Moving to Switzerland with Shares in a German GmbH
You are moving to Switzerland and retaining your shares in a German GmbH. Your planning needs to coordinate your personal change of residence, the tax treatment of your shareholding and the company's future management.
This page explains which questions should be addressed before your move and which documents are needed to coordinate the German and Swiss aspects.
One Move, Three Areas to Review
When you own shares in a GmbH, setting a moving date and registering in Switzerland is only part of the preparation. First, your personal tax status and residence under the tax treaty need to be established. Your shares and the company's management arrangements must then be examined.
These areas can produce different tax consequences. Planning should therefore cover both your assets and your role in the business: Are you solely a shareholder, also a managing director, or involved in the company's operations?
This page focuses on GmbH shares held as private assets. Shares held as business assets, German business-splitting arrangements known as Betriebsaufspaltung, and shareholdings through other companies require additional analysis.
When German Exit Tax Needs to Be Examined
Section 6 of the German Foreign Tax Act (AStG) treats qualifying shares as disposed of at fair market value, even though no actual sale takes place. This can create a tax liability without any sale proceeds.
Identify the Shareholding
Section 17 of the German Income Tax Act (EStG) generally covers shares where the shareholder held at least 1 percent of the company's capital, directly or indirectly, at any time within the preceding five years. Acquisitions by gift or inheritance and special cases require additional examination.
Review Your Tax History
Section 6 AStG generally requires at least seven years of unlimited German tax liability within the preceding twelve years. For shares acquired without consideration, periods attributable to previous owners may also count.
Determine the Trigger
Relevant events include the end of unlimited German tax liability and the exclusion or restriction of Germany's right to tax a gain on the disposal of the shares. Certain transfers without consideration are also covered.
Keeping a German home does not remove the need for review. Even if you retain a German residence, a change in treaty residence can restrict Germany's taxing rights. Residence and treaty consequences must be examined together.
Valuation and Acquisition Costs
The calculation requires a supportable determination of the shareholding's fair market value and its acquisition costs for tax purposes. Registered share capital and balance sheet equity do not replace a valuation of the shares.
Prepare financial statements, current business figures, forecasts and acquisition documents. Capital contributions and other potential acquisition costs should be documented separately.
Payment and Subsequent Changes
Upon application, section 6 AStG provides for seven equal annual instalments, generally subject to security. Subsequent events can accelerate payment of the remaining tax. Reporting obligations must also be observed.
Relief on returning to Germany is subject to statutory conditions. Your intention to return, the relevant deadlines and subsequent changes to the shareholding should therefore be examined early.
How the GmbH Will Operate After Your Move
A shareholder's personal move does not automatically relocate the GmbH to Switzerland. Under German domestic law, a GmbH with its registered office or place of management in Germany generally remains subject to unlimited German corporate income tax liability. Your personal taxation must be assessed separately.
Dividends and Distributions
Planned distributions require coordination of German withholding tax, potential treaty relief and the Swiss tax treatment. Residence certificates, applications and payment dates should be included in the preparation.
You should also examine how a distribution might affect any existing payment arrangements for German exit tax.
Investments and Withholding Taxes →Managing Director Remuneration and Work
Managing director remuneration requires a separate treaty analysis. Relevant factors include your corporate role, contractual arrangements, actual work locations, possible cross-border commuter status and special treaty provisions.
Social security coverage must also be determined based on your actual activities. Keep records of your working days and responsibilities in both countries.
Employment and Social Security →Place of Management
Section 10 of the German Fiscal Code (AO) defines the place of management as the centre of senior business management. The key question is therefore where the company's principal management decisions are actually made.
If you will manage the GmbH from Switzerland, potential Swiss tax consequences and the company's treaty position require separate examination. A German business address alone does not resolve these questions.
A Later Sale or Restructuring
A planned share sale, gift or restructuring should be included in your relocation planning from the outset. This requires a coordinated sequence of events, a valuation and an assessment of the tax treatment in both countries.
