How does the taxation of cross-border commuters work?
June 17, 2023 | 60,00 EUR | answered by Paula Bauer
Dear Mr. Tax Advisor,
I am Peter Germer and have been working as a cross-border commuter in Switzerland for some time now. So far, I have not been actively involved in tax matters as I wanted to focus on my work. However, I am now concerned that I may be paying taxes incorrectly or missing out on tax benefits.
Currently, I live in Germany and work daily in Switzerland. My income is taxed in Switzerland as I have my place of work there. However, I am also liable for taxes in Germany as I have my residence here. I am unsure about how the taxation of cross-border commuters works exactly and whether there are ways to save taxes or avoid double taxation.
My concerns mainly revolve around the possibility of making errors in my tax return and facing financial disadvantages as a result. Therefore, I would like to learn from you how the taxation of cross-border commuters works and which tax aspects I should definitely consider. Are there any special regulations or tax benefits available to me as a cross-border commuter?
I look forward to your detailed advice and hope that you can provide me with clarity regarding my tax situation as a cross-border commuter.
Thank you in advance.
Sincerely,
Peter Germer
Dear Mr. Germer,
Thank you for your inquiry regarding your tax situation as a cross-border commuter in Switzerland. I understand your concerns and can assure you that it is important to thoroughly address this issue in order to avoid potential errors in your tax return and to be able to fully utilize tax benefits.
As a cross-border commuter who resides in Germany and works in Switzerland, you are subject to both German and Swiss taxation. Your income is taxed in Switzerland, as that is where your place of work is located. At the same time, you are also subject to taxation in Germany, as you have your residence there. This poses the risk of double taxation, meaning that you may have to pay taxes twice on the same income under certain circumstances.
To prevent double taxation, there is a double taxation agreement between Germany and Switzerland that ensures your income is only taxed once. Typically, the principle of worldwide income is applied, meaning that your entire income is taxed in Switzerland, but Germany credits it to avoid overtaxation.
As a cross-border commuter, you may be eligible for tax benefits under certain conditions. This includes the possibility of deducting certain expenses such as travel costs, meal allowances, or dual household expenses for tax purposes. There are also special regulations regarding the taxation of pensions and insurance benefits for cross-border commuters.
To optimize your tax situation as a cross-border commuter and take advantage of tax benefits, I recommend consulting with an experienced tax advisor. They can assist you in correctly completing your tax return, identifying tax-saving opportunities, and ensuring that you consider all relevant tax aspects.
I hope that this information has been helpful to you and I am available to answer any further questions you may have.
Best regards,
Paula Bauer
