Germany–Switzerland · Year of Departure
Your German Tax Return for the Year You Move to Switzerland
If you move from Germany to Switzerland during the year, the tax position cannot simply be divided into a German half-year and a Swiss half-year. For German income tax purposes, the period of unlimited tax liability, the period after departure, any German income that remains taxable and the Germany–Switzerland tax treaty must all be considered together.
An annual tax
There is generally one German income tax assessment for the entire calendar year, even if you move abroad
German income tax is assessed annually. If a person moves abroad during the calendar year and changes from unlimited to limited tax liability, the relevant income is not dealt with in two entirely separate German tax returns.
Where both unlimited and limited income tax liability arise in the same calendar year, German-source income earned during the period of limited tax liability is generally included in the assessment for unlimited income tax liability.
The first step is therefore to establish the date on which unlimited German tax liability actually ends and identify the income arising before and after that date.
Allocating income between periods
Before departure, worldwide income is generally relevant; afterwards, the focus shifts to remaining German-source income
Worldwide income
As long as a person has a residence or habitual abode in Germany, they are generally subject to German income tax on their worldwide income, subject to applicable treaty relief.
- German employment income
- Foreign employment income
- Investment income
- Rental income
- Self-employment income
- Pensions and other income
Generally only German-source income
Once German residence and habitual abode have actually ended, the person is generally subject to limited tax liability only on certain categories of German-source income.
- German property
- Certain activities carried out in Germany
- German permanent establishments
- Certain income from shareholdings
- Certain pensions and other income
- The treaty rules must also be considered
The first step
Establish when unlimited German tax liability actually ends
The date of deregistration with the local registration authority is not automatically the departure date for tax purposes. What matters is when German residence and, where relevant, habitual abode actually end.
If a home in Germany is retained for personal use, unlimited German tax liability may continue despite the move to Switzerland.
- Has the German home actually been given up?
- Have keys been handed over and the right to use the home ended?
- Does a family home remain available?
- Is there still a habitual abode in Germany?
- Has residence actually been established in Switzerland?
- Determine treaty residence as a separate step
The progression rule
Swiss income after departure can affect your German tax rate
Foreign income arising after departure is not automatically taxable in Germany. However, it may be relevant to calculating the German tax rate in the year of departure.
Where unlimited German tax liability applies for only part of the year, certain foreign income arising outside that period and not subject to German income tax may fall within the German progression rule (Progressionsvorbehalt).
This income does not directly increase German taxable income, but it may affect the tax rate applied to the income that is taxable in Germany.
Example
Moving on 1 July: the basic structure of the departure year
January to June
While German residence continues, worldwide income generally falls within unlimited German tax liability, subject to applicable treaty relief.
The actual departure
The German home and habitual abode are given up and new living arrangements are established in Switzerland. The precise date must be determined from the actual circumstances.
July to December
Swiss income may now generally fall outside limited German tax liability, while certain German-source income may remain taxable in Germany.
The Germany–Switzerland tax treaty
The division into periods under domestic law is only the first step
The Germany–Switzerland double taxation agreement must be considered alongside German income tax law. In particular, it determines treaty residence and allocates taxing rights over different categories of income.
The treaty also contains specific provisions for individuals who change their country of residence during the calendar year, as well as special rules for certain departures.
- Residence before the move
- Residence after the move
- Permanent homes available in both countries?
- Centre of vital interests
- Review Article 4(3) of the treaty
- Review Article 4(4) where relevant
Homes in both countries
Keeping your German home can prevent a straightforward division at the moving date
A person who moves to Switzerland but keeps a home in Germany available for personal use whenever needed may retain a German residence for tax purposes.
Unlimited German tax liability under domestic law may therefore continue beyond the assumed moving date. Instead, dual residence may arise, requiring the treaty residence rules to be applied first.
Under the Germany–Switzerland tax treaty, Germany's special overriding taxation rule in Article 4(3) must also be examined separately.
Income categories
Typical items in the German tax return for the year of departure
Employment income
Employment income must be allocated by period, actual place of work and, where applicable, the employment provisions of the Germany–Switzerland tax treaty.
Investment income
Interest, dividends and capital gains must be allocated to the relevant period and assessed under the treaty where applicable.
Property
Income from German real estate may remain subject to German tax after departure.
Self-employment
For self-employment or business activities, the place of activity, any permanent establishment and the allocation of profits between periods require separate analysis.
Pensions
For German and Swiss pensions, the relevant treaty provision determines which country may tax the income.
Company shareholdings
In addition to ongoing distributions, shares in companies may give rise to German exit tax under section 6 AStG.
