Autor: Marcel Zutter
Cross-border commuters face specific challenges, particularly with regard to occupational benefits and tax issues. This guide aims to shed light on this complex issue and provide practical information for those who cross the border between their country of origin and Switzerland every day to carry out their work.
Principles of occupational pension provision in Switzerland (BVG)
Occupational pension provision in Switzerland, also known as the Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans (BVG), is a central pillar of the Swiss pension system. This system is based on the three-pillar principle, which aims to provide individuals with an adequate standard of living in old age, in the event of disability or in the event of the death of a family member. The first pillar consists of the state pension scheme (AHV/IV), which covers basic needs. Occupational pension provision as the second pillar serves to maintain the accustomed standard of living by supplementing the benefits of the first pillar. Finally, the third pillar enables individual, voluntary pension activities.
Participation in an occupational pension scheme is very important for cross-border commuters, as it not only ensures retirement provision, but also offers protection in the event of disability and support for surviving dependants. Contributions to the occupational pension scheme are mandatory for all employees in Switzerland as soon as they reach a certain minimum income. This also applies to cross-border commuters who work in Switzerland.
Occupational pension contributions are divided into two categories: mandatory and extra-mandatory contributions. Compulsory contributions are prescribed by law and cover a basic level of protection. Non-mandatory contributions, on the other hand, are voluntary and allow employers and employees to pay into the occupational pension scheme over and above the statutory minimum in order to achieve higher benefits.
The contributions are deducted directly from the salary and shared equally between employer and employee, with the employer paying at least half of the total contributions. The exact amount of the contributions varies depending on age, income and the specific regulations of the pension fund with which you are insured.
Pension fund for cross-border commuters
The pension fund regulations in Switzerland play a special role for cross-border commuters, as they are of central importance both during the employment phase and when returning to the home country or terminating employment in Switzerland. Cross-border commuters are compulsorily insured in the Swiss pension fund, which offers them an additional safety net alongside the German pension insurance.
Payment of pension fund assets
When returning to their country of origin or ending their professional activity in Switzerland, cross-border commuters are faced with the question of what happens to the pension fund assets they have saved. In principle, the mandatory portion of the assets remains in Switzerland in order to guarantee social security in old age, in the event of disability or death. The non-compulsory portion, on the other hand, can be paid out under certain conditions. This flexibility offers cross-border commuters the opportunity to use the capital they have saved specifically for individual life plans, for example to buy their own home or start their own business.
Vested benefits accounts and solutions
Vested benefits accounts offer a solution for the pension capital tied up in Switzerland. These accounts are used to absorb the pension fund assets if there is no direct transfer to a new pension fund – for example, in the event of a change of job or temporary unemployment. Vested benefits accounts guarantee that the pension assets can continue to earn interest and that the insurance cover is partially maintained.
In addition to traditional vested benefits accounts, there are vested benefits solutions that allow the capital to be invested in various forms of investment. This can be an attractive option for investing capital in line with your personal risk tolerance and investment strategy.
Conditions for payment of the extra-mandatory portion
Payment of the non-mandatory portion of the pension fund is subject to specific conditions. As a rule, proof must be provided that you are actually moving to a non-EU/EFTA country or that you are taking up self-employment for which there is no compulsory pension provision in Switzerland. Cross-border commuters who return to Germany can therefore generally only claim the non-mandatory portion of their pension assets.
It is essential for cross-border commuters to familiarize themselves with the pension fund regulations at an early stage and, if necessary, to seek professional advice in order to make the best possible use of their own rights and options.
Tax considerations for cross-border commuters
The tax framework for cross-border commuters between the country of origin and Switzerland is of crucial importance to ensure effective and fair taxation of income. The complex tax situation results from the different tax systems of the two countries, but is mitigated by double taxation agreements (DTAs) and specific regulations for cross-border commuters.
Double taxation agreements and withholding tax
The double taxation agreement between the country of origin and Switzerland aims to prevent the double taxation of income earned by cross-border commuters in one country and taxed in the other. According to the agreement, income is generally taxed in the country where the work is performed. This means that cross-border commuters who work in Switzerland pay withholding tax on their income there. This tax is paid directly by the employer and transferred to the Swiss tax authorities.
Crediting options in Germany
Cross-border commuters can have the withholding tax paid in Switzerland credited against their tax liability in their country of origin in order to avoid double taxation. This is done by submitting the Swiss salary statement with the local tax return, on which the withholding tax deducted is shown. The credit means that the tax paid in Switzerland reduces the tax liability in the country of origin.
The role of the certificate of residence
The certificate of residence issued by the tax authorities in the country of origin plays a key role here. This certificate serves as proof that the cross-border commuter is resident for tax purposes in the country of origin and is entitled to claim the benefits of the double taxation agreement. The presentation of this certificate to the Swiss employer or tax authorities is often necessary to ensure the correct application of withholding tax.
Life and labor law aspects
In addition to tax and pension-related aspects, life and employment law issues also play an important role for cross-border commuters. These include employment law, social security, health and accident insurance as well as special life situations such as buying a home, becoming self-employed or returning to Germany.
Employment law: Employment law in Switzerland may differ in some respects from employment law in other countries, particularly with regard to working hours, notice periods and employee protection. Cross-border commuters should therefore familiarize themselves with the working conditions that apply to them and find out about their rights and obligations. This also includes understanding the regulations on overtime, vacation and public holidays.
Social security agreement: There is a social security agreement between the border countries and Switzerland that regulates the social security entitlements of cross-border commuters. This agreement ensures that periods of employment and contribution payments in both countries are recognized for pension entitlements and other benefits. It is important that cross-border commuters document their insurance periods in full in order to be able to assert their claims in the event of a benefit claim.
Health and accident insurance
Cross-border commuters are generally insured against accidents in Switzerland, as the employer is obliged to provide cover against occupational accidents and work-related illnesses. However, health insurance must be arranged individually. Cross-border commuters have the choice of either taking out statutory health insurance in their country of origin or taking out special cross-border commuter insurance that meets the requirements of both countries.
Outlook for future developments
The dynamic nature of the world of work and social security systems suggests that the framework conditions for cross-border commuters will also be subject to further changes. The digitalization and flexibilization of employment relationships, changes in tax legislation and adjustments to social security systems could have an impact on the situation of cross-border commuters in the future.
In addition, geopolitical developments, the impact of the COVID-19 pandemic and the increasing mobility of workers could influence the regulations for cross-border commuters. It is therefore important that cross-border commuters keep themselves regularly informed and are prepared for changes.
It is advisable for cross-border commuters to build up a network of experts who can advise them on tax, legal and insurance issues. It is also valuable to exchange ideas with other cross-border commuters in order to share experiences and benefit from mutual knowledge.
