• Service: Tax, German Tax & Legal Center (GTLC)
  • Type: KPMG in the Media
  • Date: 3/1/2014

Memorandums of understanding not necessarily binding! 

International tax law as it relates to employee severance payments has been a topic of frequent discussion over the past few years. Heiko Kubaile and Silke Mies give an update on the current developments.
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According to a standing supreme court ruling by the Federal Fiscal Court of Germany (BFH), severance payments which become due following the loss of a job are not subject to the “place of work” principle under Art. 15 of the Double Tax Treaty between Germany and Switzerland (DTT DE-CH) rather these are taxed in the recipient's country of residence.


In concrete terms this means that if an employee of a German company becomes entitled to severance pay after his or her employment has been terminated and moves to Switzerland prior to the payment of this amount, the right to tax this severance payment falls to Switzerland.


Heiko Kubaile

Heiko Kubaile

Partner, Head of German Tax & Legal Center, Tax advisor

+41 58 249 35 10

Silke Mies

Silke Mies

Senior Manager, German Tax & Legal Center

+41 58 249 53 53

German Tax & Legal Center (GTLC)

The German-Swiss economic area harbors fiscal and legal opportunities and risks, for companies as well as for private individuals. With its GTLC, KPMG offers qualified tax advisory services - for both countries from a single source.