Contractors' Questions: How to do a one-day job in Switzerland?

Contractor’s Question: I'm a UK resident and have been offered a one-day job in Switzerland. The Swiss agency which found the job for me is charging the client ‘withholding tax’ and then paying me the gross amount minus the withholding tax. Will I also be liable to pay income tax in the UK? What other issues, if any, should I be aware of?

Expert’s Answer: Even for your one day’s work, you’ll have to be sponsored by a registered, Swiss-based employer who obtains your work permit. But bear in mind residency and nationality are two different things. If you are a non-EEA national, your ability to obtain a work permit may be compromised by the Swiss authorities’ tough restrictions on who they are letting into Switzerland. 

Under Swiss law, your Swiss recruitment agency cannot also be your Swiss employer. Presumably this function is being outsourced by your agency to a Swiss-based third-party holding the necessary SECO licence to run your payroll and remit the net payment to you. 

Working in Switzerland, albeit for just one day, you are in the middle of a complex chain. Your Swiss client enters into a supplier agreement with your ‘employer’ -- the payroll company. It pays your employer who sets up a payroll for you and deducts due tax and social security before paying you the net amount. It also issues you an employment contract. Meanwhile, the recruitment agency has a side agreement with your employer to receive its due commission from the funds paid by your client to your employer.  

What is more straightforward is your UK tax position. You remain UK tax resident and liable for tax on your worldwide income, which includes the Swiss contract income. Include whatever you pay in Swiss tax on your annual UK self-assessment. It will be offset against your UK liability on that same Swiss income.

Before accepting the assignment, confirm the above protocols and obtain a written understanding of all commercial and statutory costs for which you will be liable. The sums may not add up and your net income retention expectations could be badly deflated. Good luck!

The expert was Mike Philips, a director at overseas contracting advisory its international.