3.3.2022

Deduction of professional expenses in times of Covid-19 - Update 2022

Most of the measures related to the Covid 19 pandemic were lifted by the Federal Council as of 17 February 2022. Despite this decision, the Covid-19 pandemic will probably continue to have an impact on our society and the world of work for some time to come, and in particular will continue to have an impact on the 2021 tax return.

The "home office" model proved its worth during the pandemic and is likely to be used increasingly in the future. The following article examines the effects of the "home office" on the deduction of professional expenses in the 2021 tax period. The focus is on the cantons of Central Switzerland (LU, NW, OW, UR, SZ and ZG).

Only the canton of Schwyz has updated its practice on the effects of the Covid-19 measures on income tax compared to 2020 for the 2021 tax period. For the cantons of Nidwalden, Obwalden, Lucerne, Zug and Uri, the tax practice for the 2020 tax period continues to apply(see blog post). Since the FTA has not issued a statement for the purposes of direct federal tax, the respective cantonal practice is authoritative.

The Federal Tax Administration (FTA) also published on 17.02.2022 a collection of links to the cantonal regulations in the context of the impact of the Covid-19 pandemic on professional expenses, in which you can find the relevant information for all Cantons.

The deductible professional costs are divided into travel costs, subsistence costs, work-related training costs and other professional costs. The tax authorities of the Cantons of Central Switzerland have determined in principle that professional expenses for the 2021 tax period can continue to be claimed either as a lump sum or effectively. In the case of the lump sum solution, the professional costs can be deducted as if they had been incurred without Covid 19 measures, which, however, excludes an additional, effective deduction for the study or IT equipment or other Covid-related additional costs. When claiming the deduction of the effective "home office" costs or other Covid-related additional costs, the days spent in the "home office" must also be taken into account for the deduction of travel and subsistence costs as well as for the flat-rate professional allowance. A combination of these two variants is not possible. 

The changes to the deductions for professional expenses and the reimbursement of expenses in the canton of Schwyz are shown below. Further information on the respective professional expense deductions and the cantonal practice of all the cantons of Central Switzerland can be found in our blog post dated 18.03.2021 "Berufskostenabzug in Zeiten von Covid-19".

Schwyz

According to the Schwyz tax administration, all professional expenses can still be claimed as if they had been incurred without Covid-19 measures.

However, in contrast to parts of the 2020 tax period, the use of public transport is considered appropriate by the Schwyz tax administration for the entire year 2021, provided there are no special circumstances (see blog article on professional expense deductions 2021). In this respect, with regard to the use of the private vehicle for the entire tax period 2021, the general requirements (in particular time savings of less than one hour compared to the use of public transport) must be fulfilled in principle for a deduction to be allowed in this respect.

The pecuniary benefit from the free use of the company car for the commute to work can also be reduced by the Covid-related "home office days". However, if the full travel costs and additional costs for meals away from home are claimed despite the "home office", the imputed income cannot be reduced accordingly.

Concluding remark

With regard to the 2021 tax period, the Cantons also offer a pragmatic solution for the professional expenses deductions for the pandemic that will last until 2022. The cantonal practice from the previous year 2020 was adopted and only slightly adjusted in the Canton of Schwyz.

The SSK also recently published an analysis of the effects of teleworking ("home office") on the intercantonal tax assessment of companies. This shows that the SSK interprets the requirement regarding the "home office" permanent establishment even more strictly than the prevailing doctrine. In principle, the SSK does not assume an intercantonal permanent establishment in this context for reasons of materiality, even if the employer compensates the use of private premises as a "home office". For the same reasons, the activity in the "home office" also has no effect on the place of actual administration. Overall, the SSK's analysis is a welcome guideline.

Learn more
Authors
:
Sara Wüst
Livio Bucher
Tags:
Covid-19
Individual Income Tax