German pensions and German real estate

Pensions

German pensions follow the move to Zurich in different ways depending on their nature. Under the convention, pensions and similar remuneration in consideration of past employment are in principle taxable only in the state of residence of the recipient, so that the Zurich resident pays Swiss tax on his German company pension. Pensions paid by a German public body in respect of services rendered to it are taxable in Germany under the rules on public service, unless the recipient is a Swiss national. The Protocol of 2023 has clarified the delimitation between the public service article and pensions paid by public employers for activities of a commercial character.¹ Payments from the German statutory pension insurance are taxable in Switzerland as the state of residence under the rules of the convention, and German pensioners in Zurich must declare them there. Where Germany nevertheless deducts tax or assesses the pension under the limited tax liability, the recipient must invoke the convention before the competent German tax office for non-resident pensioners.²

The Swiss taxation of foreign pensions often surprises German newcomers. Swiss law taxes pensions in full, with a partial relief for certain annuities from private insurance, while lump-sum withdrawals from pension funds are taxed separately at reduced rates. Germans who arrive in Zurich shortly before retirement must therefore compare the German treatment of their pension claims, which is often favourable because of the progressive introduction of deferred taxation under the Alterseinkünftegesetz, with their full taxation in Switzerland. Early withdrawals of German occupational pension capital before the move may be advantageous in some cases.

Real estate

German real estate remains taxable in Germany after the move. Under Article 6 of the convention, income from immovable property may be taxed in the state in which the property is situated, and Article 13 allocates gains from the alienation of immovable property to the same state. Switzerland exempts such income and gains but takes them into account for the determination of the rate applicable to the remaining income.³ German rental income is therefore subject to German limited tax liability under § 49 paragraph 1 number 6 EStG. Gains from the sale of German real estate within ten years of acquisition are subject to German tax under § 23 EStG. The German property must also be included in the Swiss wealth tax return for the determination of the rate. Under § 2 AStG, German real estate constitutes a substantial economic interest if its value exceeds the thresholds. It forms part of the German inheritance tax base in any case.

For the purposes of Article 4 paragraph 3 of the convention, the most important question concerning German real estate is not its taxation but its use. A house in Germany that the taxpayer keeps furnished and at his disposal constitutes a permanent home and allows Germany to tax him on his worldwide income. The advice to let the house to a third party or to sell it before moving is therefore not merely a matter of tax optimisation but a condition for the recognition of the move itself.

Notes

1. LawMedia Redaktion, “DBA Deutschland – Schweiz: Änderungen aufgrund des Revisionsprotokolls vom 21.08.2023”, cited above, which reports that the protocol clarifies the definition of public employment and addresses specific questions of the taxation of pensions under Article 19. ↩
2. Articles 18 and 21 of the convention, Fedlex, SR 0.672.913.62, consolidated version of 27 November 2025, cited above: pensions for past employment and income not expressly dealt with are taxable only in the state of residence. Einkommensteuer-Zuständigkeitsverordnung (EStZustV) of 2 January 2009, issued under § 19 para. 6 AO, § 1, https://jurawelt.com/gesetze/liste-e/estzustv-einkommensteuer-zustaendigkeitsverordnung/, which makes the Finanzamt Neubrandenburg responsible for persons with limited tax liability who receive income under § 49 para. 1 nos. 7 and 10 EStG. ↩
3. Fedlex, SR 0.672.913.62, consolidated version of 27 November 2025, cited above, Article 24 paragraph 2, which provides for the Swiss exemption of income that may be taxed in Germany, with the exception of dividends, interest and royalties, for which Switzerland grants a credit. ↩

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.