No fictitious wage tax deduction necessary
In the case of cross-border commuters who live abroad and work in Germany, the net remuneration to be determined in accordance with Section 47 (1) SGB V does not have to be reduced by a fictitious wage tax when calculating sick pay.
The Saarland Regional Social Security Court (SG Saarland) recently ruled against such a fictitious wage tax deduction: SG Saarland, ruling dated February 17, 2022, Case No. 20 KR 133/20.
Social security background for cross-border commuters
The so-called genuine cross-border commuter in this case is a person who lives in France and works in Germany. According to the double taxation agreement (DBA) Germany – France, the cross-border commuter is subject to taxation in the country of residence, i.e. France, even when receiving social security benefits. In such a case, a special procedure of cross-border commuter fiscal equalization is applied, according to which the state entitled to taxation, i.e. France, pays the state of employment, in this case Germany, compensation in the amount of a part of the tax levied. For this reason, there is no justification for a fictitious payroll tax deduction against the background of equal treatment.
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LGP Löhne und Gehälter professionell, Ausgabe 05/2022, S. 100