A holding company structure is not a universal solution. The ownership chain, previous contributions or share exchanges, potential statutory holding periods and future business plans all need to be considered.
A Practical Planning Process Before You Move
Document Your Starting Position
Record your residences, tax history, shareholdings, acquisition transactions and responsibilities within the GmbH. Include indirect shareholdings and previous changes in your ownership percentage.
Coordinate Timing and Valuation
Set out the planned sequence for giving up your home, moving to Switzerland and changing your personal circumstances. This provides the basis for examining the relevant tax date and valuation assumptions.
Plan Funding and Company Management
Prepare a cash flow plan and determine how the GmbH will be managed in future. Planned distributions, managing director remuneration and business decisions should form part of the same planning process.
Organise Filings and Supporting Documents
Coordinate German and Swiss tax returns, applications and ongoing supporting documentation. Decide who will provide the records and arrange tax advice when your shareholding changes.
What Shareholders Ask Before Moving
Which documents are needed for an initial review?
Particularly useful documents include an overview of your residence and tax history, the current shareholder list, acquisition agreements, financial statements and a description of your activities. Add your planned moving date and details of any homes you will retain in Germany.
Should the valuation be prepared before the move?
Yes. The information needed for the valuation should be assembled early. This allows missing data, significant business developments and funding for a potential tax liability to be addressed in good time.
What matters if I own the shares through a holding company?
Provide a complete overview of the ownership chain. Documents relating to the holding company's formation, contributions or share exchanges and subsequent changes are also needed. These establish which additional issues require examination.
How does a planned return to Germany affect the analysis?
Mention a possible return during the initial review. Relevant planning factors include the intended timeframe, your personal circumstances and any planned changes to your GmbH shareholding.
How should I prepare to manage the company from Switzerland?
Describe who will make decisions, enter into contracts and manage day-to-day operations. Include the respective work locations, any other managing directors and the company's existing organisation in Germany.
Checklist for Planning Your Move
Residence and Tax History
Periods of residence and physical presence, previous tax status, your planned move to Switzerland, German homes and family circumstances.
Shareholding and Acquisition
Shareholder lists, direct and indirect ownership percentages, acquisition agreements, gifts, inheritances and documents relating to previous restructurings.
Value and Acquisition Costs
Financial statements, current management accounts, business forecasts, existing valuations, acquisition payments and capital contributions.
Management and Contracts
Your managing director service agreement, allocation of responsibilities, powers of attorney, decision-making processes and planned work locations and working days.
Funding and Future Plans
Available personal funds, distribution plans, potential security and planned sales, transfers or capital transactions.
German–Swiss Coordination
The relevant tax authorities, your Swiss canton of residence, residence certificates and contacts responsible for filings and ongoing changes.
Explore the Individual Issues
German Exit Tax When Moving to Switzerland
Your shareholding and its tax treatment when moving across the border.
Read the Article →Living in Switzerland and Keeping a German Home
How a home that remains available in Germany can affect tax liability and residence.
Explore the Scenario →Tax Returns in the Year of Your Move
Preparing tax returns and supporting documents for the year in which you change residence.
Read the Article →Key Legal Provisions
Section 6 AStG – Taxation of Appreciation in Value · Section 17 EStG – Shares in Corporations · Section 1 KStG – Unlimited Corporate Tax Liability · Section 10 AO – Place of Management
Cross-border income also requires consideration of the Germany–Switzerland double taxation agreement in the version applicable to the relevant period. The statutory links above lead to German-language texts.
Plan Your Move and GmbH Shareholding Together
Are you planning to move to Switzerland and keep your shares in a German GmbH? We review your personal circumstances, your shareholding and your proposed management arrangements with you. This provides coordinated preparation for your move.
This overview provides general guidance. The specific assessment depends on your circumstances and the law applicable at the relevant time.