How do double taxation agreements work for cross-border commuters?
June 10, 2022 | 60,00 EUR | answered by Helma Fischer
Dear tax advisor,
My name is Emma Klinger and I work as a cross-border commuter in Switzerland. I have been dealing with the topic of double taxation agreements for some time now and I am unsure if I understand everything correctly.
Currently, I am paying taxes in both Switzerland and Germany, as I have my residence in Germany but work in Switzerland. This results in a double taxation of my income, which is of course very burdensome.
I am worried that I will be financially disadvantaged by this double taxation and I am wondering if there are ways to avoid or at least minimize it. I have already researched some information on double taxation agreements, but I am still unsure how exactly they work for cross-border commuters and if I could benefit from them.
Could you please explain in detail how double taxation agreements work for cross-border commuters? Are there specific regulations that are relevant to me as a cross-border commuter and that I can use to avoid double taxation? What specific steps do I need to take to benefit from the double taxation agreements?
Thank you in advance for your help and support.
Sincerely,
Emma Klinger
Dear Mrs. Klinger,
Thank you for your inquiry regarding the double taxation agreement as a cross-border commuter in Switzerland. It is understandable that the double taxation of your income poses a great burden, therefore it is important that you familiarize yourself with the regulations regarding cross-border commuters.
Double Taxation Agreements (DTAs) are bilateral agreements between two countries that are intended to ensure that income is not taxed twice. In your case, as a cross-border commuter, you work in Switzerland but reside in Germany. The DTA between Switzerland and Germany determines which country has the right to tax your income.
In general, your income as a cross-border commuter in Switzerland is taxed there, as that is where you carry out your activities. In Germany, your worldwide income is taxed, but the taxes paid in Switzerland are credited to avoid double taxation. This is regulated through the application of the principles of residence and activity.
To benefit from the provisions of the DTA and avoid double taxation, you must take certain steps. First, you should ensure that you are correctly registered as a cross-border commuter and submit all necessary tax returns in both countries. Additionally, you should collect evidence of the taxes paid in Switzerland to claim them in your German tax return.
It is advisable to seek advice from an experienced tax advisor to ensure that you can take advantage of all the benefits of the DTA and avoid any taxation errors. A tax advisor can also help you review potential tax refunds and optimize your tax situation.
I hope this information is helpful to you and that you can minimize double taxation as a cross-border commuter. If you have any further questions or need individual advice, I am at your disposal.
Sincerely,
Helma Fischer
Tax Advisor
