Switzerland extends professional services deal with the UK

Switzerland and the UK have extended a deal that allows professionals special access to each other's markets until the end of 2025.

A person working on a laptop.
A person working on a laptop. Photo by Christin Hume on Unsplash

Under the deal, Swiss and British service providers are given easier access to each others’ markets. 

“The Services Mobility Agreement (SMA) maintains ease of access for service providers following the end of the free movement of persons between Switzerland and the UK with the latter’s withdrawal from the EU,” said a statement from the economic department at the Swiss Federal Council.

The deal “regulates market access and temporary stay for service providers such as business consultants, IT experts and engineers”, said the Council, adding that it “meets a need” in the Swiss economy. 

The temporary agreement, which came into force on January 1st 2021, is to be extended until the end of 2025. 

Under the deal, Switzerland grants UK professionals seeking to provide a service in Switzerland access for a maximum period of 90 days per calendar year.

READ ALSO: EXPLAINED – What is Switzerland’s deal with the EU?

According to the Swiss Federal Council, more than 4,000 British suppliers have used the 90-day market access option to provide services in the Swiss market since 2021.

The deal also gives Swiss exporters “preferential access” to the UK market in over 30 service sectors, according to the Swiss Federal Council. 

In many sectors, service providers no longer need to prove they hold a university degree or have experience in order to be admitted to the UK market.

Meanwhile, some Swiss higher vocational education and training qualifications are now recognised by the UK as equivalent to a university degree. The UK has also simplified some of the procedures for obtaining a business visa.

According to the British government, Switzerland is the UK’s “sixth largest export market for services, worth over £12 billion in exports last year”.

In a statement the UK government said the deal provided certainty for firms in both countries. 

“Moving skilled people between countries is vital to services exports, facilitating the delivery of projects and face to face conversations that help to win new clients and get deals done,” said the UK government in a statement.

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EXPLAINED: The rules that cross-border workers shouldn’t break in Switzerland

There are a number of restrictions imposed on G-permit holders — people who are working in Switzerland but living in neighbouring countries.

EXPLAINED: The rules that cross-border workers shouldn't break in Switzerland

Who are the Swiss cross-border workers?

Cross-border commuters are, according to the State Secretariat for Migration (SEM) “foreign nationals who are resident in a foreign border zone and are gainfully employed within the neighbouring border zone of Switzerland”.

SEM defines the term “border zone” as the countries with which Switzerland shares a border — that is, France, Italy, Germany, and Austria.

The 360,000 G-permit holders who cross the border into Switzerland each day are subject to certain restrictions that the other 1.718 million foreign nationals residing permanently in Switzerland under C, B, or L permits are not.

These are some of the rules pertaining specifically to cross-border commuters.

Restrictions concern the use of vehicles

For instance, under the current rules, cross-border commuters are allowed to drive to and from jobs in their vehicles registered abroad, but they can’t use their personal cars for professional reasons.

Instead, they must use a vehicle provided by their Swiss employer.

However, a parliamentary motion, supported by the Federal Council, calls for changes to this regulation, arguing that it limits employment opportunities for certain workers.

This is the case, for instance, in the cleaning sector, where it is customary for employees to go to the place of work directly from home, bringing the necessary material with them.

However, “due to the regulations in force, this way of proceeding is not allowed for cross-border commuters,” according to MP Martin Schmid, who filed the motion now being debated in the parliament.

By the same token, if you receive a company car registered in Switzerland from your Swiss employer, you can use it only to commute to work and back, as well as for professional activities. 

However, EU customs regulations prohibit private use of the Swiss company car in your EU home country.

But that’s not all: if you live in an EU state, never borrow cars registered in Switzerland and drive them abroad. That is because EU residents are banned from driving a Swiss car in an EU country — unless the Swiss owner of the car is sitting next to you and can vouch that this is their vehicle and you are just driving it on their behalf.

Residence rules

There are other restrictions imposed on G-permit holders as well, mostly concerning residence rights.

For instance, cross-border commuters must return to their main place of residence abroad — if not each day, then at least once a week.

While a person with a G permit can’t purchase Swiss property to be used as their main residence (since they don’t have a permanent resident status), they are allowed to  buy a secondary residence, but only in the vicinity of their Swiss employer.

This means that, if, for instance, you live in the Haute-Savoie region of France and work in Geneva or Vaud, you can’t buy a house 230 km away in Zermatt.

Also, while you are allowed to own this property, you can’t rent it out.

READ MORE: EXPLAINED: Who can work in Switzerland but live in a neighbouring country

Be aware of taxes

Cross-border workers should be aware of tax rules so they don’t inadvertently break them. The specific rules all depend on which country employees are travelling from. 

For instance, there’s an agreement between Switzerland and France, Italy, and Germany authorises cantons to subtract withholding tax (also known as taxation at source) from cross-border workers’ wages.

This system is different from the one used by resident workers, who declare their income and pay taxes in monthly instalments throughout the year.

The taxes that cross-border workers pay in Switzerland are deducted from their tax liability in their country of residence.

To determine the withholding tax rate, the total gross income from all employment, including supplementary earnings such as benefits from invalidity or accident insurance, are calculated. 

Employers then forward the levied amounts to cantonal tax authorities. 

READ MORE: What cross-border workers should know about taxation in Switzerland