Companies based in Switzerland and primarily operating in Germany.
September 24, 2014 | 25,00 EUR | answered by Ralph J. Schnaars
Hello! I am a freelance business consultant and coach. I am Swiss and am considering spending more time in Switzerland in the future. I am thinking about making Switzerland my primary residence and then also paying taxes on my income in Switzerland. However, currently 100% of my clients are in Germany. This will likely change as I spend more time in Switzerland.
My question: is this possible? Because I will still be in and living in Germany as well. Would I then deregister with the German tax office and pay taxes on all income - even if the service was provided in Germany - in Switzerland?
Thank you for any information on this!
Dear inquirer,
Natural persons who have their domicile or habitual residence in Germany are subject to unlimited income tax.
This is the first sentence in the German Income Tax Act.
For you, this means that if you have your main residence in Switzerland but also work and "live" in Germany, you are also subject to tax in Germany - at least if you spend more than "180" days a year in Germany. - In Boris Becker's case, a visit from his children in Munich was enough to assume a stay and make him fully taxable in Germany.
However, if it can be proven that you spend less than 180 days in Germany and your center of life is in Switzerland, only a "limited" tax liability for income earned in Germany would apply. However, the exact procedures and circumstances of how and where you advise your clients would still need to be examined.
Furthermore, you are considered a taxable VAT entrepreneur in Germany if you advise in Germany or advise German private individuals from Switzerland.
The uncomfortable part in your question is the sentence
- Because I will surely continue to be in and live in Germany.
This simply results in the tax obligation in Germany. The specific details of the amount and form of this tax obligation would need to be determined.
I hope I could help so far
and would still like to point out that relocating a company abroad is treated tax-wise as if you were giving up or selling the business. All hidden reserves are therefore "uncovered" and a "fictional" profit may be taxed.
I think it would be easier for you to keep the German company address for now and continue paying taxes in Germany with these earnings, while opening a "second" company in Switzerland and starting anew there. Over the years, the German business will have less and less activity until it reaches EUR 0.00, while the Swiss business grows. Perhaps this could be a solution for you.
Sincerely,
Ralph J. Schnaars
STWB Steuerberatungsgesellschaft mbH
Direct contact +49 (0)171 525 20 42
Email mail@stwb-steuer.de
