deutsche-einkuenfte-nach-wegzug-schweiz

Germany–Switzerland · Limited Tax Liability

German Income After Moving to Switzerland

The end of unlimited German tax liability does not automatically mean the end of all German taxation. If you continue to receive income from Germany after moving to Switzerland, you may remain subject to limited tax liability in Germany. German property, workdays in Germany, permanent establishments, company shareholdings, pensions and other German sources of income are particularly relevant.

After departure

Ending German residence generally ends taxation of worldwide income, but Germany may retain taxing rights

If a person has neither a residence nor a habitual abode in Germany after moving, unlimited income tax liability under German domestic law generally ends.

Their entire worldwide income is therefore no longer automatically subject to German income tax. However, Germany may continue to tax certain income with a sufficiently close connection to Germany.

Section 49 of the German Income Tax Act (EStG), in particular, determines which items qualify as German-source income. It is also necessary to check whether the Germany–Switzerland double taxation agreement preserves, limits or excludes Germany's taxing rights.

The basic framework

Swiss residence does not automatically end German taxation

Even after a complete departure, income from certain German sources may remain taxable in Germany. Taxation is then generally limited to income with the required connection to Germany.

At the same time, Switzerland, as the country of residence, may bring the same income within the scope of its domestic tax rules. The treaty coordinates taxation and relief from double taxation.

  • Has German residence actually ended?
  • Review section 49 EStG for each income source
  • Apply the Germany–Switzerland tax treaty
  • Distinguish between source country and country of residence
  • Identify German filing obligations
  • Coordinate the Swiss tax treatment

Section 49 EStG

Typical German income after moving to Switzerland

Section 49 EStG lists categories of income that may remain subject to German income tax even if the recipient has neither a residence nor a habitual abode in Germany.

RE

German property

Rental and lease income from real estate located in Germany may remain taxable in Germany.

JOB

Work in Germany

Employment income for work carried out in Germany may remain subject to German taxation after the move.

PE

German permanent establishment

Business profits may remain taxable in Germany to the extent that they are attributable to a German permanent establishment or permanent representative.

DIV

Dividends

Distributions by German companies may be subject to German withholding tax. The treaty may limit that tax.

PEN

German pensions

Certain payments by German statutory pension providers, occupational pension institutions or other German paying entities may constitute German-source income.

SALE

Capital gains

In particular, sales of German property and certain company shareholdings may have German tax consequences even after departure.

German property

German rental income generally remains taxable in Germany

Moving to Switzerland generally does not change the fact that income from property located in Germany has a direct connection to Germany.

Under section 49 EStG, rental and lease income from German real estate may remain taxable in Germany even where the owner is resident in Switzerland.

The Germany–Switzerland tax treaty also generally allows income from immovable property to be taxed in the country where the property is located. German property may therefore trigger a German income tax filing obligation even years after departure.

Selling a property

A later sale of German real estate may also remain taxable in Germany

If a German property is sold after departure, it is necessary to establish whether the capital gain is taxable under German income tax law.

For privately held property, the rules on private disposals are particularly relevant. Whether a taxable gain arises depends, among other things, on the acquisition date, the use of the property and the disposal date.

The treaty generally also allows gains from the disposal of immovable property to be taxed in the country where it is located. Germany therefore usually remains a key taxing jurisdiction for German real estate.

Employment income

If you continue working in Germany after moving, the pay for those workdays may remain taxable in Germany

For employees, neither the employer's location nor the bank account receiving the salary is decisive on its own. In cross-border employment, the place where the work is actually performed is generally a central factor.

Workdays physically spent in Germany may therefore give Germany taxing rights even after the employee has moved to Switzerland.

  • Document where work is actually performed
  • Separate German and Swiss workdays
  • Consider the employer structure
  • Review the treaty's employment provisions
  • Review the frontier-worker rules separately where relevant
  • Coordinate payroll and withholding tax

Swiss employer

A Swiss employer does not rule out German taxing rights over German workdays

An employee who lives in Switzerland and works for a Swiss employer is not necessarily taxable exclusively in Switzerland on their entire salary.

Where individual workdays are physically spent in Germany, it is necessary to assess whether Germany has taxing rights over the remuneration attributable to those days.

Special rules may apply, in particular, to frontier workers, senior executives, public service employment and other specific employment situations.

Self-employed individuals & business owners

A German permanent establishment can mean that German business taxation continues

PE

Retaining a permanent establishment

If fixed places of business continue to be maintained in Germany, the profits attributable to those permanent establishments may remain taxable in Germany.

REP

Permanent representative

A permanent representative operating in Germany may also create a relevant connection for the taxation of business profits under German domestic law.

CH

Operating entirely in Switzerland

If the business is genuinely relocated entirely to Switzerland and no German permanent establishment remains, Germany's taxing rights over ongoing business profits may be substantially reduced.

Companies

Your personal move does not automatically relocate your company to Switzerland

If a person continues to own a German GmbH (limited liability company) after moving abroad, the company generally remains a separate German taxpayer.