Employment income
Changing employer or starting work in Switzerland requires an allocation between periods
If employment in Switzerland begins after the move, pay should not be allocated solely by reference to payment dates. For treaty purposes, the period in which the remuneration was earned and the actual workdays may be particularly relevant.
Bonuses, share-based compensation and payments covering several periods of employment may therefore require a more detailed allocation.
If work for a Swiss employer continues to be performed partly in Germany, Germany may retain taxing rights in respect of those German workdays.
German income after departure
Items that may still need to be considered in the German return
| Income source | After departure | Key points to review |
|---|---|---|
| German rental property | Income may remain taxable in Germany. | Section 49 EStG and the Germany–Switzerland tax treaty |
| Workdays in Germany | Germany may retain taxing rights despite Swiss residence. | Actual place of work and treaty provisions |
| German permanent establishment | Business profits may continue to be attributable to Germany. | Attribution of profits to the permanent establishment |
| German GmbH | Distributions and subsequent share disposals may have German tax consequences. | Withholding tax, treaty provisions and section 17 EStG |
| German pension income | Germany may retain taxing rights, depending on the type of pension. | The applicable treaty provision |
| Income arising solely in Switzerland | Not automatically taxable in Germany once unlimited German tax liability has actually ended. | The progression rule and special treaty provisions |
Step by step
A systematic approach to the tax return for the year of departure
Establish the departure date for tax purposes
Document when German residence and habitual abode actually ended.
Determine treaty residence
Where homes are available in both countries, apply the tie-breaker rules of the Germany–Switzerland tax treaty.
Record income arising before departure
Worldwide income generally needs to be considered for the period of unlimited German tax liability.
Record income arising after departure
Review German-source income for continuing limited tax liability and apply the treaty provisions.
Review Swiss income under the progression rule
Income that is not taxable in Germany may still affect the German tax rate in the year of departure.
Review special departure rules
Company shareholdings, Article 4(3) and (4) of the treaty and, where relevant, section 2 AStG should be analysed separately.
Reconcile Swiss tax information
Document Swiss income and tax payments so that treaty relief and the German progression calculation can be substantiated.
Documents
Key documents for the German tax return in the year of departure
German residence documents
Evidence of termination of the lease, sale, handover or letting of the German home, together with the deregistration certificate where applicable.
Swiss residence
Lease or proof of ownership, registration, residence permit and the actual moving-in date.
Employment income
German annual wage tax certificate, Swiss salary certificate, employment contracts and, where relevant, a workday schedule.
Investments
German and Swiss bank and securities account statements, together with transaction summaries for the entire calendar year.
Property
Documents relating to German and Swiss properties, rental income, deductible expenses and any property sales.
Swiss tax information
Swiss tax return, tax assessments or provisional calculations, insofar as they are needed for treaty relief and German taxation.
Subsequent years
A German filing obligation may continue after the year of departure
Once the move is complete, German taxation of worldwide income generally ends if neither a residence nor a habitual abode remains in Germany.
However, a German tax return may still be required in subsequent years if German-source income continues to arise, for example from property, work carried out in Germany, a German permanent establishment or certain other sources.
The Germany–Switzerland tax treaty also contains special departure provisions. Subject to certain conditions, Article 4(4) may grant Germany extended taxing rights over income arising in Germany for a limited period.
Common mistakes
Frequent errors in the year of departure
Automatically treating deregistration as the end of tax liability
Using the date of deregistration without checking whether the German home was actually given up.
Ignoring Swiss income entirely
Omitting income arising after departure even though it may be relevant to the German progression rule.
Allocating employment income solely by payment date
Failing to allocate bonuses or cross-border workdays to the appropriate earning period.
Overlooking German income after departure
Property, workdays in Germany and other German sources of income may remain taxable after the move.
Failing to document treaty residence
Not keeping a clear record of the tie-breaker analysis where residence exists in both countries.
Overlooking exit tax
Failing to review company shareholdings or relevant investment fund holdings before departure.
Further tax knowledge
Related topics
Frequently asked questions
Your German tax return for the year you move to Switzerland
Do I still need to file a German tax return for the year I move to Switzerland?
Is the year split into two German tax returns?
For which period must I declare my worldwide income in Germany?
Must I include Swiss employment income earned after departure in my German return?
What happens if I own a rental property in Germany?
Is my deregistration date automatically my departure date for tax purposes?
What if I have a home in Germany and Switzerland at the same time?
Should exit tax also be reviewed in the year of departure?
Do I need my Swiss tax return to prepare my German return?
Germany–Switzerland tax advice
Have you moved from Germany to Switzerland during the current year?
We review your departure date for tax purposes, German tax liability before and after the move, treaty residence, German and Swiss income, the progression rule and, where relevant, exit tax. We also prepare or coordinate the required tax returns.
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