Workshop by René Matteotti and Philipp Betschart on the occasion of the ISIS) seminar on June 02 + 03, 2025 entitled "Current cases on intercantonal and international corporate tax law"
Note: This language version is an automatically generated translation. The text may therefore contain linguistic and terminological errors.
view in original language (German)During the 2020 tax period, A AG had its registered office in the Canton of Zug. Its actual management was located in the Canton of Zurich. This resulted in the following decisions and procedural actions:
October 2021: Final assessment of Zug cantonal and municipal taxes and direct federal tax by the Zug Cantonal Tax Administration, assuming unlimited tax liability in the Canton of Zug.
May 2022: Final assessment of Zurich state and municipal taxes and final assessment of direct federal tax by the Zurich Cantonal Tax Office, assuming unlimited tax liability in the Canton of Zurich.
June 2022: A AG files a timely and properly formatted objection against the two decisions of the Zurich Cantonal Tax Office.
August 2022: Suspension of the appeal proceedings regarding direct federal tax and dismissal of the appeal regarding state and municipal taxes by the Zurich Cantonal Tax Office.
September 2022–April 2024: A AG pursues legal remedies regarding the cantonal and municipal taxes. In June 2024, the Federal Supreme Court rules in the final instance that the actual management of A AG was located in the Canton of Zurich in 2020. Intercantonal double taxation is not eliminated, as A AG acted in a contradictory or abusive manner.
August 2024: The Zurich Cantonal Tax Office requests the FTA, pursuant to Art. 108 DBG, to determine the place of assessment for direct federal tax.
On September 22, 2008, A AG relocated its registered office from the Canton of St. Gallen to the Canton of Appenzell Ausserrhoden. Its purpose is the trade in, as well as the import and export of, cosmetic products.
At its new registered office, A AG had only 13 m² of office space as part of a co-working arrangement (rental price of CHF 300 per month, including utilities and infrastructure costs).
In contrast, A AG retained its premises in the Canton of St. Gallen, which it had been renting since 2004 (100 m² with three offices and an exhibition and storage room).
In the context of a tax jurisdiction proceeding, the Tax Office of the Canton of St. Gallen concluded that it was highly probable that the place of effective management remained in the Canton of St. Gallen. It therefore issued a ruling establishing A AG’s unlimited tax liability in the Canton of St. Gallen.
After all of A AG’s appeals at the cantonal level were dismissed, A AG filed a complaint with the Federal Supreme Court against the Canton of St. Gallen (primary claim) and the Canton of Appenzell Ausserrhoden (alternative claim).
Z, a resident of the Canton of Zurich, owns real estate located in the Canton of Thurgau in addition to his securities portfolio; this property is leased and used for agricultural and forestry purposes. The Canton of Thurgau values these properties at a market value of CHF 1,000,000 (as they are not subject to agricultural land law). Both the Canton of Zurich and the Canton of Thurgau apply the following asset tax allocation:
This results in a taxable asset value of CHF 2,250,000 in the Canton of Zurich (at a rate of CHF 3,000,000).
If the Thurgau properties were located in the Canton of Zurich, they would be valued by the Canton of Zurich at a capitalized income value of CHF 100,000 (since they are actually used for agricultural or forestry purposes). Z therefore files an objection against the assessment decision of the Canton of Zurich and asserts the following tax allocation:
This would result in taxable assets of CHF 2,032,000 in the Canton of Zurich (at a rate of CHF 2,100,000).
The Danish organization A., a non-profit credit institution, purchased several tranches of a Swiss government bond in 2023 with a total value of CHF 10 million. The bond carried a fixed interest rate of 3%, resulting in annual interest income of CHF 300,000. Swiss withholding tax of 35% was paid on this interest, corresponding to a tax burden of CHF 105,000 per year.
To minimize the currency risk associated with the bond, A. entered into a so-called cross-currency rate swap (swap) with an investment bank.
Under the swap, A. received from the investment bank an amount in CHF corresponding to the notional value of the tranche of the federal bond in Swiss francs (“notional”) plus a premium payment equal to the difference between the notional value of the acquired tranche and its market value plus the current market interest rate. A. was required to pay interest on the amount in Swiss francs at the same rate it received on the corresponding federal bond. In return, A. paid the investment bank the equivalent of the notional value of the relevant bond tranche in U.S. dollars (USD) at the beginning of the swap’s term and received the variable USD LIBOR rate plus a “spread” on that amount.
The Federal Supreme Court found, based on the facts, that the swap agreement contained no indication of a payment obligation tied to the actual receipt of interest. Rather, A. would have been contractually obligated to make payment to the swap counterparty even if the interest payments had been wholly or partially withheld. Relying on the double taxation agreement concluded between Switzerland and Denmark, A. filed a claim for a refund of withholding tax in the amount of CHF 105,000, which had been paid to the FTA on the interest payments from the federal bond.
Wasserkraftwerke A. AG (hereinafter “A”) produces electricity and supplies it to its partner companies. These companies compensated Wasserkraftwerke A. AG according to the so-called dividend model. To substantiate compliance with the arm’s length principle, A performed a control calculation. It based the cost basis on operating costs. It applied a 5% cost mark-up. Income taxes were not taken into account.
The tax administration, however, took the position that imputed interest on equity capital must also be taken into account. Furthermore, the cost mark-up should amount to 10%. The tax administration also chose not to include income taxes in the cost basis. Since the price paid based on the dividend model was lower than the amount resulting from the control calculation, the tax administration adjusted A’s taxable income.