For active shareholder-managing directors, it is also necessary to establish where key management decisions are made. The shareholder's and managing director's personal move to Switzerland may therefore raise additional questions about the place of management and cross-border corporate taxation.

Personal income tax, taxation of the company and the treaty allocation of taxing rights are separate issues.

Investment income

German bank accounts and German company shares require different analyses

Holding an account or securities portfolio with a German bank does not automatically mean that all investment income arising from it remains subject to German income tax after departure.

For investment income, it is necessary to establish whether section 49 EStG provides a basis for German taxation and how the Germany–Switzerland tax treaty allocates taxing rights.

  • Identify the type of investment income
  • Check the debtor's or company's residence
  • Consider withholding tax
  • Review treaty limits
  • Include the Swiss tax treatment
  • Use relief or refund procedures where applicable

German GmbH

Distributions by a German GmbH remain relevant to both countries after departure

If a shareholder moves to Switzerland, a later distribution by their German GmbH may trigger both German withholding tax and Swiss income tax consequences.

As the source country, Germany may generally tax the dividend. The Germany–Switzerland treaty may limit that taxation. The precise treatment depends, among other things, on the type of shareholder and the treaty requirements.

German withholding tax and Swiss taxation should therefore be considered together. Depending on the circumstances, a German relief or refund procedure may also be relevant.

Selling company shares

A later share disposal requires a fresh review after departure

If German exit tax under section 6 of the Foreign Tax Act (AStG) was triggered on departure, a later actual sale of the shares must be coordinated with that earlier exit tax charge.

Germany may also retain domestic taxing rights over certain share disposals after departure. Whether those rights can actually be exercised must be assessed under the Germany–Switzerland tax treaty.

Share disposals after departure should therefore not be planned solely from a Swiss tax perspective.

German retirement income

German pensions may remain relevant for tax purposes after moving

Section 49 EStG covers, among other things, certain pensions and other payments from German statutory pension providers, professional pension schemes, insurance companies and other paying entities.

However, this does not automatically mean that the treaty ultimately allows Germany to tax every such payment. For pensions and retirement benefits, the precise category of income and the applicable provision of the Germany–Switzerland treaty must also be reviewed.

DRV

Statutory pension

For benefits from the German statutory pension system, domestic tax liability and the treaty allocation of taxing rights must be considered together.

OCC

Occupational pension

Depending on their structure, occupational pension benefits may be governed by different treaty provisions from statutory pensions.

PRV

Private retirement provision

Private insurance and pension benefits also require separate classification according to the type of contract and the treaty.

Overview

Income that typically needs to be reviewed after departure

Income category Connection to Germany After departure Treaty review
German rental property Property located in Germany Generally remains taxable in Germany Article 6 of the treaty
Sale of German property German immovable property Remains relevant if the capital gain is taxable Review the capital gain and treaty provisions
Employment income Work physically performed in Germany Germany may retain taxing rights Employment provisions and any special rules
Business profits German permanent establishment or permanent representative Attributable profits may be taxable in Germany Permanent establishment and business profits provisions
Dividend from a German GmbH German company making the distribution German withholding tax may apply Article 10 of the treaty
German pension German paying entity or another statutory connection May be taxable under German domestic law Review the pension type and applicable treaty article
Swiss employment income with no German workdays Generally no German place of work Generally outside ordinary German taxation following a genuine departure Subject to special treaty provisions
Swiss bank account No direct connection to Germany Generally not taxable in Germany merely because the account exists, if only limited tax liability applies Review the individual circumstances

Limited tax liability

Personal deductions may be restricted after departure

Limited income tax liability does not work in exactly the same way as ordinary unlimited tax liability applied to a smaller amount of income.

Special provisions apply to individuals with limited tax liability. Personal allowances, special expenses and other deductions may be restricted or treated differently.

As a result, German tax on a particular item of German income may be calculated differently after departure than before the move.

A special option

Treatment as an unlimited taxpayer may be available on application in certain cases

Individuals with neither a residence nor a habitual abode in Germany may, subject to certain conditions, apply to be treated as unlimited taxpayers for German income tax purposes.

Income-based thresholds and monetary limits apply, and foreign income must be substantiated.

Whether such an application is available and beneficial for a Swiss resident should be assessed in light of their overall income position.

Special treaty rules

The standard section 49 review may not be sufficient when moving to Switzerland

The Germany–Switzerland tax treaty contains special provisions that may be particularly relevant to individuals who were previously resident in Germany.

These include the overriding taxation rule in Article 4(3) and the special departure rule in Article 4(4) of the treaty.

In certain circumstances, Germany may therefore retain broader taxing rights after a move to Switzerland than in an ordinary case of limited tax liability. The applicable domestic tax rules must also provide a basis for taxation.

Article 4(3) of the treaty

A German home may lead to broader German taxation despite Swiss treaty residence

If a person resident in Switzerland continues to have a permanent home in Germany, it is necessary to examine whether the special overriding taxation rule in the Germany–Switzerland treaty applies.

In such a case, German taxation may extend beyond ordinary limited tax liability under section 49 EStG.

