TAX
Home office management – what are the tax risks?

The answer depends on the circumstances, but yes, there are tax risks!

HOME-OFFICE DE LA DIRECTION – QUELS RISQUES FISCAUX?

Teleworking is unlikely to stop with the end of the pandemic, especially as it looks very attractive, at least in part, to many people. The growth of managers working constantly in a location other than the head office is leading the tax authorities to review the corporate tax system.

Indeed, a corporation pays direct federal tax and cantonal and communal tax on profit and capital at the place where it has its registered office, but there are exceptions and additions. Firstly, the place of effective management can substitute the place of the company’s seat, which is very important at the international level, knowing also that most international conventions provide for the primacy of the effective management. Thus, for a sole director of a French company working and residing mainly in Switzerland, the place of taxation is very likely to be Switzerland and not France.

It must be noted that in the case of several places of effective management, the most important place is the one that is decisive. Thus, if one of the directors constantly works in a place other than that of the company’s headquarters, there is also a risk that the permanent establishment will be recognised at this place of work, in which case the company will pay its taxes partly in the public authority concerned.

At the international level, these facts lead not only to surprises on the part of the Swiss tax authorities, but also to problems of regularisation of foreign taxes which may have already been entered into force and can no longer be reviewed except by applying the long, costly and difficult international mutual agreement procedure. At the inter-cantonal level, even taxes that have already come into force can be reviewed within 30 days of the decision of the last canton, when several cantons at the same time are competent to tax the taxpayer. In both cases, it would be desirable to obtain a prior decision from the authorities concerned in order to make the situation clear and predictable.