attempting to renegotiate the ruling into something more reasonable and logical. But at present, an employer who receives a payment request from the French authorities does not have many options.
In order to reduce the risk of falling under this ruling, Swiss employers should:
- Find out if any of their employees are holding down another job across the border;
- If possible, implement an internal ruling prohibiting the employee from working for another employer;
- Limit “home-working” to less than 25% of the working week whenever possible.
Any employer who is contacted by the French authorities in this respect should take legal advice.
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