Tax Treaty Case Law around the Globe 2025

1. Facts of the case

The taxpayer was a resident of Germany and worked in Switzerland for a Swiss company. His employer terminated his work contract on 26 April 2016 to be effective as of 31 October 2016, and he was put on paid leave on 27 April 2026. During 1 January 2016 - 26 April 2016, he spent 11 working days in Switzerland and 52 working days in Germany. The other days were either week-ends and bank holidays or the taxpayer was on holiday or on sick-leave. For 22 days the taxpayer did not commute home but remained in Switzerland after work. He spent all of his days in Germany while on paid leave. The taxpayer received a salary of CHF 101,746.75 during 1 January 2016 - 31 October 2026 and a severance payment of CHF 30,148.25.

The taxpayer and the tax administration disagreed on how the taxing rights for the salary and the severance payment should be apportioned. The taxpayer argued that the salary from the paid leave must be exempt from tax in Germany and appealed the tax administration’s decision. The Court of First Instance held that the salary from the paid leave could be taxed only in Germany and that the taxing right for the severance payment should be apportioned according...