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Old 20.10.2014, 02:10
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Source tax B vs C question for german resident wife on elternzeit [maternity leave]

Hello,

I have a confusing situation at hand and would need advice on the below
question..

Me and my wife live in Germany, We have a 2 yr old baby and recently had
another baby as well. I have come over for a contract job in Switzerland which is for a little less than 3 months, while my wife is looking after the babies back
home. I am a UK citizen but work and reside in Germany.

As you may be knowing in Germany my wife is on her eltern geld at the moment and she is not getting paid by her current employer till such time that
the eltern zeit gets over which will be quite a while actually.

In Switzerland what tax tariff do I fall under? 'B' for married, being sole earner
or 'C' for married and having dual income including spouse's?

I would have thought that I'd be under tariff B because I even confirmed from
the finanzamt or tax office in Germany that my wife's eltern geld is a benefit
and not a taxable income, but my Swiss employer has asked me to prove that
my wife is not earning and has put me under C and argues that the authorities
won't accept my wife's eltern geld as non taxable income. They have asked
me to get a certificate from the finanzamt in Germany that proves my wife
is not earning but the finanzamt doesn't give such certificates...Is there any
document I can avail of to help me please?

I'm utterly confused...From what I make out, the tax amount difference is
quite considerable so can anyone help/assist/advise me on what, if anything,
I can do?

Thanks! -d
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Old 21.10.2014, 23:23
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Re: Source tax B vs C question for german resident wife on elternzeit [maternity leav

Hi Guys,

I see no one has replied so I'll make the question a little shorter to aid easy
reading...

basically, me and my wife and newborn live in Germany. I'm here on a short
term <3 month contract. My wife is on maternity leave and will not be going
to work but would be getting her parental allowance - this is a tax funded and
non taxable public benefit, its not for too long and doesn't pay too much
either.

Now, my employer here in Switzerland wants proof that my wife is not
gainfully employed and unless they get that I will be on the higher tax tariff
called 'C' which is for married persons having dual income as against the lower
tax tariff called 'B' which is for married persons with single income, such as is
my case...

The tax office in Germany doesn't hand out certificates or proofs that a
person is not getting paid...

So that's my dilemma...

Any help would be greatly appreciated, of course.
Thanks,
-d
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Old 24.10.2014, 00:53
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Re: Source tax B vs C question for german resident wife on elternzeit [maternity leav

Hi Guys, its getting closer to payday...or should I say lesser-pay-more-tax day.
I was relying on this forum actually...
but it looks like my situation is pretty unique ? oh well.

I asked here because the employers here seem to be slaves to "the authorities"
and haven't helped me much. And the "authorities" at least according to me
don't seem to have guys like me fairly covered in their policies, and concoct
rules based on assumption instead of facts...
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Old 24.10.2014, 19:55
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Re: Source tax B vs C question for german resident wife on elternzeit [maternity leav

Don't stress out, if there is some mistake, you will be able to ask for a correction at the end of the year. If you are not resident here but in Germany, you should be taxed as a 'Grenzgaenger' according to tariff M or N, which is basically a prepayment of the taxes you will have to pay at home in Germany and for most people a flat rate of 4.5%, where it does not matter if you are the sole provider or not. What permit do you have?
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Old 24.10.2014, 20:13
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Re: Source tax B vs C question for german resident wife on elternzeit [maternity leav

The thing is is that in Switzerland, money paid during maternity leave IS taxable as income.

So, from their point of view, you are dual income.

Tom
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Old 24.10.2014, 23:44
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Re: Source tax B vs C question for german resident wife on elternzeit [maternity leav

And actually in Germany, although the Elterngeld is not taxed, it influences the 'progressionsvorbehalt' so your income would be taxed at a higher rate anyway, so I would guess it is correct that tariff C or N applies. You could contact one of the organisations supporting 'grenzgaenger' in the border region for advice. Try and Google 'Grenzgaenger Bodensee'.
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Old 25.10.2014, 02:07
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Thanks for replying, I'm on a temporary work permit because I am on <3 months
contract......

And my wife is resident abroad, the benefits are not paid to her
by a swiss employer, they're paid and that too for a short while only by
the german government...so I am confused and also when the benefits stop
does the tax tariff change as well?

Last edited by 3Wishes; 25.10.2014 at 10:54. Reason: merging successive posts
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Old 25.10.2014, 10:44
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Re: Source tax B vs C question for german resident wife on elternzeit [maternity leav

So you are on an L permit and resident in Switzerland for these few months? This would be more favourable than taxation in Germany whatever tariff you are paying. The CH tax authorities do not care who pays out a second income in a family, even if this income is very small, both partners are taxed at C. Source tax is calculated for each monthly period and the tariff can indeed change each month if your situation changes. If you get no other replies from people in your situation, contact these guys I suggested. You might be able to deduct costs for a second household if you apply for a tax correction at the end of the year.