  • Review any German home retained after departure
  • Determine treaty residence
  • Analyse Article 4(3) separately
  • Take Swiss tax into account
  • Review any implications for worldwide income
  • Do not assume that taxation is automatically limited to section 49 EStG

The process

A systematic review of German income after departure

Establish the end of unlimited tax liability

First, clarify whether German residence and habitual abode have actually ended.

Identify all German sources of income

Compile details of property, activities, businesses, company shareholdings, pensions and other payments from Germany.

Apply section 49 EStG to each income category

For each source of income, establish whether limited tax liability arises under German domestic law.

Review the Germany–Switzerland tax treaty

Next, determine whether the treaty allows Germany to exercise its domestic taxing rights.

Consider special departure rules

Review Article 4(3) and (4) of the treaty, section 6 AStG and any other relevant German international tax provisions separately.

Determine German filing obligations

German taxes are not all reported or collected in the same way. Depending on the income category, assessment, withholding tax or special procedures may be relevant.

Coordinate the Swiss tax treatment

Finally, report the German income correctly in the Swiss tax return and determine the available Swiss relief from double taxation.

Common mistakes

What is often overlooked after moving to Switzerland

01

“I live in Switzerland, so I no longer pay tax in Germany”

Even without a German residence, income from German sources may remain subject to limited tax liability.

02

No longer reporting a German rental property

Rental income from German real estate generally remains a German tax matter.

03

Ignoring German workdays

Workdays physically spent in Germany may give Germany taxing rights even if the employee lives in Switzerland.

04

Assessing investment income solely by the bank's location

A German securities account does not automatically mean that all investment income remains taxable in Germany.

05

Failing to apply the treaty

Section 49 EStG addresses only the domestic-law position. The treaty may then limit Germany's taxing rights.

06

Keeping a home available in Germany

The person may still have a German residence, rather than being subject only to limited tax liability, with additional treaty questions to address.

Further tax knowledge

Related topics

End of German Tax Liability

When residence and unlimited German tax liability actually end on moving to Switzerland.

Tax Return for the Year of Departure

Worldwide income, allocation between periods, the progression rule and the treaty in the year of the move.

Treaty Residence with Homes in Both Countries

Permanent home, centre of vital interests and special provisions of the Germany–Switzerland treaty.

German Exit Tax When Moving to Switzerland

Section 6 AStG, company shares, valuation, instalments and relief on returning to Germany.

Frequently asked questions

German income after moving to Switzerland

Do I still have to pay German tax after moving to Switzerland?
That depends on the German income you continue to receive. After unlimited tax liability ends, Germany may still tax certain German-source income under section 49 EStG. The Germany–Switzerland tax treaty must also be considered.
Does rental income from German property remain taxable?
Yes. Income from real estate located in Germany may remain taxable in Germany even after a complete move to Switzerland.
Do I still need to file a German tax return for German property after departure?
Where taxable German rental income arises, a German income tax return is generally still required. The individual is then generally treated as a limited taxpayer unless a different tax status applies.
What if I live in Switzerland but work in Germany on some days?
Germany may retain taxing rights over work physically performed in Germany. The precise allocation depends, in particular, on the activity, the employer, the number and location of workdays and the applicable treaty provisions.
Is interest on a German bank account automatically taxable in Germany after departure?
No. The bank's location alone does not determine the tax treatment. It is necessary to establish whether section 49 EStG provides a basis for German taxation and how the Germany–Switzerland treaty allocates the income.
What happens to dividends from my German GmbH?
As the source country, Germany may generally tax the dividend. The Germany–Switzerland treaty may limit that source taxation. The dividend must also be considered for Swiss tax purposes, so the two systems need to be coordinated.
Do German pensions remain taxable after moving to Switzerland?
That depends on the type of pension. Certain German pensions constitute German-source income under section 49 EStG. The next step is to determine which country the Germany–Switzerland treaty allows to tax the payment.
Do I have to declare my Swiss income in Germany?
Where only ordinary limited tax liability applies, income arising solely in Switzerland generally falls outside German taxation. However, the position may differ in the year of departure, where a German residence continues or where special treaty rules apply. Foreign income information may also be needed for an application to be treated as an unlimited taxpayer.
What if I still have a home in Germany after departure?
The first step is to determine whether a German residence continues under section 8 of the Fiscal Code (AO). If it does, the person may not be subject only to limited tax liability. Article 4(3) of the Germany–Switzerland treaty may also be relevant.
Can Germany tax more than the income listed in section 49 EStG after departure?
This may be possible in particular Germany–Switzerland situations, for example where a German residence continues or another domestic rule extends tax liability. Article 4(3) and Article 4(4) of the treaty should be reviewed separately where relevant, especially following prior German residence. The treaty must be considered together with the applicable domestic tax rules.

Germany–Switzerland tax advice

Are you now living in Switzerland but still receiving income from Germany?

We review German limited tax liability, the Germany–Switzerland tax treaty and the treatment of property, employment income, businesses, company shareholdings, pensions and other German income. We also coordinate the relevant German and Swiss tax positions.

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