Financial services firms can dramatically lower their spending with a sizable number of their staff working from home. The Swiss government is likely to pick up the slack, and tax shortfalls loom.

One of the most striking lessons of the coronavirus pandemic was that employees of banks and financial services firms adapted to working from home – and did so productively. This was an eye-opener not just for banks in Switzerland.

As financial firms globally weigh massive spending cuts to counter the economic crisis, a growing shift to working from home is taking hold. The move saves banks millions annually on office space and infrastructure.

Blurred Lines

UBS, for example, is open to as much as one-third of its nearly 70,000 staff could work from home at any given time, on a flexible rotation. The Swiss bank said the view is underpinned by its effectively providing service during the lockdown which saw 80 percent of its staff worldwide sent home to work.

The wealth manager isn't alone with this view: while it is too early for a conclusive judgment, the modern office clearly blurs the line between workplace and home. Potential savings are the focus for financial industry players, but the move also has fundamental implications for employees and for the government.

Hefty Deductions 

Swiss tax officials are following developments very closely, Patrick Teuscher, a spokesman for the Federal Tax Administration, told finews.com. No wonder: «Under certain conditions, costs that citizens shoulder due to working from home can be deducted as production costs,» he said. 

The FTA maintains an online tool to calculate how deductions would affect a tax bill. By spending several thousand Swiss francs on work-from-home arrangements, taxpayers could potentially benefit from hundreds in deductions (in German) – though other common deductions such as meals and travel expenses would fall away.

Rolling Over Costs?

If roughly one-third of all finance employees retreat to home-working arrangements, tax income could fall by a three-digit million figure. Bank employees would of course be required to provide confirmation of their working from home scheme from their employer.

UBS and other banks are coy about the design of their future workplace: labor contracts require revision and customary flat-rate expense accounts will come under review. Meanwhile, the arrangements will result in banks spending less – and likely booking higher profits.

A new pattern of business benefiting while rolling over its costs on the state? Teuscher, the tax official, said «We don't have any estimates on the effect of working from home on the Swiss government.»