COVID-19: New mutual agreement between Switzerland and Germany for cross-border commuters - Tax and Legal blog

FSI_20171009_Blog_Tax strategies in the spotlight – a UK requirement with global implications

Switzerland and Germany have just concluded a mutual agreement which settles the question of the taxation of their cross-border commuters who are forced to work from home, due to the sanitary measures taken by their governments or by their employers. Furthermore, the agreement also answers the question how short-term compensation and other state support benefits are to be treated under the double tax treaty between Switzerland and Germany.

The agreement instates a kind of fictional, deemed cross-border commute during the months of March to June 2020 in order to allow cross-border employees to still qualify for the same tax treatment despite not actually having commuted. The impact is described below depending on whether an employee is a daily (cross-border commuter) or weekly commuter (cross-border worker).

Cross-border commuters (“Grenzgänger”):

For the period from March until the end of June, cross-border commuters working from home will be deemed as if they had physically gone to their usual place of work for tax purposes. As a result of this assumption, the employees still qualify as cross-border commuters (“Grenzgänger”) and the special cross-border taxation regime under the double tax treaty applies (4.5% taxation). The mutual agreement also contains rules for the treatment of harmful non-return days (so-called “60-days rule”).

Cross-border workers:

A similar rule applies for cross-border workers who do not qualify for special cross-border taxation regime (individuals who normally stay in the work country during the week but who have their centre of vital interests abroad). The working days that are forced to be performed in the home country will be deemed as working days of the other state.

In substance, according to this agreement, cross-border commuters working from home continue to benefit from the same tax treatment as if they had physically gone to their usual place of work.

Employees must apply for this continued treatment and provide evidence based on records, accompanied by confirmation from their employer.

The provisions of this mutual agreement take effect from 11 March 2020 and apply until and including 30 June 2020. The agreement is tacitly renewable, at the end of each month. It will cease to have effect when the two States have ended travel warnings and restrictions.

Deloitte's view

This agreement reflects the recommendations recently made by the OECD and is a pragmatic approach to very relevant questions which should reassure cross-border commuters and contribute to the security of law. Swiss employers with a significant German cross-border population may wish to prepare standard confirmations for their employees to be able to deliver them quickly upon request from the employees.

Author: Andreas Tschannen - Senior Manager, Global Employer Services


If you would like to discuss more on this topic, please do reach out to our key contacts below.

Explore our collection of Swiss COVID- Tax & Legal insights designed to help companies in Switzerland to better navigate the COVID-19 crisis.

Key contacts


David Wigersma - Partner, Global Employer Services

David has 17 years of experience in the area of international corporate and individual taxation planning. He specialises in addressing the complex compliance needs of a cross-border workforce with varied elements of compensation.


Andreas Tschannen

Andreas Tschannen- Senior Manager, Global Employer Services

Andreas is a Senior Manager in the Global Employer Services (GES) practice of Deloitte in Zurich. He has broad experience as Swiss tax advisor with focus on Swiss individual taxation and international executive taxation, salary withholding tax, social security tax including pension fund as well as compensation and benefits and design and implementation of Tax/IA policies.


Tabea Nyfeler_110x110

Tabea Nyfeler - Senior Manager, Global Employer Services

Tabea is a recognised expert in the fields of international tax and social security planning. She is the co-lead of our international social security team in Switzerland. Over her career, she has acquired experience in a number of other areas of reward and mobility, including : global employment taxes, rewards, equity based compensation and pensions. Moreover, she has considerable experience in managing global mobility projects for multinational companies across a broad range of industries. Tabea is a Certified Tax Advisor and has authored publications on international tax and social security law.



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