<h3>Important clarification regarding Juso inheritance tax initiative</h3>
<p>The Young Socialists party has submitted an initiative to introduce a Federal inheritance tax. The initiative will be put to the vote in 2026 at the earliest. The tax demanded by the initiators is an inheritance tax of 50%, with a tax-free amount of CHF 50 million being applied. The tax revenue would have to be used to combat the climate crisis.</p>
<p>Although polls show that the chances of the initiative being accepted are negligible, it has caused a certain amount of uncertainty among the taxpayers concerned. The reason for this is the measures demanded by the initiators to prevent tax avoidance through relocation.</p>
<p>In interpellation 24.3763 submitted on June 14, 2024, National Councillor Schneeberger called on the Federal Council to clarify which specific measures are being considered to prevent tax avoidance in order to quickly clarify the potential implementation of the initiative.</p>
<p>In its response published today, the Federal Council states that it considers the retroactive taxation of estates and gifts demanded by the initiators to be highly problematic in terms of Government policy. It also makes it clear that it will comment in detail on the interpretation of the popular initiative and its possible implementation in the event of its adoption in the dispatch by the beginning of February 2025 at the latest.</p>
<p>The Federal Council has now already announced that the implementation must in any case comply with international law and the Constitution. An exit tax is therefore out of the question. The relocation of a person abroad cannot simply be qualified as tax avoidance and sanctioned with tax consequences. At best, a retroactive right of taxation would be conceivable in the case of a gift made shortly after moving away. However, the Federal Council emphasizes that Switzerland would not be able to enforce such taxation abroad.</p>
<p>The Federal Council also states that the introduction of tax avoidance measures must always comply with constitutional and international law requirements and, in particular, the principle of proportionality.<br />
According to the Federal Council, it is also questionable whether a retroactive entry into force of the inheritance and gift tax would also apply to the required measures for tax avoidance if the initiative was accepted.</p>
<p>The Federal Council&#8217;s response makes it clear that a precautionary departure from Switzerland before the day of the vote is not necessary. Even in the unlikely event that the initiative was accepted, it would still be possible to leave Switzerland after the day of the vote without incurring the inheritance tax demanded by the Juso.</p>
<p>With its response to the Schneeberger interpellation, the Federal Council has provided clarity on this issue, which is extremely gratifying. It has thus sent an unmistakable signal that it is not necessary to leave Switzerland before the voting day.</p>
<p>In view of the Federal Council&#8217;s clear response, we do not consider it necessary for taxpayers to plan to leave Switzerland at this stage. According to current polls, the initiative has no chance. If, contrary to expectations, the initiative was accepted, it would still be possible to leave Switzerland after the day of the vote without any negative tax consequences. However, we recommend reviewing the situation again in February after publication of the message.</p>


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Federal Council rejects exit tax

