CONVINUS Global Mobility Alert - Week 13.2024

BEST PRACTICE
ANOTHER PRACTICAL QUESTION ABOUT
CROSS-BORDER EMPLOYMENT:
CROSS-BORDER COMMUTERS,
INTERNATIONAL WEEKLY RESIDENTS, OR
EXECUTIVES IN THE GERMAN-SWISS
RELATIONSHIP - WHICH REGULATIONS
APPLY?
FRIEDERIKE RUCH, CONVINUS
Only in the double taxation agreement (DTA) between Switzerland and Germany is there a
regulation for the taxation of earned income concerning the taxation of executive employees as
well as a regulation regarding cross-border commuters.
In some constellations, an employee can be both a cross-border commuter and an executive
employee. In these situations, it is particularly important to assess the details precisely and draw
the right conclusions. According to the DTA between Switzerland and Germany, the regulations for
cross-border commuters take precedence over the regulations for executive employees.
What are the rules for executive employees?
The taxation clause Article 15 paragraph 4 in the DTA Switzerland - Germany reads:
"Subject to the provisions of Article 15a (separate note: taxation rule for frontier workers), an
individual who is a resident of a Contracting State but acts as an officer, director, manager or
authorised signatory of a corporation resident in the other Contracting State may be taxed in that
other State on the income derived from that activity, unless his activity is so limited as to include
only functions outside that other State. If that other Contracting State does not tax such income, it
may be taxed in the State in which the individual is resident."
Until the consultation agreement was issued in April 2023, the tax and financial authorities of both
countries required the individual to be entered into the commercial register.
According to the consultation agreement, which will apply until 31 December 2025, the group of
senior executives is to be expanded to include the following extended group of persons
Persons who are only entered in the commercial register with individual or collective signatures
but without a designation of their function,
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