Cross-border commuters from Germany: health insurance, taxes and social security

Who counts as a cross-border commuter between Germany and Switzerland?

You are a cross-border commuter if you live in Germany, work for an employer in Switzerland and return to your place of residence regularly. However, immigration law, tax law and social security each use their own criteria – so it pays to look closely.

For the cross-border commuter permit (G permit), it is generally sufficient to return to your place of residence in Germany at least once a week. The application is usually made by your employer to the cantonal migration office. Its validity depends on the duration of your employment contract.

For tax purposes under the double taxation agreement, a stricter standard applies: in principle, you are expected to return to your place of residence every day. Those who confuse the two rules are often in for a surprise when it comes to withholding tax.

Health insurance for cross-border commuters: right of option within three months

Cross-border commuters resident in Germany are, in principle, subject to compulsory health insurance in Switzerland under the Health Insurance Act (KVG). On application, you can be exempted from this obligation and insure yourself in Germany instead. This choice is called the right of option.

The application must reach the competent authority within three months of starting work in Switzerland. The decision generally applies for good and can only be changed later in exceptional cases. It usually also covers family members who are not themselves employed.

If the deadline passes without a decision, you remain subject to compulsory insurance in Switzerland. If you then do not arrange a health insurer yourself, the authority may assign you to one.

Swiss or German health insurance: how to compare properly

With Swiss basic health insurance, you pay a flat premium per person, regardless of income. Cross-border commuters pay specific premiums for insured persons resident in Germany. Treatment is generally possible in both countries.

In Germany, contributions to statutory health insurance depend on your income, while private health insurance depends on age, health and tariff. Whether you are accepted into statutory insurance depends on your insurance history.

Before deciding, clarify whether and how your Swiss employer contributes to the premiums. Compare not just today's price but also how your situation is likely to develop:

• Your income today and in a few years
• Family: partner and children without their own income
• Where you want to be treated – family doctor, specialists, hospital
• Long-term care insurance and benefits in old age
• Plans to move to Switzerland later or to change jobs

Withholding tax for cross-border commuters from Germany: 4.5 per cent at most

The double taxation agreement between Switzerland and Germany contains a special rule for cross-border commuters (Article 15a): your salary is, in principle, taxed in Germany. Switzerland nevertheless deducts a withholding tax, which is capped at 4.5 per cent of your gross salary. This Swiss tax is credited in Germany.

The capped withholding tax requires a certificate of residence from your German tax office (form Gre-1), which you hand to your employer. It must be renewed regularly. Without it, your employer will generally apply the ordinary withholding tax rate – which can be considerably more.

• Request the certificate of residence from your local German tax office
• Hand the certificate to your employer before your first salary payment
• Arrange the renewal in good time for each new year
• Check your payslip: is the capped rate being applied?

Non-return days: when you lose cross-border commuter status

If you do not return to your place of residence for work reasons on more than 60 working days a year, you no longer count as a cross-border commuter for tax purposes. Typical reasons are business trips with overnight stays, training courses or project assignments. Your employer certifies the non-return days.

If you fall outside the cross-border commuter rule, Switzerland may tax a larger share of your salary. So keep track of your travel days and agree with your employer how they are recorded.

Special rules also apply to senior executives with signing authority. If you take on such a role, have the tax implications checked in advance.

Filing a German tax return as a cross-border commuter

As a cross-border commuter, you generally file an income tax return in Germany every year. In it, you declare your Swiss salary and have the Swiss withholding tax credited. Contributions to AHV/OASI and your pension fund are taken into account according to their own rules – this is where mistakes often happen.

Keep your salary statement, withholding tax certificate and pension fund statement to hand every year. You should also document your commuting costs and home-office days carefully.

Working from home as a cross-border commuter: social security and taxes

For social security, the law of the country in which you work generally applies. However, if you work a substantial part of your time in your country of residence – under the general rules, 25 per cent or more – your social security cover may switch to Germany. There is a special rule for teleworking: on application, you remain insured in Switzerland with a home-office share of less than 50 per cent.

Working from home can also trigger different tax rules, for example if you do not meet the cross-border commuter rule. So clarify any home-office arrangement with your employer before agreeing to it, and record your working days in your country of residence in writing.

AHV/OASI, pension fund and pillar 3a for cross-border commuters

If you work in Switzerland, you generally pay into AHV/IV/EO (old-age, disability and income compensation insurance), unemployment insurance and – above a certain salary – a BVG pension fund. Your employer insures you against accidents, and if you work at least eight hours a week, also in your free time. If you become fully unemployed, your country of residence, Germany, is generally responsible for unemployment benefit.

Cross-border commuters can open a pillar 3a account if they are subject to AHV/OASI contributions in Switzerland. But because your salary is taxed in Germany, its tax effect is often different from that for Swiss residents. Check this before you sign a contract.

Family allowances are generally paid by your Swiss employer. How they are coordinated with German child benefit (Kindergeld) depends on whether and where your partner works.

Checklist for starting out as a cross-border commuter

These points should be dealt with in the first few weeks after signing your contract:

• Apply for the G permit together with your employer
• Request certificate of residence Gre-1 from your tax office and hand it in
• Compare health insurance and decide within three months of starting work
• Put your home-office arrangement with your employer in writing
• Check your pension fund statement and accident insurance
• Collect documents for your German tax return from the start

Common mistakes made by cross-border commuters from Germany

We see these mistakes again and again – and almost all of them can be avoided:

• Right-of-option deadline missed because the start of work was not recognised as the key date
• Health insurance chosen on today's price alone, without considering family and future
• Certificate of residence handed in too late – resulting in excessive withholding tax
• Non-return days from business trips not counted
• Home office agreed without checking the consequences for social security and taxes

How PROFINIO supports you as a cross-border commuter

Your dedicated contact person compares health insurance in both countries before the deadline expires and keeps track of withholding tax, your certificate of residence and retirement savings. In the client portal, you simply upload your salary statement and certificates with your phone and see which deadline is next. We advise you in German, French, Italian or English.

Frequently asked questions