The Supreme Tax Court has refused leave to appeal against a lower court decision that an employee of a Liechtenstein company living in Switzerland was resident in Germany where his family home was and to which he returned at weekends. Continue reading
Tax & Legal
An ECJ advocate general has suggested the court rule that there is no conflict between the discrimination prohibition of the EU/Swiss free movement agreement and the Swiss/German double tax treaty provision for the continued German taxation of German source income of a former resident.
A German resident worked for a Swiss subsidiary in Germany. Later, he moved to Switzerland, but retained his job in Germany. As a cross-border commuter he was no longer a German tax resident. However, the German/Swiss double tax treaty allows Germany to continue to tax the German source income of former long-term residents (other than Swiss nationals) for the next five full years after their move to Switzerland. German national law contains a corresponding (but more extensive) Provision – Sec. 2 of the Foreign Tax Act – whilst the EU/Swiss free movement agreement basically requires each side to treat nationals from the other side as its own citizens in substantially all respects. The taxpayer protested against continued German taxation of his salary, claiming that it conflicted with the spirit of free movement between Switzerland and the EU.
The ECJ advocate general on the case has now suggested the court accept that there is no conflict in letter or spirit between the two agreements, or with the general principles of EU law. The free movement agreement explicitly reserves bilateral double tax treaty provisions, and the provision here at issue follows a legitimate aim of preserving a German taxing right for a limited period. Swiss tax on the German income is credited against the German charge, so the taxpayer suffered no additional burden from his move. The discrimination prohibitions of the free movement agreement do not apply to citizens in their own country, so the German taxpayer cannot claim in Germany that a Swiss national would have been in a more favourable position.
The ECJ case reference is C-241/14 Bukovansky opinion of April 30, 2015.
The finance ministry has issued a decree allowing the spouse living in Switzerland but with no Swiss income to opt for unrestricted German taxation. Continue reading
The cabinet has resolved a bill to be laid before Parliament in order to enact the recently revised treaty with Switzerland to legalise the position of German tax evaders without revealing their identity.
Agreement has been reached with the Swiss finance ministry that a taxpayer on whom information is sought may be identified other than by name and address.
The finance ministry has published the text of a treaty signed with Switzerland to ensure German level withholding tax on investment income, whilst protecting those who choose to move their undeclared funds to a third country. Germany continues to broadly accept Swiss banking secrecy.