Quick ReadSince the COVID-19 pandemic, working from home has become established as a permanent way of working. The question of whether working from home in another canton or abroad constitutes a permanent establishment was already the subject of heated debate during the pandemic.
In 2022, with an eye toward the post-pandemic era, the Swiss Tax Conference (SSK) published an analysis that generally rejects the notion of intercantonal permanent establishments arising from working from home. This is primarily due to the company’s lack of control over the residence and the lack of quantitative significance. This analysis is based on the interpretation of previous Federal Supreme Court case law and is applied in practice by the cantonal tax administrations. The Federal Supreme Court has not since ruled on any case involving a modern (post-pandemic) home office permanent establishment, and the SSK analysis has not yet been critically examined in the literature. Although the SSK analysis explicitly does not apply to international situations, these principles are regularly applied to cross-border home office activities as well.
In late 2025, the OECD published an update to the Model Tax Convention and its accompanying commentary, which for the first time provides detailed rules on when a home office constitutes a permanent establishment. Central to this is the new concept of a deemed power of disposal by the company over the employee’s residence. It is not required that the company have legal control over the employee’s residence. However, if the employee spends more than 50% of their working hours during a year at their residence and there is a business reason for doing so, the power of control is deemed to exist.
Based on this OECD update and several years of experience with the work-from-home model, the article examines whether the tax authorities’ current practice regarding intercantonal and international work-from-home permanent establishments should be adjusted. In doing so, two weaknesses in the SSK’s reasoning and in official practice are identified.
On the one hand, the SSK takes the position regarding intercantonal home office permanent establishments that a company has no power of disposal over the residence, as it is neither the owner nor the tenant. The article concludes that, according to Federal Supreme Court case law, it is sufficient if the company actually makes the premises available for business purposes. Although the OECD update has no legal effect in intercantonal tax law, the OECD’s concept (duration, location) is viewed as a practical approach to presumptively construct this actual provision—as required by the Federal Supreme Court—even in an intercantonal context.
On the other hand, the article criticizes the SSK’s view that quantitative materiality cannot exist if there is only one person per residence. The authors argue that materiality must be assessed relative to the size of the company and that, therefore, even a single person can constitute a permanent establishment.
Based on these two weaknesses, an adjustment to the current practice regarding intercantonal home office permanent establishments is called for. However, this should continue to be carried out within the limits of the required prevention of fragmentation of the tax base.
The requested adjustment to practice regarding control over intercantonal permanent establishments should also apply to international permanent establishments. Even in international cases, the Federal Supreme Court does not impose high hurdles regarding control. Applying the general approach of the OECD update to international cases is even more appropriate than to intercantonal ones, as the Federal Supreme Court holds the view that the DBG concept of a permanent establishment is based on Article 5 of the OECD Model Tax Convention and that the OECD Model Commentary should therefore be consulted.