Strengthening Zurich's Favorable Tax Treatment of Charitable Foundations

<h3>1. Introduction</h3>
<p>The global COVID-19 pandemic has given a real boost to remote working and, in particular, to  the working from home model. Even though the pandemic is slowly coming to an end,  working from home has remained and become an integral part of modern working life. When employees no longer work 100% on-site at the Swiss company, questions arise in cross-border situations regarding labor law, tax law and social security law.</p>
<p>On December 22, 2022, Switzerland and France enacted new agreements regarding the taxation of French residents employed by Swiss companies that work remotely and in particular work from home. On January 1, 2023, the new agreements came into force. Under the new agreements, French residents working for Swiss employers may work from home up to 40 percent of the time each calendar year without affecting their current tax status. The tax status of employees still varies from canton to canton.</p>
<p>Working 40 percent of the time in France does not currently subject workers to French social security obligations, however, because of temporary EU accommodations in place until June 30, 2023 to account for remote work.</p>
<p>The new  work-from-home agreements update the tax regulations in light of the increase in remote working.</p>
<h3>2. Tax and Social Security Regime relating to Home Office for French Residents</h3>
<p>Generally, whether income from employment French resident cross-border commuters earn from their Swiss employer is subject to Swiss wage tax withholding depends on the canton in which the employer is situated.</p>
<p>As a result of the agreements entered into between Switzerland and France on December 22, 2022, which apply since January 1, 2023, employers need to take an additional factor into consideration when determining the applicable tax rules. Namely, the deduction of Swiss wage tax withholding on such income depends on the worktime the employee spends working from home in France. In contrast to tax law, the employee&#8217;s social security status generally depends on whether the work is carried out in Switzerland or France and the work time spent in either of these states (the canton where the employer is situated is of no relevance).</p>
<h3>3. Income tax</h3>
<h4>3.1     Employers situated in the cantons of Bern, Solothurn, Basel-Stadt, Basel-Land, Vaud, Valais, Neuchâtel and Jura</h4>
<p>Income from employment earned by a French resident cross-border commuter who is employed by a Swiss employer situated in any of these eight Swiss cantons is not subject to Swiss wage tax withholding. Rather, such income may only be taxed by France i.e. the country of residence of the employee. France compensates Switzerland financially with 4.5% of the total annual gross remuneration earned by the French cross-border workers.</p>
<p>Pursuant to the agreement signed by Switzerland and France on December 22, 2022, French workers commuting daily between France and these eight Swiss cantons can perform up to 40% of their work from their French home without jeopardizing their cross-border status or impacting the right of France to tax their income. The 40% of work conducted in their French home office is computed on an annual basis (January to December).</p>
<p>Without this new agreement, cross-border workers working from their French home office would have lost their cross-border worker status for tax purposes and would, as a rule, have been taxed on their employment income at their place of work in Switzerland and become subject to Swiss wage tax withholding. If they worked in both Switzerland (e.g. 60%) and France (e.g. 40%), Switzerland would have, generally speaking, levied withholding taxes on the part of the income for work physically conducted in Switzerland (e.g. on 60%).</p>
<h4>3.2       Employers situated in other Swiss cantons</h4>
<p>Income from employment earned by a French resident cross-border commuter who is employed by a Swiss employer situated in any Swiss canton with the exception of one of the eight cantons listed in 4.1. above is subject to Swiss wage tax withholding to the extent that the employment is physically conducted in Switzerland and the respective canton, respectively. Generally, a French resident border commuter who physically conducts 40% of the employment in France and the other 60% in Switzerland is subject to Swiss wage tax withholding on 60% of the employment income.</p>
<p>Pursuant to the new agreement signed by Switzerland and France on December 22, 2022, cross-border commuters between France and any Swiss canton with the exception of one of the eight cantons, can perform up to 40% of their work from their French home without jeopardizing their cross-border status, nor impacting the right of Switzerland to tax 100% or their employment income (i.e. the employee is deemed to perform 100% of the work physically in Switzerland). Similar to the agreement reached with respect to the eight Swiss cantons, the 40% of work conducted in the French home office is computed on an annual basis (January to December).</p>
<h3>4. Social security</h3>
<p>Generally, an EU or EFTA (or Swiss) national who is a resident of France and who is employed by a Swiss employer and who normally pursues employment in Switzerland and France is subject to the Swiss social security system, unless the employee pursues at least 25% of the employment in France. Therefore, an employee who pursues 40% of the employment in the French home office and 60% on site at the company in Switzerland is subject to the French social security system on 100% of the income.</p>
<p>Taking into account that telework has now become established throughout Europe, the members of the EU Administrative Commission for the Coordination of National Social Security Systems agreed on June 14, 2022 to extend the flexible application of the rules on the coordination of social security introduced during the covid pandemic during a transitional phase until December 31, 2022. This deadline was extended again in mid-November until June 30, 2023. The flexible application of the subordination rules is also extended accordingly within the framework of the agreement on the free movement of persons with the EU and the EFTA Convention and applies to Switzerland.</p>
<p>Consequently, until June 30, 2023, a French cross-border worker conducting work in the French home office continues to be subject to the Swiss social security legislation in respect of 100% of the employment income, even if the employee carries out the activity from the French home office of more than 25% of the employment. It may be that, following the expiration of the special regulation on June 30, 2023, the coordination rules will be set or interpreted such that telework exceeding the 25% threshold may be carried out in France without changing the authority of Switzerland to impose social charges, i.e. the French home office worker would continue to be insured in the Swiss social security system.</p>
<h3>5. Employment Law: Working from Home and Equal Treatment</h3>
<p>In light of the above mentioned new agreement between Switzerland and France, and the tax and social security regulations that apply to French-resident employees, Swiss employers may want to treat French-resident cross-border workers differently from Swiss-resident employees regarding home office. The different treatment should assist in avoiding avoid additional administrative burden and financial risks for the employer. The question arises as to whether such unequal treatment is legally permissible.</p>
<p>Under Swiss employment law there is a general obligation to treat all employees equally (<em>see </em>art. 328 Swiss Code of Obligations). However, treating French-resident employees differently from Swiss-resident employees for purposes of working from home does not violate the principle of equal treatment provided (i) that the unequal treatment is objectively reasonable and (ii) the unequal treatment complies with mandatory employment and public labor laws, such as the Equal Treatment Act (<em>Gleichstellungsgesetz</em>). The different legal framework between French and Swiss residents may constitute such an objective reason for unequal treatment of employees. Accordingly, French-resident employees might only be permitted to work less than 25 percent of the time from home (or 40 percent during the temporary extension of the COVID-19 -regime until June 30, 2023), whereas Swiss-resident employees are permitted to work more or all of the time from home. It would also be justifiable in our view to prohibit French-resident employees working from home entirely to avoid any administrative and financial risk. Additionally, and also acceptable from the perspective of equal treatment, it is also possible for the employer to conclude individual agreements with the employees regarding home office (e.g. by means of an addendum to the employment contract).</p>


