Are there differences in the taxation of cross-border commuters depending on their country of residence?
June 12, 2022 | 60,00 EUR | answered by Thomas Schottmann
Dear tax advisor,
my name is Wilhelm Sontheimer and I am a cross-border commuter who works in Germany but lives in Switzerland. Lately, I have been wondering if there are differences in the taxation of cross-border commuters depending on their country of residence. I am concerned that I may have to pay more taxes than I have assumed so far, as I have heard that the tax laws in Switzerland and Germany can be different.
Currently, I pay my taxes in Germany because I work there. However, I live in Switzerland and have heard that it might be more beneficial to pay my taxes there. I am not sure if I am in the right tax situation and if it would be advantageous for me to pay my taxes in Switzerland.
Could you please explain to me if there are indeed differences in the taxation of cross-border commuters depending on their country of residence? What are the tax implications for me as a cross-border commuter living in Switzerland and working in Germany? Are there possibly ways to optimize my tax situation and save taxes?
Thank you in advance for your help and support.
Sincerely,
Wilhelm Sontheimer
Dear Mr. Sontheimer,
Thank you for your inquiry regarding the taxation of cross-border commuters working in Germany and living in Switzerland. As an expert on this topic, I can assist you and explain the differences in taxation depending on the country of residence.
Generally, cross-border commuters are usually subject to taxation in their country of residence, in your case Switzerland. This means that you must file your income tax return in Switzerland and pay taxes on your income there. However, there may also be a risk of double taxation, as Germany has the right to tax income earned in Germany.
To avoid double taxation, there is a double taxation agreement between Germany and Switzerland. This agreement determines which country has the right to tax which income and how double taxation can be prevented. In most cases, the right to tax the salaries of cross-border commuters is granted to the country of residence.
It is important that you thoroughly understand the provisions of the double taxation agreement and consider consulting a tax advisor to ensure that you pay your taxes correctly. In some cases, it may actually be advantageous to pay taxes in the country of residence, as the tax rates and allowances there may be more favorable than in the country where you work.
To optimize your tax situation and save taxes, you should review all relevant tax aspects and make adjustments as necessary. This may include choosing the country of residence, optimizing deductible expenses, or taking advantage of tax benefits.
I strongly recommend consulting a tax advisor to analyze your individual tax situation and find the best solution for you. This is the only way to ensure that you do not pay more taxes than necessary.
I hope this information is helpful to you and I am available for further questions.
Sincerely,
Thomas Schottmann
