Büsingen am Hochrhein is a German city with a lot of Swiss character. This is because this small town on the Rhine is completely surrounded by Switzerland. Like many territorial enclaves, Büsingen has absorbed many host nation forms and conventions.
The people of Büsingen speak Swiss and prefer to use Swiss Francs instead of Euros. In fact, Büsingen did not even accept the Deutsche Mark until the late 1980s. Even the post office in Büsingen only accepted Swiss francs for Deutsche Marks. Although the children go to the local German school, many high school students end up on the other side of the border. Most Büsingen residents work in Switzerland in nearby Swiss cities and are paid in Swiss francs.
Even their electricity comes from Switzerland. However, they pay German income taxes because technically they are still German citizens. There is a lot of duality in Büsingen. Residents can choose between the two postal codes, and phone service providers from both countries compete with each other for customers, as do insurance companies. You can find both German and Swiss sockets in people’s homes and hotels. They even have two police departments. A troublemaker caught in Büsingen can be tried in either a German or Swiss court, depending on which police force was involved in the arrest.
So how did Büsingen end up in this strange position? It all started with a family feud in 1693. At that time, Büsingen was under the control of an Austrian feudal lord named Eberhard Im Thurn. Eberhard belonged to a Protestant family, but after a quarrel with the pastor of the city, Eberhard was accused of being an underground Catholic.
Shortly thereafter, he was kidnapped by his cousins and handed over to the Swiss authorities in Schaffhausen. Eberhard spent six years in prison before being returned to Büsingen with physical and mental injuries. Upon his return, Eberhard actually converted to Catholicism. The kidnapping and imprisonment of Lord Büsingen at the hands of neighboring Swiss nearly led to war between Austria and Switzerland. Decades later, when Austria sold its local possessions to the Swiss canton of Zurich, it decided to keep Büsingen. In the end, this part of the Austrian Empire was absorbed by Germany, and Büsingen became German territory.
But the people of Büsingen did not like being under German rule, and in 1918 they held a referendum to decide on which side the city would be located. About 96 percent of the voters voted for the Swiss side, but since the Swiss could not offer Germany any territory in return, Büsingen remained German. Another example of such a settlement within Europe is Baarle-Nassau and Baarle-Hertog in Belgium and the Netherlands.
Finally, in 1967, Büsingen officially entered into a customs union with Switzerland, making it the only German territory that is not part of the European Union and therefore EU economic rules do not apply there. This made Büsingen a tax haven of sorts. When residents buy goods in the EU and export them to Büsingen, they can claim back the VAT paid on their purchases. Purchases are subject to Swiss VAT, which is lower than in Germany. Residents of Büsingen also do not pay property tax.
On the other hand, the income tax is higher than in neighboring Swiss cities, which makes many young people leave Büsingen for Switzerland. But the situation changes when a person retires. Retirees, like the rest of Germany, pay little to no tax on their pensions, so for many Swiss, Büsingen is the perfect place to retire.
As for the locals, many believe that life would be much easier if their city was part of Switzerland. But this is unlikely to happen. So people just pretend to be Swiss. They fly the Swiss flag and celebrate Swiss festivals.