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On 1 August, Switzerland’s National Day, summer holidaymakers are out in force. Flotillas of rafts and canoes bob along the Rhine River, sunbathers lay out on the grassy shore, and on the largely empty streets an occasional public bus rumbles by, decorated for the festivities with Switzerland’s familiar red flag with a white cross.

It’s a perfect holiday scene, except for one nagging detail. All this merrymaking marking the anniversary of Switzerland’s confederation is taking place in Germany.

Our spirit and heart are Swiss

“To make holidays here, it’s attractive,” explained Roland Güntert, deputy mayor of the town of Büsingen am Hochrhein in Germany. “This is just something you do. Our spirit and heart are Swiss.”

The reason? This tiny spot of Germany is entirely surrounded by Switzerland, which makes it both an enclave and exclave, geographic oddities to trivia fans, but confounding to everyone else.

For the cartographically curious, an enclave is a territory or section of a territory completely surrounded by another entity – a prime example is the tiny nation of Lesotho encircled by South Africa. It’s closely related to an exclave: a portion of a territory separated from its main part by another territory. Büsingen meets both definitions.

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The village’s eastern border lies a mere 700m from the rest of the Federal Republic of Germany. And while politically this town of about 1,450 inhabitants belongs to Germany, economically it’s part of Switzerland.

Just like Switzerland, Büsingen operates outside of the European Union, and the town has been cited as a model for post-Brexit cooperation. Three years ago, a politician representing Belfast South suggested that Northern Ireland could be granted a special customs status, similar to the one governing Büsingen.

As with Büsingen and Switzerland, there would be limited customs or immigration controls between Northern Ireland and the Republic of Ireland, proposed MP Alasdair McDonnell, meaning that Northern Ireland could leave the EU with Brexit but remain tied to the Republic of Ireland. “There is a precedent for this in the German town of Büsingen,” he said in a speech. Others, however, aren’t convinced, countering that the hamlet of Büsingen is hardly a stand-in for Northern Ireland, which has a population topping 1.8 million.

Güntert says at its heart, Büsingen’s arrangement is pretty simple. “We have German laws and German government, and on the other part, we have the Swiss economy.”

Nowhere is the division more evident than at Restaurant Waldheim. A line painted across its outdoor dining terrace marks the international border, so it’s possible to be served a plate of schnitzel in Switzerland, and then reach into Germany to grab a stein of beer from the other side of the table.

Still, for residents, living a binational life brings up daily contradictions and choices. Although commerce is typically conducted in Swiss francs and most residents work in nearby, larger Swiss towns, they still must pay the higher German income taxes. Children go to a local (German) primary school, but parents decide in which country they’ll attend high school. Likewise, Büsingen locals have both German and Swiss postal and international telephone codes: callers can dial either Germany’s +49 or Switzerland’s +41, and still ring a resident. And perhaps most notably, the town’s football club is the only German team allowed to play in the Swiss league.

It was all an adjustment for Sarah Biernat, who lives 30 minutes away in Singen, Germany, and crosses multiple international borders during her daily commute to Büsingen. She knew nothing about the area, having come to the town only once as a child for a dental appointment. Then, 11 years ago, she took a job at Büsingen’s Alte Rheinmühle hotel, and on her first day of work found herself giving a customer change in Swiss francs. “It was like play money to me,” she said.

Even a decade later, the town still feels and sounds Swiss to her. “They talk like the Switzer. Their German is different.”

As with most of the globe’s enclaves and exclaves, there’s quite a backstory behind this territorial identity crisis.

For Büsingen, the problem began in 1693, long before Germany existed. The village was under Austrian control when a family feud over religious allegiance led to the kidnapping of the Catholic-leaning feudal lord of Büsingen. His cousins hauled him to the nearby Swiss (and Protestant) town of Schaffhausen, where he was sentenced to life in prison. It took six years and the threat of Austria invading Schaffhausen to finally free the lord.

They said it would never go back to Switzerland – never, ever, ever

A few decades later, when Austria sold its local holdings to the Swiss canton of Zurich, it held on to Büsingen – strictly out of spite, according to historians. “They said it would never go back to Switzerland. Never, ever, ever,” the deputy mayor said.

That meant that when parts of the Austrian Empire were later absorbed by Germany in the 19th Century, Büsingen was claimed by the new republic.

The orderly Swiss tried to clear up the mess in 1919 when it held a referendum that saw Büsingen residents voting by 96% to leave Germany. But Berlin wasn’t interested in giving the town up because Switzerland offered nothing in return.

Even in the chaos of World War Two, the arrangement remained. Before German soldiers could return home to Büsingen on leave, they had to check their guns at the border and cover up their military uniform with a cape, said Güntert, whose relatives served in the German army. After the war, the division continued, turning daily shopping trips into an exercise in global trade.

“It was complicated,” said Elizabeth Arpke, who grew up in the area but was visiting Büsingen for the holiday. “When you bought meat in Germany, you’d have to cross the border [into Switzerland] and fill out forms.”

Finally, in 1967, Germany and Switzerland agreed to add Büsingen to the Swiss customs area, which removed border controls and checkpoints around the village of less than 8 sq km.

Today, the problem is taxes.

Because the cost of living is higher in Switzerland than Germany, Büsingen residents typically earn larger salaries than their fellow countrymen. But since Germany has a higher tax rate, workers end up paying more than their Swiss neighbours.

Of course, there’s a flip side too. Taxi driver Caroline Major estimates her rent is 50% less in Büsingen than if she lived a few kilometres away in Switzerland. She relocated from the German town of Friedberg two years ago and couldn’t be happier. “I love my life. There’s good energy here. It’s so, so nice here.”

Others have discovered that too. Because Germany offers a tax break for pensioners, Büsingen attracts retired Swiss residents. The result: “The young people go to Switzerland, and the old people come here. The village gets older every day,” said Rainer Krause, whose daughter runs Restaurant Waldheim on the international border.

Politics aside, Büsingen makes for a lovely Rhine Valley getaway.

Those intrigued by Büsingen’s centuries-old spat can hike a well-marked path, which the town interchangeably calls the Enclave or Exclave Trail. The 11-stop excursion takes in river views, international border markers and even a vineyard, where terraces of German Riesling and Pinot Noir grapes ripen before they’re trucked a few kilometres away to be made into Swiss wine.

Perhaps the trail’s first stop, a town hall mural on the village’s main street, explains it best: a smiling worker holds a pole flying a German flag, while a Swiss one sticks out of his jacket pocket.

Despite the confusion of living in a no-man’s land, life seems pretty good here.

The deputy mayor notes how his village is ideally located under an hour by train from Zurich airport and a 10-minute bus ride to the Swiss town of Schaffhausen. As he sips an espresso at an outdoor cafe overlooking the Rhine, he points to the river where he played as a child and across the bank to the forest, a nature preserve protected from development.

The town, he says, “is like paradise” – another place, it’s worth noting, whose borders have never quite been defined.

Places That Don’t Belong is a BBC Travel series that delves into the playful side of geography, taking you through the history and identity of geo-political anomalies and places along the way.

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