Factsheet 8

2.1 Management executives

Management executives are normally members of the manage- ment board or similar management bodies and officers of equiva- lent seniority. The person posted must also work in a manage- ment position with the Swiss company.

2.2 Specialists

Specialists in terms of these guidelines are employees who as a result of their special professional qualifications are likely to be deployed in different countries around the world (primarily infor- mation technology and telecommunications specialists).

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2.3 Posting by a foreign employer

Being posted by a foreign employer means that the contract of employment with the foreign employer continues to apply during the posting. A posting also arises within a group of companies if the employee posted is given a local contract of employment by the Swiss group company or permanent estab- lishment and there is an agreement on reappointment with the foreign company in its group that has made the posting.

2.4 Temporary employment

“Temporarily” means a period of employment limited to a maxi- mum of five years. Expatriate status ceases to apply earlier if a contract of employment is concluded with the Swiss company for an unlimited period.

3 General professional expenses

The general provisions on the deduction of professional expenses (Professional Expenses Ordinance)3 also apply to expatriates. All expenses that are required and personally incurred in order to carry out the profession and earn an income can therefore be claimed.4

4 Special professional expenses5

Special professional expenses for expatriates are those costs that are incurred in direct connection with the timelimited activi- ty in Switzerland and the contemporaneous relationship with the foreign country of residence or of origin and which cannot reasonably be avoided. The question of which spe- cial professional expenses expatriates can additionally claim de- pends on their tax domicile during the posting.

4.1 Expatriates domiciled abroad for tax purposes

The following may be claimed:

• the costs required to travel between the foreign domicile and Switzerland;

• reasonable living expenses in Switzerland while perman- ently retaining a dwelling abroad for personal use; retention of the foreign dwelling must be proved by providing relevant documents (lease, confirmation of place of residence, etc.).

4.2 Expatriates domiciled in Switzerland

for tax purposes The following may be claimed:

• the costs incurred in moving to Switzerland and back to the previous foreign country of residence;

• the costs incurred to travel to and from Switzerland by the expatriate and his or her family at the start and the end of the posting;

• reasonable living expenses in Switzerland while per- manently retaining a dwelling abroad for personal use; reten- tion of the foreign dwelling must be proved by providing relevant documents (lease, confirmation of place of residence,

etc.);

• the costs of schooling any minor children who speak a fo- reign language in a foreign language private school, unless schooling is offered in the child’s mother tongue at public schools at the place of residence. School costs do not include meals, transport and childcare costs before and after school hours.

4.3 Non-deductible costs6

The following in particular may not be claimed:

• the costs of permanently retaining a dwelling abroad. These costs have no direct connection with the temporary employ- ment in Switzerland. They are incurred irrespective of whether the expatriate works in Switzerland or not and are therefore non-deductible;

• the outlays for the furnishing the dwelling and the cost of utili- ties in Switzerland;

• additional expenses due to the higher cost of living or the high- er tax burden in Switzerland;

• the costs of obtaining legal or tax advice.

If the employer pays compensation or allowances to cover these expenses, these payments are added to the gross salary.

6 Art. 3 ExpatO 7

5.1 Claiming special professional expenses

when tax is deducted at source If the expatriate’s employer refunds the special professional expenses specified in Section 4 of this factsheet against re- ceipt, no tax is deducted at source in respect of these payments. The employer must retain the original receipts.

If the expatriate’s employer does not refund the special profes- sional expenses specified in Section 4 of this factsheet, the em- ployer should reduce the taxable monthly salary by CHF 1 500.– and deduct tax at source from the remaining amount. This monthly allowance may only be deducted if the expatriate retains his or her dwelling abroad for personal use and has provided the employer with proof of retention of the foreign dwelling.

If the expatriate employer refunds the special professional ex- penses specified in Section 4 of this factsheet by paying a monthly flat-rate amount, this flat-rate amount is deemed to be part of the taxable monthly salary. The employer should redu- ce the taxable monthly salary by CHF 1 500.– and deduct tax at source from the remaining amount. This monthly reduction may only be made if the expatriate retains his or her dwelling abroad for personal use and has provided the employer with proof of re- tention of the foreign dwelling.

5.2 Special professional expenses that could not be

claimed when tax was deducted at source

Expatriates domiciled abroad for tax purposes If the employer has not refunded all the proven expenses to the expatriate or if the expenses paid by the expatriate exceed the monthly allowance of CHF 1 500.–, the expatriate may apply for a retrospective ordinary assessment (ROA) by the end of March of the following year if he or she meets the requirements for quasi-residence (Art. 99a DFTA, Art. 114b TaxA10). The request for an ROA should be sent to the following address: Steuerver- waltung des Kantons Bern, Quellensteuer, Postfach, 3001 Bern. No interest is paid on any excess tax deducted at source that is refunded.

Expatriates domiciled in Switzerland for tax purposes If the employer has not refunded all the proven expenses to the expatriate or if the expenses paid by the expatriate exceed the monthly allowance of CHF 1 500.–, in principle these expenses may be claimed under the ROA procedure11 (Art. 89 and 89a DFTA, 114a and 114b TaxA). The costs of attending a foreign lan-

5.3 Special professional expenses incurred by

expatriates without deduction of tax at source Expatriates who are not required to pay tax at source, but who are taxed under the ordinary procedure may claim their special pro- fessional expenses in their ordinary annual tax return.

Where expatriates have themselves paid the travel and relocation costs as well as the accommodation and living expenses speci- fied in Section 4 of this factsheet, unless their employer has refun- ded these expenses, they can deduct a flat-rate allowance of CHF 1 500.– per month from their gross earnings in the tax return. The deduction of CHF 1 500.– per month in the tax return is also permitted if the expatriate’s employer has refunded the special professional expenses in the form of a flat-rate amount that has been added to the gross taxable salary in the annual salary certi- ficate. The deduction of CHF 1 500.– may only be made if the ex- patriate can provide the relevant documents (lease, confirmation of place of residence, etc.) to prove he or she has retained the foreign dwelling.