Last edited by mgosia; 25.10.2014 at 11:12.
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Old 28.10.2014, 14:11
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Re: Source tax B vs C question for german resident wife on elternzeit [maternity leav

Thanks mgosia for your reply.

I dont know what permit I am in , the payroll provider hasnt told me yet, but
I understand when you say it would better to be on tariff C here than being
taxed in Germany.

If however, the salary is deposited into my german bank account will I have
to pay tax in germany as well? My first month salary will be going into it.

I am for a less than 3 month contract here, so what does it mean with
regards to Registering/Registration - Am I taxed as a resident of Switzerland
or of Germany? I do not want to de-register from Germany as I am just a year
away from getting german citizenship. Do you know how long one can stay
outside Germany so that the 8 year period still counts (In 8 years time a
resident can apply for a german passport in Germany)

Also, you said that I could claim for paying for a seperate household abroad
and get deductions for supporting my wife and children, could I do that if I am
on tariff C and how do I do so? If I have to pay more tax just because my
wife is getting a bit of tax funded govt allowance for a short while, I might
as well claim whatever I can, if I know what to claim i.e.

Please advise when free,
Thanks
Dmed
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Old 28.10.2014, 16:07
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Re: Source tax B vs C question for german resident wife on elternzeit [maternity leav

You pay taxes where you reside. If you don't de-register from Germany, you will be taxed there, of which a flat rate of 4.5% will be prepaid as tax at source in CH. More info here (it looks like you need to deliver some document to your employer in CH to prove your status to make sure you will be taxed to tariff M/N not B/C): http://www.gaav.de/grenzgaenger-steuern.php
I don't even think it makes sense to register in CH to pay lower taxes for the 3 months of your contract - as in general you have to spend more than half the year in any country to be considered tax-resident there, but you better ask somebody who is sure, like the organization in above mentioned link. Wherever you are tax resident, you will be taxed on your worldwide income anyway. If you have lived in Germany for 7 years, you must have made a tax declaration there before? Deductions for running a second household also exist there, but how to file a German tax return is outside the scope of this forum

Last edited by mgosia; 28.10.2014 at 16:17.
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Old 30.10.2014, 01:22
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Re: Source tax B vs C question for german resident wife on elternzeit [maternity leav

Hi mgosia, sorry for the delay in replying. And sorry for the long post...
So, what I understand is if I am still registered in Germany, I will pay 4.5% tax on my salary here first and the remaining will be taxed in Germany at a higher tax rate, right ?
Yes, I have made a Tax declaration in Germany before, I don't do it every year though.
Also from what I understand, if I register in Switzerland, I'll have to de-register from Germany first, right? And if I do that I'll lose my time spent there in-lieu of my 8 years prior to qualifying for citizenship there? And may have to start from scratch when I go back?, right?
I will ask the link you sent me, thanks for that. I might also ask my tax consultant in Germany with whom I filed my taxes in the past. I try to avoid involving him because he's expensive but I've got to find out, so I will.
And if I get deductions for running a second household hopefully It will help too.
Regarding my employer, I asked for and got the form they sent to the tax authorities in Switzerland and in that (1) they have put my residence address in Zurich and (2) they also mentioned that my wife is gainfully employed.
No wonder the tax authorities put me on tariff C. Now, HOW this could all happen without any documentation at all to prove my wife's gainful employment is beyond me. Don't the Swiss authorities check the same? The employer keeps saying to provide a certificate from the German tax office that my wife is NOT gainfully employed and the German tax office keep saying that they do NOT give such certificates.
And, I found out yesterday from my wife that she hasn't even started getting the Elterngeld (parental allowance) as yet till date because of some missing document. She did get however (but, before I started working in CH) her Mutterschaftsgeld.
Now can you make out how this all adds up? I haven't a clue.
I await your reply,
Thanks
-dmed
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Old 30.10.2014, 16:54
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Re: Source tax B vs C question for german resident wife on elternzeit [maternity leav

My guess is your only option is to stay tax resident in Germany. The link I sent you explains the procedure: you declare to the German finanzamt that you work in CH for 3 months and your income here. They will give you a bill for prepayment of your taxes and a document that you should send to your CH employer (called 'Ansässigkeitsbescheinigung' or 'Vordruck Gre1') . Based on this document your employer will correct your tax at source to tariff M/N (both 4.5% so it will not matter if your wife is employed or not). At the end of the year you file your taxes in Germany where among other deductions you can deduct the extra costs you made for working in CH, like the second household, and the 4.5% tax you prepaid as tax-at-source in CH. Do contact your German tax consultant as he might save you more money than you have to pay him in your not-so-straightforward situation. Good luck!
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