Cross-border commuters: tax liability on wages according to the DBA

The EU definition of a cross-border commuter, which, in addition to traveling from home to work across a border, requires daily or weekly return to home, is essential for the social protection of the workers concerned in the European Union. As a rule, the place where the work is physically carried out should determine which social system the employee belongs to.

As long as there is only one place where the work is carried out, it should not be too difficult to correctly determine the SI obligation. Exceptions confirm the rule; the only thing worth remembering at this point is the so-called posting by the employer to another country. It becomes more difficult when the work is carried out in several countries.

Since SV law only knows black or white, i.e. 100% obligation either in one or the other country, you have to check it very carefully. This becomes clear in the following example, which only applies to the EU states and Switzerland:

a) Switzerland

Art. 15a of the German-Swiss DBA defines the cross-border commuter as an exception to the rule: the employee who returns to his place of residence in the other country every day or almost every day. This exception does not apply if the employee does not return to his place of residence for more than 60 days for work-related reasons. The days have to be described more as nights, so it's about the number of overnight stays away from home. 

In all seriousness, arguments regularly arise about how to count from 1 to 60. In principle, only those days/nights on which work is carried out can be taken into account. Weekends are therefore generally not possible. Sick days do not count either. Illness counts as a private reason even if it is a work-related illness. If the treating doctor, who lives in Basel and works at the Freiburg University Clinic, is on night duty there in order to be quickly available in emergencies, then his overnight stay, which is clearly work-related, does not count when determining the 60 nights.

In this respect, it is assumed that the service was carried out continuously from one day to the next. The professional reasons are considered proven if the distance between home and work (the exact address is decisive) is more than 110 km or if the one-way journey would take longer than 1,5 hours.

If the employee has a vehicle at his disposal, then the journey with this vehicle is decisive, otherwise the public transport timetables apply. The night must be spent in Switzerland, otherwise it doesn't count. So anyone who uses accommodation right across the border on the German side for cost reasons will be treated differently for tax purposes than if they stay overnight on the Swiss side. 

If the employee travels on business and spends nights in third countries, then the income to be divided up on a daily basis is not taxed in the country of work, but in the country of residence. However, this does not apply to senior employees if their function is registered in the commercial register or in the Swiss Official Commercial Gazette (SHAB). Managing directors, directors, authorized representatives and administrative boards count their 60 days differently. Not only those in Switzerland apply to them. Germany, but also the days spent in third countries and in the home country are taken into account when checking whether the border commuter's exemption is fulfilled or not.

For example:

The managing director of a Swiss AG is also the managing director of the German subsidiary registered in HR. He comes to Germany every two weeks and then stays for two days and thus has an overnight stay in Germany. Calculated per year, there are around 40 overnight stays.

He is not a cross-border commuter because he does not regularly commute between his place of residence and his place of work. A portion of his salary is subject to tax in Germany. Because it depends on the place where the work is carried out, if necessary it is divided. However, if he also travels to third countries in the interests of the German company and spends a total of 60 overnight stays, then he mutates into a cross-border commuter and is 100% taxed in Switzerland.

b) France

In the relationship between Germany and France, cross-border commuters are defined according to whether they live and work in the border area. The relevant border area includes all municipalities whose area, in whole or in part, lies no more than 20 km from the border. For this purpose, lists of the affected political communities are kept. However, employees living in the French border departments of Haut-Rhin, Bas-Rhin and Moselle are also considered cross-border commuters if their place of work in Germany is a maximum of 30 km from the border. 

What is already complicated enough in Switzerland as a 60-day rule is actually a 60-night rule, but in France it is dealt with in a 45-mixed day and night rule that differs in content. If an employee who is fundamentally recognized as a cross-border commuter does not return to his place of residence every day or, in exceptional cases, is employed at places of work outside the border zone, the status of cross-border commuter is not lost, provided that

• the employee is employed in the border zone for the entire calendar year and does not return to his place of residence for a maximum of 45 nights during this time or works for his employer outside the border zone for a maximum of 45 days or 

• the employee is not employed in the border zone for the entire calendar year, but at the same time the days of non-return or work outside the border zone do not exceed 20% of the total working days.
  Once the 45 days or nights have been reached, cross-border commuter status no longer applies here either.

Overnight stays that can be viewed as harmful or, depending on your perspective, also useful include, for example, overnight stays on business trips lasting several days outside the border zone and also one-day business trips outside the border zone if the activity is carried out outside the border zone for the entire working day. Shift workers or night shifts for doctors and other groups of people spend the night in the country of work, but this night does not count towards the 45 nights.

For example:

An employee from Mulhouse works for a company in Lörrach. Both cities are in the border area, so cross-border commuter status is generally an option. As a rule, France will tax the wages earned in Germany; the employer does not deduct any income tax, provided he has an exemption certificate.

However, the wages are 100% subject to German social security. However, if the employee is also deployed outside the border zone, for example at a branch in Stuttgart, then the cross-border commuter status no longer applies and the wages attributable to the days worked in Germany are taxed in this country, despite an exemption certificate, if at least 45 such days occur in the calendar year.

By the end of August there were said to be 40 days, then another 11 days in September, and from October onwards he only works in Lörrach. In this case, the employer must also withhold and pay income tax from September up to and including December. The employee is subject to tax on his income in Germany for the entire year. Further case studies are included in the mutual agreement dated February 16.02.2006, XNUMX.

c) Austria

A regulation comparable to France applies. However, the border zone of 30 km is defined by a straight line on both sides of the border. Special regulations have been made with Austria for the application of the 45-day period for professional drivers. Remuneration paid to the managing director, management board, supervisory board and administrative board is taxable in relation to Austria where the company has its registered office or is resident for tax purposes.

d) Cross-border commuters from other countries

In some cases, Germany also had cross-border commuter regulations with other neighboring countries in the past, such as the Netherlands and Belgium; but these have been repealed.