Cross-border commuters from France:
If an employee commuting from France meets the requirements as a cross-border commuter, his wages can only be taxed in France. The salary is then tax-free in Germany. However, if an employee transfers his residence from Germany to France, it must be noted in the year of departure that the salary attributable to the cross-border commuter activity is tax-free, but is nevertheless subject to the progression proviso in Germany, i.e. the tax-free salary then increases the tax rate on the income taxable in Germany (§ 32b, para. 1, sentence 1, no. 2 EStG).
The German employer can only refrain from withholding German wage tax if he has received an exemption certificate from the German tax office responsible for him. The exemption certificate must be applied for by the cross-border worker using form no. 5011 (for temporary workers form no. 5011 A). The application must be submitted in good time so that the employer is already in possession of the exemption certificate before payment of the remuneration for the first wage payment period.
The frontier worker submits the form, completed in triplicate, to the German employer, who must make the appropriate entries. The frontier worker then submits the three copies to the competent Centre des impôts in France. The Centre confirms residence within the border zone and sends two copies back to the cross-border worker with the confirmation note. The cross-border worker must in turn hand the second copy to the German employer. The employer then submits the form to the German tax office, which then sends him an exemption certificate.
The exemption certificate is generally issued for 3 years. However, the employee must submit a form no. 5011 completed by the employer to the French tax authorities every year. It should be noted that a new exemption certificate must be applied for in the event of a change of employer, even if the employee remains a cross-border commuter.
Cross-border commuters commuting from Germany to France:
In this case, Germany has the right of taxation for the cross-border commuter's salary. The frontier worker must apply for exemption from French tax using form S 2-240. The employee must complete this form and submit it in triplicate to the French employer, who must add the relevant information to the form. The cross-border worker then submits the application in triplicate to the German tax office responsible for him. The tax office confirms the residence within the border zone and sends two copies back to the cross-border commuter with the confirmation note. Of these, the cross-border commuter must submit one certificate to the French employer, who will arrange for the rest to be done vis-à-vis the French tax administration. The application must be submitted annually. It should be noted, however, that a new application must be submitted if the employer changes, even if the employee remains a frontier worker.