Taxes - Moving from Germany to Switzerland

Finance, Taxes, Banking, Insurance and Retirement
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Hi all,

First want to thank this community for the invaluable support provided in the past weeks regarding our move to Switzerland.

I'd like to share a tax situation we have now (I also spoke with a Steuerberater) but always good to get more opinions especially if you had similiar real life experience

We are moving to Switzerland with my wife (and child) We have 3 flats in Germany: 2 rented out, 1 in construction (to be rented out) We have a stock portfolio

Likelihood is that we will need to pay taxes on our worldwide income this year (2023) in Germany given our center of life will remain Germany (we plan to give up the apartment end of the year). This will also include paying DE taxes on the CH income during 2023.

Once we are no longer registered in Germany and move to CH fully, we would start paying Swiss taxes on the Swiss income. The Swiss income won't be taxed in DE.

All income from the rental flats in Germany will continue to be taxed in Germany for at least 10 years. Thats ok.

Swiss wealth tax won't be applicable (to a large extend) as we have financing which will lower the 'wealth' amount of the flats to almost 0.

I've been told that any swiss income starting in 2024 (once we fully move to CH and give up the flat in Germany) will be taxable only in CH.

Let me know if you have ever experienced anything similar. Thoughts welcome.

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As far as the Swiss are concerned (may be canton dependent):

Anything you earned before the date you moved to Switzerland is not taxed in Switzerland.

After you move to Switzerland you will be taxed for your global income and wealth. (this regardless to what the other country does)

Properties : Real estate abroad is an exception, you must declare it (income and value/wealth) but is not taxed.

However, it is included in the calculation of the tax rate - ability to pay (so basically the properties will increase the % you pay on the Swiss income)

but the impact is generally very small. The amount of debt interest is subtracted from the rental income, and the amount of outstanding debt from the wealth.

The tax rates vary a lot depending on the Canton. Wealth tax rates can be very small. You cannot have 'zero' wealth (but can have zero wealth tax), as

it includes everything, bank account balances on 31.12, cars, etc). Note that in many cases of foreigners moving here, you have to request yourself a tax form as they won't know you own properties.

I am not sure that you won't have to pay anything for 2023 as you say; I think most likely you will end up paying in both countries.

You have to see the double taxation agreements, the center of life argument is not the only/decisive one.

For the German side of taxes I do not know, yet don't assume that because you paid for tax in one country you don't have to pay in another.

Even if this is the case, it may not be automatic: For example your stock portfolio, you will have to include the value for wealth tax,

and dividends are income in Switzerland. Note there is not capital gains tax for financial products.

It is you job to ensure that DE taxes you correctly. Eg You may have to tell the bank/broker that you are now living in Switzerland

so that they stop keeping DE tax, but they may not obliged to do that, and you may have to see how to get a DE tax refund yourself.

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If you are physically living in Switzerland and working in Switzerland, then your center of life is Switzerland.

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Thank you - great info.

The center of life argument is because of my wife will continue living in Germany with my kid for the remainder of 2023. In 2024 we will all be living in Switzerland. Re wealth tax - agreed, will be quite small so not a big factor.

I will def pay taxes in both countries, but these will be taken in consideration by Germany given the double taxation act. Yes, I need to ensure Germany does the tax correctly and takes into consideration whatever I am already taxed in Switzerland for any period of time when I need to be taxed in both places.

Re the property - income will be taxed in Germany. DE is very particular about that.

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is there any exit tax from Germany re stock i.e. there is one if you own 1% of a company in DE and move outside the EU (they basically tax the % of ownership as if you would sell it - pretty large impact).

I assume for stock - single stock (apple/tesla) and ETFs ca. few hundred EUR = not tax will be due to move from DE to CH broker.

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The broker's location doesn't matter, it's part of your wealth anyway. Doesn't the exit tax apply to >1% ownership only?

You'll want to look into using the services of a discount broker, the lower fees amount to free money. The German DeGiro looks interesting, otherwise Interactive Brokers (unbeatable IMHO, but I wouldn't recommend them without at least basic experience). Given DeGiro's inexpensive phone order option they may well be the better choice, at least while your account is small and in spite of higher costs.

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Yes, indeed ext tax apply to => 1% of ownership within a privately held company, so stocks and ETFs aren't affected. Unless you have 1% of apple or any other publicly traded stock.

Portofolio is several hundred thousand, so would love to keep it 'safe' with a big broker - IB properly is the best choice. Thanks for the advise!

LOVE the fact that selling stock / ETFs is NOT taxed in Switzerland!!!

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I was reminded to post under this thread (thank you).

Has anyone had employment income in Switzerland while being a tax resident in Germany?

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Everyone with a G permit.

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Meaning having a swiss salary and living in Switzerland (not Germany) but given the center of vital interest is Germany, where was tax due on the Swiss income, Germany or Switzerland?

This is not a cross-border case.

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Yes, my former boss. Filed zero income in Germany and paid taxes in Switzerland.

I‘ve had it similarly, hubby in Germany, paid taxes only in CH.

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Great, so basically he was a tax resident in Germany and paid only Swiss tax on his income in Switzerland despite residency being DE?

Reason to ask: want to avoid having to pay DE taxes on Swiss income while being exposed to Swiss cost...(logically..)

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He was considered to be tax resident in both countries as his family lived there. As he had no income in Germany he filed zero income there.

Talk to your swiss tax office. They‘ll be more than happy to defend your pov (I know the SH tax office did that for me).

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He was resident in both but considered with center of life in Germany (as his family lived there) - similar to my case.

Thats great. What is SH?

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The Kanton, Schaffhausen.

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I hope this will be the case as there exists a considerable amount of conflicting information available on the internet. Certain sources suggest that foreign income will be subject to taxation based on the German tax rate, whereas other references indicate that foreign income is solely used to determine the tax percentage applied to domestic earnings in Germany.

All while being a tax resident in DE....