Employment income and cross-border commuters

The general rule and Article 15a

Employment income is taxable under Article 15 of the convention in the state where the employment is exercised. The usual exception applies to short assignments of less than 183 days where the employer is not resident in that state and the remuneration is not borne by a permanent establishment there.¹ For the thousands of commuters who cross the Rhine every day the convention contains a special regime in Article 15a. A cross-border commuter, or Grenzgänger, is a person resident in one state who works in the other and regularly returns from the place of work to his residence. His salary may be taxed in the state of residence, while the state of employment may levy a withholding tax of up to 4.5 per cent of the gross remuneration, provided that the commuter proves his residence by an official certificate. Occasional overnight stays at the place of work do not affect commuting status. The status ends, however, if the commuter does not return home on more than sixty working days in the calendar year for professional reasons. The state of residence takes the withholding tax into account, and Germany does so by crediting it against German income tax.²

The Grenzgänger regime matters for this chapter in two ways. First, it defines the tax position of Germans who work in Zurich but keep their family home in Baden-Württemberg. Such persons remain fully taxable in Germany and pay only the withholding tax in Switzerland. Many Germans begin their Swiss careers in this way before moving their family to the canton. Secondly, the regime illustrates the principle that runs through the whole convention: Germany keeps the primary taxing right over persons whose life remains centred in Germany. A move to Zurich that is intended to change the tax position must therefore change the centre of life, and not only the place of work.

Home office, travel and the protocol of 2023

The spread of work from home after 2020 created new difficulties for the commuter regime, because days worked at home in Germany do not involve crossing the border and could be counted as days without return. The competent authorities responded with mutual agreements, first during the pandemic and then permanently. Among them, the ESTV country page lists an agreement of 2022 on full-day work from home by cross-border commuters.³ The Protocol of 2023 has carried parts of these arrangements into the treaty text. According to the published summaries, salaries are to be allocated on the basis of actual working days confirmed by the employer, with travel days documented in a travel calendar. The definition of the cross-border commuter now refers to commuting on at least a minimum share of the agreed working days.⁴

For entrepreneurs who remain managing directors of German companies after the move, a different rule applies. Remuneration of a German Geschäftsführer or member of a management board has long been subject to special treatment under Article 15 paragraph 4 of the convention. The provision allows the state of residence of the company to tax the remuneration of persons in a leading position whose activity is not limited to the other state.⁵ In combination with Article 4 paragraph 4 and the German rules on limited tax liability, this means that the remuneration of an entrepreneur who continues to run his German company from Zurich usually remains taxable in Germany.

Notes

1. Fedlex, SR 0.672.913.62, consolidated version of 27 November 2025, cited above, Article 15 paragraphs 1 and 2. ↩
2. Fedlex, SR 0.672.913.62, consolidated version of 27 November 2025, cited above, Article 15a paragraphs 1 to 3. The certificates of residence are issued on the official forms Gre-1 to Gre-5 listed on the ESTV country page cited above. ↩
3. ESTV, “Deutschland”, cited above, listing the consultation agreements on the taxation of cross-border commuters working from home, including agreements concluded during the COVID-19 pandemic in 2020 and 2021. ↩
4. LawMedia Redaktion, “DBA Deutschland – Schweiz: Änderungen aufgrund des Revisionsprotokolls vom 21.08.2023”, cited above, which gives the threshold as at least 20 per cent of the agreed working days. ↩
5. Article 15 paragraph 4 of the convention, Fedlex, SR 0.672.913.62, consolidated version of 27 November 2025, cited above: a person resident in one contracting state who acts as “Vorstandsmitglied, Direktor, Geschäftsführer oder Prokurist” of a company resident in the other state may be taxed there on that income, “sofern ihre Tätigkeit nicht so abgegrenzt ist, dass sie lediglich Aufgaben ausserhalb dieses anderen Staates umfasst”. The ESTV country page, cited above, lists a mutual agreement of 6 April 2023 on this provision. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.