Swiss rules on overtime – including compensation and time off in lieu – generally apply equally to employees living in Switzerland and to cross-border commuters. But what about the taxation of overtime hours when cross-border commuters work in Switzerland and live in France?
Cross-border commuters are subject to special tax rules. In this article, you will learn how your employees can benefit from partial or complete tax exemption when overtime is paid in accordance with legal requirements.
What is overtime?
Overtime is defined as any hour worked in excess of the weekly working hours agreed in the employment contract. However, only hours up to the statutory maximum working hours are taken into account. Anything above this is considered extra time.
The maximum working hours are:
a maximum of 45 hours per week in the industrial and service sectors, in technical professions or large retail companies
50 hours per week in all other sectors
Swiss legislation therefore makes a clear distinction between overtime and extra hours, particularly when it comes to compensation.
Overtime ordered by the company must meet the following conditions:
It must be necessary to protect the company or to ensure operational processes.
It must not endanger the physical and mental health of employees.
They must not violate the mandatory breaks stipulated in Swiss labour law.
Which cross-border commuters benefit from tax exemption?
France and Switzerland have a tax agreement that allows cross-border commuters to receive tax-free payment for their overtime. However, this only applies if the overtime is clearly documented and all legal requirements are met.
Cross-border commuters who work in Switzerland but pay tax on their income in France can benefit from this regulation if they are in full-time employment. The exemption applies to cross-border commuters who work in the border areas of the cantons of Bern, Solothurn, Basel-Stadt, Basel-Landschaft, Vaud, Valais, Neuchâtel and Jura specified in the agreement.
Tax exemption is also possible for part-time positions. Overtime is then simply calculated in proportion to the level of employment.
How many hours of overtime are tax-free for cross-border commuters?
Overtime exceeding 1,840 hours per year is tax-free, but only within the following limits:
maximum 368 hours per year (for part-time work in proportion to the workload)
maximum €7,500 tax-free
Example:
A cross-border commuter works a total of 2,200 hours in 2024. Her taxable net income before deduction of professional expenses is €66,000.
overtime: 2,200 − 1,840 = 360 hours (below the limit of 368 hours)
tax-free portion: 66,000 × (360 ÷ 2,200) = €7,500
Since the amount is capped at €7,500, €7,500 is tax-free.
remaining taxable income: 66,000 − 7,500 = €58,500
Good to know: The tax-free amount is based on the actual overtime worked (maximum 368 hours per year) and the corresponding income, and is capped at €7,500. In order for your employees from France to benefit from the tax exemption, overtime must be recorded accurately. This can only be verified with precise time tracking. Modern time tracking software provides you with monthly and annual evaluations – clear, transparent and legally compliant.
Would you also like to be on the safe side when it comes to home office for cross-border commuters? Our guide explains what you need to bear in mind with regard to taxes and social security contributions.
