Germany–Switzerland · Leaving Germany
When Does German Tax Liability End After Moving to Switzerland?
Moving to Switzerland does not automatically end your German tax liability on the date you deregister. The key factors are your residence, habitual abode, residence under the tax treaty and any continuing German-source income. A move to Switzerland also requires consideration of specific provisions in the double taxation treaty and, where applicable, German exit taxation.
German Tax Law
Registering in Switzerland does not, by itself, end unlimited German tax liability
An individual is generally subject to unlimited German income tax liability while maintaining a residence or habitual abode in Germany. Under domestic law, this generally brings worldwide income within the scope of German income tax, subject to applicable treaty relief.
The decisive issue when leaving Germany is therefore not simply the date of deregistration with the German registration authority or registration in Switzerland. Your actual living arrangements and personal circumstances determine the tax position.
If you completely give up your German home and your habitual abode is in Switzerland, unlimited German tax liability may end. If a home remains available for your use in Germany, however, a closer assessment is needed to determine whether you still have a German residence for tax purposes.
Section 8 AO · German Fiscal Code
Your German home is often the decisive factor when leaving
Keeping a home in Germany may mean that you continue to have a German residence for tax purposes, even if your centre of vital interests is in Switzerland.
The home is fully given up
If the tenancy is terminated, the property is sold or the home is made permanently available to someone else and is no longer available for your own use, this supports the conclusion that your German residence has ended.
The home remains available
A home that remains available for your use at any time may constitute a German residence, even if you spend most of your time in Switzerland.
Your family remains in Germany
If your spouse or family remains in the former family home, this generally indicates particularly close personal ties to Germany. It can be relevant both to residence under domestic law and to residence under the tax treaty.
Section 9 AO · German Fiscal Code
A habitual abode can also maintain German tax liability
Even without a home in Germany, unlimited tax liability may continue if your habitual abode remains in Germany.
A continuous stay of more than six months is generally treated as establishing a habitual abode in Germany. Short interruptions do not automatically break that continuity.
For a permanent move to Switzerland, this is often less problematic than keeping a German home. It should nevertheless be reviewed if you continue to spend frequent or extended periods in Germany.
Germany–Switzerland Tax Treaty
Swiss treaty residence does not necessarily end all German taxation
If you have a permanent home in both countries after moving, the double taxation treaty determines which country is your country of residence for treaty purposes.
The first criterion is the availability of a permanent home. If one is available in both countries, the centre of your personal and economic relations is assessed. The subsequent criteria are habitual abode and, where relevant, nationality.
- Permanent home
- Centre of vital interests
- Habitual abode
- Nationality
- Special Germany–Switzerland provisions
- Taxation of continuing German-source income
Special Rules for Switzerland
Article 4(3): Germany’s overriding taxation rule
The Germany–Switzerland tax treaty contains a special rule that is not commonly found in other double taxation treaties.
An individual may be resident in Switzerland under the treaty but still have a permanent home in Germany or spend at least six months there during the calendar year. If the conditions of Article 4(3) are met, Germany may continue to tax that individual under the rules governing unlimited tax liability.
Swiss tax is taken into account under the treaty’s specific relief provisions. For a move to Switzerland, establishing that your centre of vital interests is in Switzerland may therefore be insufficient on its own.
A Further Treaty Provision
Article 4(4): German taxing rights for five further years
The treaty also contains a special provision for certain individuals moving from Germany to Switzerland.
If an individual resident in Switzerland is not a Swiss national and was previously subject to unlimited German tax liability for a total of at least five years, Germany may generally continue to tax certain German-source income in the year of departure and the following five years.
The treaty provides exceptions, including for individuals moving to Switzerland to take up genuine employment with an employer in which they have no substantial economic interest beyond the employment relationship.
Previous German tax liability
The rule generally requires the individual to have been subject to unlimited German tax liability for a total of at least five years before departure.
Swiss residence
After departure, the individual must be resident in Switzerland within the meaning of the double taxation treaty.
German-source income
The focus is on income arising in Germany. German assets and sources of income retained after departure therefore require a separate assessment.
Year of Relocation
The year of departure requires a clear allocation between periods
The Germany–Switzerland tax treaty expressly addresses individuals who change their country of residence during a calendar year. Taxation on the basis of unlimited tax liability is generally allocated to the respective period of residence.
