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Income tax obligation in Germany after moving to Switzerland

May 6, 2014 | 35,00 EUR | answered by Peter Lipp

Hello,

I moved from Germany to Switzerland for work on March 1, 2014 and at that time I changed my residence to Switzerland. I spent January and February 2014 in Germany and received unemployment benefits (ALG 1) during that time, with no taxable income.

My Swiss employer has been sending me to Germany regularly (Mon-Thu) since March for a project, expected to last until the end of the year. In Switzerland, the general rule is to avoid employees staying in another country for more than 183 days. It seems that this may not be possible in my case.

For personal reasons, I also spend a few days in Germany (approximately every other weekend). I still have valid insurance policies in Germany (disability insurance, Riester pension, life insurance, private savings plan) and a bank account (although I have a Swiss salary account). I rent an apartment in Switzerland and no longer have a residence in Germany.

My question is: Could I become liable to pay income tax in Germany for the year 2014 with my entire income? In my opinion, I do not have to pay income tax to the German tax office for the first two months, and for the rest of the time I should be taxable in Switzerland (withholding tax).

Do the first two months before changing my residence count towards the 183 days? I have even heard that in the year of relocation, one is automatically liable for tax in Germany. I find this hard to believe. In case the German tax office assumes that my habitual residence is in Germany (or I exceed the 183 days), what do I need to disclose or prove? Do I need to prove to the tax office that I was not in Germany?

The issue of income tax is causing me a lot of concern and I would appreciate a response. Thank you very much.

Peter Lipp

Dear client,

According to § 1 para. 1 sentence 1 of the Income Tax Act (EStG), individuals who have their residence or habitual abode in Germany are subject to unlimited tax liability. Residence requires a future intention of use according to § 8 AO. This is not present in this case due to the abandonment in February. Holding the residence in the first two months is not harmful.

The question is whether a habitual abode according to § 9 AO exists. This is given when there is a continuous period of more than 6 months in Germany. Short interruptions are not taken into account. This means that weekend trips home must be included in the calculation, see BFH I R 205/82. Therefore, you are subject to unlimited tax liability in Germany in 2014.

This can only be prevented by shortening the assignment or having an uneven duration of stay. For example, being assigned for two weeks in a row and then working in Switzerland for 1 week. Of course, the 6-month limit still needs to be considered.

I hope this answers your question sufficiently.