Homeownership - Loans: Taxation Switzerland vs. Germany
August 26, 2009 | 40,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
I am German and have been living and working in Switzerland for more than 7 years, so I have a settlement permit (C) and accordingly pay regular taxes according to Swiss law.
I would like to purchase a property in Germany, which I will also live in - at least on weekends. My questions in this regard are as follows:
1. If I take out a loan from a German bank, how will this affect my Swiss tax return or tax payments? Are there tax differences depending on whether I take out the loan from a German or a Swiss bank?
- How does owning property in Germany affect my Swiss tax return? Are there differences depending on how I use this property (personal use / vacancy / rental)?
- Would it be more tax advantageous to move my main residence to Germany and pay taxes as a cross-border commuter in Germany? To what extent could travel and accommodation costs to/from my place of work in Switzerland be tax deductible? In other words, can I have a "second residence" at my place of work in Switzerland and deduct it from taxes?
Dear client,
Thank you for your inquiry, which I would like to answer based on the information provided and in the context of your situation in an initial consultation as follows:
Firstly, I would like to address the issue of cross-border commuters. The status of a cross-border commuter according to the DTA Switzerland depends solely on the fact that an employee works in the other state and regularly returns to their place of residence from there (Art. 15a para. 2 DTA/Switzerland). Therefore, you must have your residence and habitual abode in Germany and regularly return to your place of residence. It is acceptable if you do not return to your place of residence for up to 60 working days in a year. As a German cross-border commuter, you are required to submit an income tax return for the income earned in Switzerland after the end of the calendar year. The Swiss employer withholds a tax of up to 4.5% of the gross salary. The limitation of the tax to 4.5% requires the Swiss employer to present a certificate of residence confirmed by the German tax office. To avoid double taxation, the withholding tax paid in Switzerland is credited against the income tax in Germany after presenting a tax certificate during the assessment. The tax credit in Germany is only up to 4.5%. A deduction of professional expenses is then based on general principles. If your residence is in Germany and your income from dependent work in Germany is taxed as mentioned above, you can claim ordinary business expenses. These include, for example, commutes between home and workplace and expenses for a double household management if your center of life is in Germany. Whether it is more favorable for you to be taxed in Germany or in Switzerland cannot be determined without knowing the details; you would need to consult a tax advisor for detailed advice.
If you do not have a residence or habitual abode in Germany, you are subject to limited tax liability in Germany with the income listed in § 49 EStG. If you buy a property in Germany and rent it out, you will generate income from renting and leasing in Germany, which is taxed exclusively in Germany and tax-free in Switzerland. If you do not rent out the property, for example, if it remains empty or you use it yourself, nothing happens tax-wise since you do not generate any income. The same applies in Switzerland.
I hope my explanations have been helpful in the context of your situation.
Kind regards,
Ulrich Stiller
Tax advisor