Establish the actual departure date
The relevant facts are when you actually give up your German living arrangements and establish your life in Switzerland, rather than the registration dates alone.
Review homes in Germany and Switzerland
Establish which homes are actually available in each country and how they are used.
Determine residence under the treaty
Where homes are available in both countries, particular attention must be paid to personal and economic relations and habitual abode.
Allocate income before and after departure
Employment income, self-employment income, investment income, rental income and other income may require different treatment during the transition year.
Review the special treaty provisions
In particular, Article 4(3) and Article 4(4) of the Germany–Switzerland treaty may affect German taxation beyond the actual change of residence.
Assess exit taxation separately
Shareholdings in corporations may trigger exit taxation independently of the treatment of ongoing income.
After Departure
German-source income may remain taxable even without a German residence
The end of unlimited tax liability does not mean that Germany can no longer levy any income tax.
| Situation | After departure | Points to review |
|---|---|---|
| German real estate | Rental income may remain taxable in Germany. | Section 49 EStG and the Germany–Switzerland tax treaty |
| Work performed in Germany | Work physically performed in Germany may continue to give Germany taxing rights. | Place of work and the treaty provisions on employment income |
| German business | A German permanent establishment may remain subject to German taxation. | Permanent establishment and business profits |
| Shares in a German GmbH | Distributions and a subsequent sale may have German tax consequences. | Withholding tax, the tax treaty and Section 17 EStG |
| German pensions | Depending on the type of pension, Germany may retain a right to tax it. | Section 49 EStG and the relevant treaty provision |
| Other German-source income | Limited German tax liability may apply if the income falls within Section 49 EStG. | Income category and tax treaty |
Limited Tax Liability
Germany does not automatically continue to tax worldwide income after departure
Once unlimited German tax liability has actually ended, German income tax is generally limited to the categories of German-source income listed in Section 49 of the German Income Tax Act (EStG).
These may include income from German real estate, certain activities performed in Germany, German permanent establishments or certain interests in German companies.
The Germany–Switzerland tax treaty may restrict Germany’s taxing rights or contain special rules. Domestic law and the treaty must therefore always be considered together.
Section 6 AStG · German Foreign Tax Act
Shareholdings may trigger German exit taxation when you leave
If you hold shares within the scope of Section 17 EStG, you must also assess whether Section 6 of the German Foreign Tax Act (AStG) applies to your departure.
The termination of unlimited tax liability may be treated as a disposal of the shares at fair market value for tax purposes, even though no shares have actually been sold.
- Identify shareholdings within Section 17 EStG
- Determine fair market value at the departure date
- Calculate unrealised capital gains
- Review the personal requirements under Section 6 AStG
- Assess instalment payment options
- Review the return provisions for a temporary move abroad
Extended Limited Tax Liability
Section 2 AStG may also be relevant when leaving Germany
German nationals may also need to consider extended limited tax liability under Section 2 AStG.
Its requirements include a specified period of previous German tax liability, low taxation in the foreign jurisdiction and substantial economic interests in Germany.
Moving to Switzerland does not automatically trigger this provision. The actual Swiss tax burden and continuing economic interests in Germany must be assessed in each individual case.
Practical Preparation
What should you document before moving?
German home
Document the termination of the tenancy, sale or letting, and record whether the home remains available for your own use after departure.
Swiss residence
Document your rental agreement or ownership, registration and actual move into the Swiss home.
Days spent in each country
Keep clear records of stays and workdays in Germany and Switzerland, particularly during the year of departure.
Income
Record employment income, rental income, investment income, pensions and self-employment income by period and country.
Shareholdings
Compile ownership percentages, acquisition costs and company valuations before departure.
Continuing German connections
Prepare a complete record of German real estate, businesses, activities, pensions and other German sources of income.
Further Reading
Related Topics
Frequently Asked Questions
Ending German tax liability when moving to Switzerland
Does my German tax liability end when I deregister in Germany?
Can I keep my German home and still be tax resident in Switzerland?
Will I still need to file a German tax return after leaving?
Will German rental income remain taxable after the move?
Does only Swiss tax law apply once I have moved to Switzerland?
What is the five-year rule in the Germany–Switzerland tax treaty?
Can moving to Switzerland trigger German exit tax?
Is Switzerland automatically a low-tax jurisdiction under Section 2 AStG?
Germany–Switzerland Tax Advice
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