Switzerland: Employees working abroad | KPMG | GLOBAL

Switzerland: Employees working abroad, potential permanent establishment

Switzerland: Employees working abroad

Swiss companies that send employees abroad need to be aware whether this could constitute a “permanent establishment” or a fixed place of business.


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Whether or not there is a permanent establishment depends on the specific facts and circumstances. Typically, one of the following two scenarios applies:

  • An employee is sent abroad and is still employed by the Swiss company. The costs are not recharged to the foreign entity. The employee still reports to his/her Swiss employer.
  • An employee is sent abroad and the foreign company becomes his/her employer or the costs are recharged to the foreign entity. The employee reports to the foreign entity.

The latter generally would not constitute a permanent establishment if the host country follows the approach of the OECD Model Tax Convention on Income and on Capital. With regard to the recharge of costs, it needs to be determined that such recharge meets the arm’s length principle.

If the employee remains employed by the Swiss company, the costs are not recharged to the foreign entity, and the employee keeps reporting to the Swiss employer, then the situation needs to be analyzed whether the activities abroad constitute a permanent establishment.


Read an October 2015 blog posting by the KPMG member firm in Switzerland: Sending employees abroad – what you need to know

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