I normally don’t write about legislative consultations. In this case, however, it is a piece of the puzzle that needs to be added to the overall need for action. The consultation concerns the Federal Act on the International Automatic Exchange of Information on Salary Data (AIALG), which is to be completed by 27 September 2024 and should enter into force on 1 January 2026 (in German). https://www.fedlex.admin.ch/filestore/fedlex.data.admin.ch/eli/dl/proj/2024/22/cons_1/doc_1/de/pdf-a/fedlex-data-admin-ch-eli-dl-proj-2024-22-cons_1-doc_1-de-pdf-a.pdf
The proposed legislation includes provisions for both the authorities and employers.
In various blogs, I have reported on the annual returns that companies must submit to the relevant tax authorities.
- Employers in the cantons of Grisons, Ticino and Valais will have to submit the first annual return at the beginning of 2025 for the calendar year 2024 for all employees residing in Italy who do not have the status of an old genuine cross-border commuter.
- Employers in all cantons of Switzerland must report information to the competent tax authorities for the first time at the beginning of 2026 for the 2025 calendar year for all employees resident in France (exceptions in the public sector).
The cantons can specify the form in which and the deadline within which the information must be transmitted to them.
The AIALG stipulates that companies must archive the documents relating to the declaration for ten years. Employers are required to have this information available for any queries from the tax authorities. This is equivalent to the ten-year retention period for business records in accordance with Art. 958f of the Swiss Code of Obligations.
In addition, employers are obliged to inform their employees (see below – free translation from German).
Art. 9 Duty to provide information to employees
Employers must inform the employees concerned at the beginning of the employment relationship or at the latest on 28 February of the year in which information concerning them is transmitted to a partner state for the first time:
a. the applicable contract and its content, in particular the information to be exchanged on the basis of this contract;
b. the partner state to which the information is transmitted;
c. the authorised use of the information based on the applicable contract;
d. the rights of the employees concerned in accordance with the Data Protection Act of 25 September 2020 (DPA) and this Act.
How can a company implement this in practice? The best way is to include the obligation to provide information in the HR regulations, which are an integral part of the employment contract. A section on the exchange of information with Italy and France could be added.
In connection with the legally required exchange of information with Italy, the following information is transmitted annually to the cantonal tax authorities in accordance with the agreement of 23 December 2020 (cross-border commuters agreement) :
a) Surname, first names, date of birth and home address of the cross-border commuter;
b) for cross-border commuters resident in Switzerland, the place of origin; for cross-border commuters resident in Italy, the place of birth;
c) the tax number assigned to the cross-border commuter by the country of residence;
d) the gross amount of salaries, wages and similar remuneration received by the cross-border commuter;
e) the amount of compulsory social security contributions paid by the cross-border commuter;
f) the total amount of withholding tax levied on the cross-border commuter’s salaries, wages and similar remuneration;
g) Name, address and tax number of the employer.
In connection with the legally required exchange of information with France in accordance with the supplementary agreement of 27 June 2023 (supplementary agreement on teleworking), the following information is transmitted annually to the cantonal tax authorities
a) Surname(s) and first name(s) of the person, date of birth, postcode of the place of residence and, if available, other details that facilitate the identification of the person (address, place of birth, marital status, tax number);
b) Calendar year in which the income was earned;
c) Number of teleworking days or teleworking rate in per cent;
d) Total amount of gross remuneration paid.
In addition, employees domiciled in France have the option of requesting a detailed certificate with the relevant information on employment in accordance with Art. 127 para. 3 DBG if they leave the company during the year.
Employees must also actively participate in obtaining the necessary data so that the employer can fulfil its obligations to the tax authorities. (Possibly reference to an instruction explaining what information must be recorded by the employee to the employer, e.g. on a monthly basis).
To collect the data for France, various detailed information must be available, as described in the blog https://www.zulaufgmbh.ch/en/reporting-for-all-companies-in-switzerland-for-employees-resident-in-france-be-prepared-in-advance/, which enables the employer to fulfil its reporting obligation).
It would also be advisable to proactively inform the employees concerned again prior to the first submission to the tax authorities.
Companies should generally consider where they hold the data to be transmitted or transmitted data in order to fulfil their obligations under the Data Protection Act.
- Assertion of the right to information in accordance with Art. 25 Federal Act on Data Protection.
The employer or the Federal Tax Administration must inform the employees concerned within 30 days of all available data to be processed about them as such, the purpose of processing, the retention period of the data, the available information on the origin of the data and the recipients of the data. There is also a right to information from the cantonal authorities in accordance with cantonal regulations. - Assertion of the correction of incorrect data in accordance with Art. 32 para. 1 Federal Act on Data Protection
The following penalties are provided for if the employer intentionally or negligently fails to submit the necessary information to the competent tax authorities despite a reminder.
The fine is up to 1,000 francs, in serious cases or in the event of a repeat offence up to 10,000 francs.
The following process steps must be taken into account:
- Employers should instruct their employees to regularly record the necessary data and make it available to the employer in a defined form.
- The employer regularly checks the plausibility of the information provided by its employees.
- The employer summarises the (monthly) detailed data for the annual submission to the tax authorities.
- The employer transmits the required data for the employees specified by law to the responsible canton (in accordance with the canton’s specified form)
- The employer informs the employees concerned which specific data is/was transmitted to the tax authorities.
- The employer archives this data for possible information to the tax authorities.
- The employer organises itself in order to comply with the requirements of the FADP.
According to various feedbacks, it must be assumed that not all companies have yet taken comprehensive measures for the correct collection of data. Particularly in connection with France, data transmission is planned even if no teleworking was granted. In France and third countries, travelling days must be included. In this case, the teleworking rate is not automatically zero per cent.
The next seminar with reference to France will take place on 2 July 2024 in German
and the next seminar with reference to Italy is scheduled for 10 September 2024 in German
