Current news on applying for income tax assessment

Federal Ministry of Finance (BMF) circular of 5 August 2024 now also allows nationals of an EU or EEA member state with residence or habitual abode in Switzerland to apply for voluntary income tax filing in Germany.

On 5 August 2024, the German Federal Ministry of Finance (BMF) published a circular in reference to the judgment of the European Court of Justice (ECJ) of 30 May 2024, stipulating that applications for voluntary income tax filing must also be granted if the applicant is a national of an EU or an EEA member state and is a tax resident of Switzerland or has their habitual abode in Switzerland.

In the case of non-resident taxpayers, i.e. taxpayers who are not resident or who do not have their habitual abode in Germany, income tax is already fully paid when wage tax is deducted at source. For example, if non-resident taxpayers wish to claim income-related expenses to reduce their tax bill, they can apply for an assessment under certain conditions by submitting an income tax return. Until now, however, this privilege has been reserved only for EU/EEA citizens who have their residence or habitual abode in an EU/EEA state.

In its judgment of 30 May 2024, the ECJ decided that this regulation discriminates employees with an EU/EEA citizenship who are resident in Switzerland. In 1999, the European Community, its Member States, and Switzerland concluded an agreement on the free movement of persons, which regulates the mutual right of Swiss and EU citizens to freely choose their place of work and residence within the territory of Switzerland.
The existing income tax law in Germany would restrict the freedom of movement guaranteed by the agreement. 

Anticipating an amendment of the income tax code, the Federal Ministry of Finance has therefore laid down in its circular that an application for voluntary income tax filing must also be granted, if the applicant is a national of an EU/EEA member state and has their residence or habitual abode in Switzerland. This regulation is to be applied for all open cases.

In practice: check tax advantages now

EU or EEA citizens living in Switzerland, especially those with income from employment in Germany, should take the Federal Ministry of Finance circular as an opportunity to check whether they can gain any tax advantages from voluntarily filing an income tax return in Germany.