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New Cross-Border Regulations With France for Work From Home

Private Clients

Citywealth IFC Awards 2024

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<p>Yesterday, Claudia Suter was honored as «Lawyer of the Year &#8211; Switzerland» at the Citywealth IFC Awards in London.</p>
<p>The Citywealth IFC Awards aim to highlight excellent work of advisors in the private wealth sector based in major finance centers worldwide. A total of 36 awards were announced – the winners having been judged by an international panel of highly respected practitioners from all relevant sectors.</p>


Homburger partner Claudia Suter honored as Lawyer of the Year – Switzerland by Citywealth

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Corporate Governance

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<p>Today, Lexology announced the winners of this year’s Client Choice Awards.</p>
<p>For the second year in a row, Claudia Suter and Andreas Müller were honored with Lexology Client Choice Awards. Claudia Suter received the «Private Client in Switzerland Zurich» Award and Andreas Müller the «M&amp;A and Governance in Switzerland Zurich» Award.</p>
<p>Established in 2005, Lexology Client Choice recognizes those individuals around the world that stand apart for the excellent client care they provide and the quality of their service. The criteria for this recognition focus on an ability to add real value to clients’ business above and beyond the other players in the market.</p>


Homburger partners Claudia Suter and Andreas Müller honored with Lexology Client Choice Awards

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<p>On October 4, 2023, Homburger associate Tobias Kaufmann was selected as one of Citywealth&#8217;s Next Gen Top 40 under 40 IFC 2023. Tobias Kaufmann is a member of Homburger&#8217;s Private Clients and Tax teams.</p>
<p>Citywealth&#8217;s Next Gen Top 40 under 40 reveals a curated list of talented individuals across the private wealth industry who have been recognized for excellence. They not only perform at the highest level in their work and with clients but they give back to society through charity work and team endeavors. The list was compiled over several months of research by the Citywealth team and by applications to Citywealth.</p>


Homburger associate Tobias Kaufmann has been listed in Citywealth's Next Gen Top 40 under 40 IFC 2023

<p>We use our expert knowledge and vast experience to provide comprehensive advice to families, private individuals, entrepreneurs and companies on all legal and tax aspects related to:</p>
<ul>
<li>Cross-border structuring of wealth</li>
<li>Estate planning and asset protection</li>
<li>Testamentary wills and inheritance agreements</li>
<li>Pre-nuptial and post-nuptial agreements</li>
<li>Family constitutions and family governance</li>
<li>Execution of wills and estate management</li>
<li>Contentious estates</li>
<li>National and international tax advice, including inheritance tax and gift tax</li>
</ul>


Succession Planning / Wealth Protection

<p>We provide advice and support with international relocations to high net worth individuals and management employees. Our core competences include:</p>
<ul>
<li>Residence planning</li>
<li>Lump-sum taxation</li>
<li>Residence and work permits</li>
<li>Naturalization</li>
</ul>


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<p>We advise all types of foundations, including those with an entrepreneurial, charitable or mixed purpose, family foundations and trusts. We provide advice on all legal and tax issues that may arise. Our core competencies include:</p>
<ul>
<li>Establishment, dissolution and reorganization of foundations and trusts, including underlying assets</li>
<li>Charity and venture philanthropy</li>
<li>Tax planning</li>
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<p>We have comprehensive know-how in other legal fields, especially in connection with real estate, art, luxury goods, and sports. Our core competencies include:</p>
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<li>Real estate transactions (Lex Koller / Trusts)</li>
<li>Art collections and investments, cultural assets</li>
<li>Protection of children and adults</li>
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Federal Council rejects exit tax

Strengthening Zurich's Favorable Tax Treatment of Charitable Foundations

New Cross-Border Regulations With France for Work From Home

Homburger partner Claudia Suter honored as Lawyer of the Year – Switzerland by Citywealth

Homburger partners Claudia Suter and Andreas Müller honored with Lexology Client Choice Awards

Homburger associate Tobias Kaufmann has been listed in Citywealth's Next Gen Top 40 under 40 IFC 2023

Utilising trusts in Swiss divorces?

Regulation of state and supplementary pension schemes in Switzerland: overview 2018

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