Glossary

Tax glossary

The key terms around cross-border Switzerland–Germany tax cases — explained briefly and clearly.

Short, general explanations — not tax advice.

Withholding tax (Quellensteuer): Tax withheld at source in Switzerland (e.g. from salary, pension-fund capital payouts or dividends). If you are resident abroad, it can often be reclaimed in full or in part under the applicable double-taxation treaty.
Double-taxation treaty (DBA): A treaty between two states defining which country may tax which income, so the same income is not taxed twice. The Switzerland–Germany treaty allocates, among others, pensions, capital payouts and employment income.
Exit tax (§ 6 AStG): When leaving Germany, the unrealised gains in substantial shareholdings of corporations are taxed as if the shares had been sold at the date of departure — even without an actual sale. On moving to Switzerland a deferral may be available under conditions.
Pillar 2 / pension fund: Switzerland's occupational pension (the second pillar). When the capital is paid out — e.g. after emigrating — withholding tax is deducted; under the treaty the state of residence is often entitled to tax it, so the Swiss withholding tax can be reclaimed.
Pillar 3a: Switzerland's tax-privileged restricted private pension (third pillar, type a). Like Pillar 2, capital withdrawals are subject to withholding tax and are treated under the treaty if you are resident abroad.
Inheritance tax: Tax on what is received upon death. In Germany, allowances and rates depend on the degree of kinship (tax class) and the value acquired. For cross-border estates, check which state may tax and whether foreign tax is credited.
Real-estate capital-gains tax: A Swiss (cantonal/communal) tax on the gain from selling real estate — the difference between sale proceeds and investment cost. Holding period and cantonal rates affect the amount substantially.
Anlage V (rental income): The annex to the German income-tax return for income from renting and leasing. It records rental income and deductible expenses (e.g. depreciation, interest, maintenance) per property.
Tax residence: The state in which a person is treated as tax-resident — usually by domicile or habitual abode. In cases of dual residence, the treaty's tie-breaker rule decides (centre of vital interests, etc.).
Vested benefits (Freizügigkeitsleistung): The accumulated second-pillar pension capital transferred to a vested-benefits account/securities deposit when leaving a pension fund. On payout, the same withholding-tax and treaty rules apply as for pension-fund benefits.