Exemption rules cross-border commuter due to COVID

Unfortunately, the Corona pandemic continues to be omnipresent. Therefore, intergovernmental regulations have been extended again. This has an impact on the tax area also the social security regulations.

Social insurances

Liechtenstein and its neighboring states have agreed to extend the pandemic-related cross-border commuter regulation in the area of the settlement of social security benefits, in particular AHV, for employees in home offices.

Extension until June 30, 2022

For employees of companies who work in their home office during the ongoing COVID-19 pandemic and accordingly in their country of residence and not in the employer’s country, or who are prevented from performing their work due to the pandemic, this means in concrete terms that until the end of June 2022 the employee will continue to be covered by the social security in Liechtenstein or in the country in which the work is normally performed, irrespective of the time or percentage the employee works in the home office,

As a general rule, cross-border commuters who work more than 25 percent of their working hours in their country of residence cannot be insured in their employer’s country, but must be insured in their country of residence. Due to the pandemic, an exception to this principle has been made since March 2020.

After the pandemic has subsided, the basic regulation of the interstate treaties applies again, i.e. according to the EU Agreement on the Free Movement of Persons, the 25 percent rule applies. Liechtenstein cannot deviate unilaterally from this interstate treaty rule. The responsible EU bodies are examining whether, irrespective of the pandemic, relaxations for cross-border workers in the home office would be sensible. It is currently not possible to say whether and, if so, when an adjustment will be made. If the regulations are changed by the EU, such adjustments would typically be adopted in the EEA and would then also apply to Liechtenstein.

Economic support benefits such as pandemic-related short-time work compensation, hardship allowances or the COVID-19 daily allowance will also be extended in the Principality of Liechtenstein until the end of March 2022.

Tax regulations

The exemptions also continue to apply with the tax regulations. Switzerland and Germany, as well as Switzerland and France, are extending their derogations in the area, but in advance only until March 31, 2022. The derogation between Switzerland and Liechtenstein provides that it will remain in force until it is terminated by a contracting state. This has not happened so far.

The most important facts at a glance

  • Basically, anyone who de facto performs more than 25% of their work activity in their state of residence cannot be covered by social security in the employer state. Due to the COVID-19 pandemic and related measures, an exemption was introduced in March 2020.
  • The Principality of Liechtenstein as well as the other neighboring countries are now extending the exemptions in the area of social security until June 30, 2022.
  • In the area of taxation, Switzerland and Germany as well as Switzerland and France are also extending their corresponding derogation until March 31, 2022. The derogation between Switzerland and Liechtenstein will also remain in force until the agreement is terminated by one of the two contracting states.