Working in Switzerland, Living Abroad: Cross-Border Commuters and Their Taxes

Every year, Switzerland attracts thousands of cross-border commuters who work in the country but live abroad. Many come from Germany, France, Italy, and Austria, crossing the border daily or weekly. But how does taxation work in such cases? The rules differ by country and depend on specific agreements. This article outlines how taxation for cross-border commuters is regulated, what deductions are available, and what to keep in mind.

Basic Principle: Taxation in the State of Employment

The international rule of thumb is: income is taxed where the work is carried out. For cross-border commuters, this generally means tax liability in Switzerland. However, neighboring countries have agreements with Switzerland that introduce special provisions.

Germany: Cross-Border Commuter Rule for Residents in Germany

• Employment income is generally taxed in Germany.
• Switzerland levies a withholding tax of 4.5%, which is credited against German tax.
• Condition: the commuter must return to their residence in Germany at least 60 days per year.
• If this condition is not met (e.g. longer stays in Switzerland), full Swiss taxation may apply.

France: Taxation in the State of Residence

• Income is generally taxed in France.
• Switzerland levies only a flat 4.5% withholding tax, which is transferred to France.
• Exception: in certain border cantons (e.g. Geneva), Switzerland levies full tax, with France providing a credit in return.

Italy: Special Agreement with New Rules

• Since 2023, new rules apply for Italian cross-border commuters.
• New commuters pay tax both in Italy and Switzerland, with Switzerland allowed to levy a maximum of 80% of the Italian tax due.
• Transitional rule: “old cross-border commuters” (working in Switzerland before 2023) remain taxed exclusively in Switzerland.

Austria: Taxation in Switzerland

• Cross-border commuters residing in Austria are generally taxed in Switzerland, the state of employment.
• Austria only considers the income when calculating the individual’s tax rate (progression).

Deductions for Cross-Border Commuters

Cross-border commuters can also claim certain deductions, either in Switzerland or in their country of residence:

• Work-related expenses: commuting costs, meals, work equipment.
• Insurance premiums: health and life insurance.
• Family-related deductions: child allowance and childcare costs (depending on tax filing requirements).

Double taxation agreements (DTAs) ensure that no double taxation occurs.

Practical Tips for Cross-Border Commuters

• Check agreements: Find out which rules apply between Switzerland and your country of residence.
• Track return days: Especially important for German commuters due to the 60-day rule.
• Use deductions: Cross-border commuters are also entitled to tax benefits – professional advice often pays off.
• Consider social security: In addition to taxes, AHV contributions and social security obligations depend on the place of work.
• Seek professional help: International cases can be complex, so expert guidance is highly recommended.

Conclusion: Clear Agreements Benefit Cross-Border Commuters

The taxation of cross-border commuters in Switzerland is clearly regulated by agreements with neighboring countries – but the details differ significantly. While German and French commuters primarily pay taxes in their country of residence, Austrian commuters are taxed in Switzerland. Italy applies a mixed system with transitional rules. With proper documentation and a clear overview, tax obligations can be met correctly while avoiding unnecessary double taxation.