With the whole working from home thing for office employees I am considering to live across the border in Germany.
I want to understand the TAX vs Cheaper rent situation. I’m an EU citizen so there will be no trouble to live in Germany.
Can anyone suggest a reliable calculator ( in English ) for taxes I need to pay in Germany ?
I will probability pay CHF 200 less tax in Switzerland but than I need to pay some tax in Germany
Sorry, don’t know if they have an English version as well. Germany is a big country and just isn’t as internationally minded. For instance, there’s hardly even any banks that offer service or even official information in English. Even the federal government (ministries etc.) only have reduced or skeleton service in English.
That’s 200 a month I would pay less in Swiss tax according to online calculators. Also rent and other expenses are another savings opportunity.
I understand I will own the German tax man some money, trying to figure out how much and see if it’s worth considering a move.
From what I have heard and/or know - and I quickly looked it up again - there’s only a flat 4.5% Swiss tax when you live in Germany as a cross-border commuter. Other than that, you’ll be paying normal taxes in Germany.
For which I can’t imagine there’d only be a 200 CHF difference “less tax in Switzerland”. Unless you’re on a way-below average salary or contract. Which might very well be - but doesn’t quite fit into the picture your earlier statements painted (see above). I mean… you’d have to earn less than me. And I don’t think there’s anybody on this forum who makes less than me (as/on a 100% full-time occupation).
My understanding is, if you live in Germany you end up paying the higher German tax and offset any tax already paid in CH ( 4.5%) Then there’s the German solidarity surcharge.
I think you get away without paying the social deductions in Germany (Pension, Unemployment, health and Care insurance) as they are already paid in CH.
All in all, I’d pay about 500 euro more in Germany.
I won’t be able to offset that with a lower rent and cost of living + having to commute 20 minutes by car instead of walking or cycling.
The situation would become more unfavorable when will have a second income.
It seems that working in CH and living in DE is a good idea if you indeed earn quite less, maybe part time employment, fresh out of school or something similar.
Ah, understood. That’s where the 200 CHF difference comes from: 7.8% withholding tax while living in CH vs. 4.5% while living in DE - which in the end wouldn’t matter anyway, as it’ll be offset against the German tax.
From what I understand yes. I think you can also deduct them as expenses on your German tax return (quick googling here)
I think my figure was similar, when I calculated it a couple of years back. It definitely didn’t seem worth it, unless it was part-time employment (less than 80%) - however, with part-time employment, the commute on public transport can get much more expensive, relatively: There’s hardly any offer in-between monthly passes and single tickets.
Another good one: Having a family with children.
I’ve been working and living very close to the border for years. During that time, I’ve come across very few Swiss citizens who living in Germany and commuting back to CH for work. But of these few that did, all of them had at least two kids.
The lower cost of accommodation is of course true without kids: If you’re the type to enjoy having your own house and garden, Germany is less expensive.
I currently work in Schaffhausen, will see where my next job is.
I think for the time it’s best if I’m flexible location wise.
Then there’s the Dividend tax and Capital gains tax in CH vs DE.
Not worth it on the long run as I expect my income to increase.
Maybe later in life
PS: whilst we’re on it, even though it might not be relevant to your (Dunkoff’s) personal situation:
I believe living in Germany becomes much more attractive in terms of quality of life and costs the more children (or other members of family) you have. I’ve also tried to calculate this a while ago, which seemed to confirm this.
I suspect many young Swiss families are just unable or unwilling to “think out of the box” and consider a move to Germany, even though it would make sense for them in many respects - including a financial/costs perspective.
And taxation gets very messy, once it’s not handled automatically by your broker.
Agree with you, It’s worth considering to live in Germany and run the numbers when something changes in your family, like having another baby or changing your job.
Last 2 years I commuted about 3 hours a day.
Now I walk about 30 minutes each way and I can’t put a price on that
The number seems about right. I’ve run the calulations recently.
This. If you are married and have two or more children, you’ll probably fare better financially in Germany. Also, the cost of childcare is lower there.
For a single high-income earner, Switzerland is always the better choice.
Partly true. Costs of accomodation close to the border is also high, unless you really want to live somewhere in the middle of nowhere. E.g. in places like Lörrach or Waldshut flats are also pretty expensive.
Taxation gets automatically handled by the broker if you are living in Germany. They will keep Kapitalertragssteuer from your dividends. Capital gains are taxed in Germany (huge disadvantage vs Switzerland).
Even if you are able to save some taxes, this is the most important point for me. I don’t like to spend hours on commuting. Those are hours you can use for something better (time with family, work one hour more etc)
Correct. No EU broker will offer VT, due to PRIPs. The EU demands all vendors to have a detailed information sheet about what the client is investing in. The original Vanguard ETFs (VT, VTI, VEA etc) don’t have that. That’s why you can only buy ETFs like VWRL in the EU.
I’m not even sure if you are able to register at IB if you are living in Germany or any other EU country.
And if you are able to register, if you have the option to buy VT.
Maybe others know more here.