What impact will the new Swiss-German tax treaty have on cross-border workers?

A new treaty signed by Switzerland and Germany is entering into force on June 11th and may affect German ‘Grenzübergänger', as the cross-border employees are known.

What impact will the new Swiss-German tax treaty have on cross-border workers?
New tax agreement entered into force between Switzerland and Germany. Photo by AFP

For daily cross-border commuters the agreement includes the following regulations: 

Days spent working at home due to COVID-19 restrictions are considered the same as they would be if the pandemic hadn’t happened — that is, if workers would have returned each day to their homes in Germany. This rule is not applicable if employees would have spent the day in their home country anyway.

If the daily cross-border commuter had to remain in Switzerland and the employer paid for accommodation during the period of lockdown, these days are taxed the same way as if the workers continued to return every day to Germany.

For the period of this agreement, the 60 non-return days rule will be disregarded. As such, the 60- day threshold will have to be pro-rated for the rest of the year.

For other cross-border employees:

Days spent working at home during the lockdown are considered the same as they would be if the pandemic hadn’t happened. However, this rule is only applicable if the employee can prove that their income has been taxed in Switzerland at regular rates.

READ MORE: Have cross-border workers in Switzerland had enough help during the coronavirus crisis?

If the employee applies this rule, they will have to notify German tax authorities in and provide suitable evidence, such as the number of days spent in the home country that would have been spent in Switzerland if COVID-19 hadn’t happened.

In such a case, the employee will agree that Switzerland will tax their income. The employee must inform the employer of the notification. The employer will then have to confirm the application of the rule in writing, for instance on the salary certificate or other suitable format.

If the employee does not make use of the work rule, the regular rules of the treaty continue to apply. However, income paid to employees who were unable to work will be taxable in Switzerland.

“If these concessions had not been agreed to, then cross-border workers could have found themselves with unexpected tax bills and unintended changes in social contributions and coverage. Employers would have had onerous and unclear compliance obligations”, said Daniel Foster, director of Tax & Legal department at KPMG Zurich.

“The agreements and guidelines are, on the whole, a pragmatic and sensible response to the crisis”, he added.

About 33,700 German citizens currently work in Switzerland. 

During the lockdown, when all non-essential travel into Switzerland was restricted, cross-border workers were among the few foreigners allowed into the country.


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Switzerland: How to get money back when cross-border shopping in Germany

Crossing into Germany to go shopping is usually cheaper - and that’s before you add the tax savings. Here’s how you can claim back tax when shopping in Germany.

Switzerland: How to get money back when cross-border shopping in Germany

There are a range of reasons why most things are cheaper in Germany than in Switzerland. 

While there are some exceptions to this – the most notable one being petrol – generally speaking you pay a premium on goods purchased in Switzerland. 

EXPLAINED: Why is Switzerland so expensive?

If you shop in Germany, you can also save on VAT, which is generally 19 percent and added to most goods. 

Here’s what you need to know. 

What are the tax rules for shopping in Germany? 

Residents of Switzerland, as a non-EU country, do not need to pay VAT in Germany on purchases over 50 euros. 

Your country of residence rather than nationality is important here. 

Therefore, a German living in Switzerland and shopping in Germany does not need to pay the tax. 

A Swiss living in Germany however would need to pay the amount. 

Importantly, you need to physically be in Germany when you make the purchase. 

In order to qualify for the tax exemption, you must bring the goods back to Switzerland with you. 

The specific rules for this are laid out by German Customs here, but they need to be either in your carry on or checked baggage, or in a car that you are travelling in personally. 

These rules are to ensure people are buying the goods for themselves rather than intending to sell them on. 

What kind of goods? 

Goods bought in Germany and taken back to Switzerland are exempt from VAT. 

You will generally however be required to pay tax on services rendered or completed in Germany. 

For instance, bus or train tickets in Germany, restaurant bills, hotel stays, massages etc. 

There are also a range of rules which apply to vehicles. 

If you are getting your car repaired, filling up with petrol, affixing bumpers, mirrors or other additions or even getting a car wash, you will need to pay VAT. 

How do I get the money back? 

Unfortunately, you do not get a discount at the place of purchase.

Instead, you need to claim the money back after you have purchased the product on which you paid the tax. 

In most large stores or shopping centres, you will be able to do this on site. 

You need to have a copy of the receipt and fill in the VAT refund form (Ausfuhrschein) with your name, address and Swiss residency permit number. 

You can get one of these forms at larger stores or you can download it and print it here. 

You will need to do one for each invoice. 

Once you have done that, you can take the completed form to the German customs office (Zoll), which you can find at most border crossings and get the paper stamped. 

Then, you need to return the paper to the place of purchase, where they will issue with a refund of the VAT. 

Some stores require you to return after three months, some six and some 12, so be sure to check the store policy. 

Note that some online stores will automatically deduct the VAT if you have a Swiss delivery address. 

Cost of living in Switzerland: How to save money if you live in Zurich

One thing to keep in mind however is that Switzerland charges its own VAT, which is either 2.5 percent or 8 percent. More on that below. 

What’s with all this paper? 

For anyone who’s spent even a few hours in Germany, the country’s reluctance to embrace digital methods of payment and record keeping is clear. 

While cash remains king in many stores and restaurants, claiming back money from shopping in Germany is also a paper-heavy endeavour. 

Fortunately for people not so keen on paperwork, a change is afoot – although exactly when it will take place remains unclear. 

In February 2022, the German government announced it had kicked off a project to make a digital export certificate possible. 

In addition to saving time and paper, the government indicated it expected to save around 6.2 million euros in personnel expenses as around 100 customs officers are currently assigned to the Swiss border alone. 

No deadline has been given for when the change will come into effect. 

Cost of living: How to save on groceries in Switzerland

Swiss customs rules

When bringing goods into Switzerland, you will need to pay VAT if the amount exceeds 300 francs. 

While border patrols are rare, those who make a habit of exceeding this amount – even if it is for goods for personal use – run the risk of falling foul of the authorities. 

There are several different rules in place for bringing in different items, including meats, cheeses and alcohol. 

The limits for each of these items can be found here. 

Keep in mind that while the CHF300 applies now, Switzerland is set to reduce this to CHF50 in the future – although final approval of this has not yet been secured. 

Tax change: Switzerland to introduce 50 franc limit on cross-border shopping