Non-EU student, living in Germany, working for a Swiss company - taxes?

Question

I'm non-EU citizen, but from Europe, now studying in Germany on Master program (so I'm a student, have an Erasmus stipendium, and have 1-year national visa that allows to work 120 full or 240 half days). And now the details of my case that I could not find information about searching on the Internet: I want to work for a Swiss company remotely.

• What kind of taxes should I pay in that case and how much?
• And to what country's government?
• How many hours am I allowed to work? (Visa authorities said I can work not more than 20h/week, in other case I will need another insurance)

Thank you for your time and help.

Answer 1

I'll assume that you would work as a regular (part-time) employee. In this case, you are technically a Grenzgänger.

• You will need a specific kind of Swiss permit ("Grenzgängerbewilligung") allowing you to work in Switzerland. Your employer typically takes care of this - they have more experience than you. You being non-EU might make matters a bit more complicated.

• Your employer will withhold 4.5% of your gross income as source taxes ("Quellensteuer"). When you do your tax declaration, your entire income will be taxed in Germany, since this is where you live. This will happen after your first year of work. Be prepared for a large tax bill (or think of this as an interest-free loan from Germany to you).

  However, due to the Doppelbesteuerungsabkommen (DBA), the 4.5% you already paid to Switzerland will be deducted from the taxes you are due in Germany.

  Judging from my experience, the tax authorities in Germany are not fluent in the DBA - particularly in areas far away from the Swiss border. I had to gently remind them to deduct the source taxes, explicitly referring to the DBA. The bill was revised without problems, but I strongly recommend making sure that your source taxes are correctly deducted from your German tax liability.

• Once your local German tax office understands your situation, you will be asked to make quarterly prepayments, which will be calculated in a way to minimize your later overall tax liability. Budget for these.

• You didn't ask, but I'll tell you anyway: social security will normally be handled by Switzerland as the country of employment - not the country of residence. Your employer will automatically deduct old age, unemployment and accident insurance and contribute to a pension plan, all in Switzerland. However...

• ... if you do a lot of your work in Germany (>25%), which certainly applies if you plan on mostly working remotely, your social security will be handled by your country of residence.

  This is a major pain for your employer, because now your Swiss employer needs to understand the German social security system, how much and to whom to co-pay and so forth. This is a major area of study, and your employer may not want to spend all this effort. My employer has looked at this and requires anyone living outside of Switzerland to limit working from home to less than 25%, because by extension, they would some day also need to do the same for employees living in France, Italy, Austria... or even the UK. They don't want to dig through half the EU states' social security regulations. Therefore, you would not be able to work remotely from Germany for my employer.

  This is actually a fairly recent development that only entered in force at the beginning of 2015 (before that, this was all a bit of a gray area). Your prospective employer may not be aware of all details. So you will need to think about whether you actively want to point them at this (possibly ruining your plans of working remotely), or not (and possibly getting major problems and post-payments years later).

• Finally, I think you can choose whether you want to have your health insurance in Switzerland or in Germany (unless your Swiss obligation to be insured is waived because of your part-time status). Some Swiss health insurers offer plans where they cooperate with German health insurers, so you can go to German doctors just like a German resident.

Source: I have been a Grenzgänger from Germany into Switzerland off and on for over ten years now.

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I can't say anything about whether your German visa restricts you from working in Switzerland. You may want to ask about this at Expatriates.SE, but I'd much rather ask your local German authorities than random strangers on the internet.

Answer 2

Finally, I got response from finance center:

"It doesn't matter where do you study, what does matter is where you live. So, once you live in Germany, you pay taxes in Germany. And it doesn't matter who you work for."

So, there are two options to pay taxes: it's paid by an employer or an employee: If I would work for Swiss company, I need to show how much money I make every month (or year) to Finance Center.