Federal Supreme Court, 29.12.2025, 9C_231/2024
Facts
A German company, A.________ GmbH, participated in the construction of the Gotthard Base Tunnel. It maintained permanent establishments in several Swiss cantons (ZH, NW, UR, TI). In 2013, the company entered into a tax agreement (ruling) with the tax authorities of the cantons of Ticino, Uri, Zurich, and Nidwalden. This agreement stipulated that the company's profits would be allocated among the cantons in proportion to the salaries paid to employees within each territory.
For the 2013 to 2016 tax periods, the Ticino tax authority unilaterally decided not to apply the ruling, arguing that the actual facts differed from those presented during the application. It applied a new allocation method based on the kilometers of railway track constructed within its territory, which resulted in higher taxation. This decision was upheld by the Ticino cantonal court. The company appealed to the Federal Supreme Court, citing a violation of the ruling and the risk of intercantonal double taxation.
Law
The Federal Supreme Court reiterates the principle prohibiting intercantonal double taxation (Art. 127 para. 3 of the Federal Constitution). For companies active in multiple cantons, total profit must be allocated between the canton of the registered office and those of the permanent establishments.
Two allocation methods exist:
- The direct method, based on separate accounting for each establishment, is only applicable if the establishments are highly autonomous.
- The indirect method, used in other cases, allocates global profit based on auxiliary factors. For manufacturing and construction companies, case law generally relies on the production factors of "capital" (assets, rents) and "labor" (payroll).
The Federal Supreme Court specifies that the choice of auxiliary factors in the indirect method must be adapted to the specificities of the case at hand. A large construction site, even without permanent fixed structures, is considered a permanent establishment.
Application to the specific case
The Federal Supreme Court examines whether the allocation method agreed upon in the ruling (based solely on payroll) complies with federal law regarding double taxation.
Contrary to the cantonal instance, the Federal Supreme Court deems this method appropriate in the present case. It notes that the "capital" factor (buildings, factories, etc.) was not relevant, as the construction site facilities were not traditional fixed assets. Conversely, the "labor" factor, represented by salaries paid to specialized employees for the realization of a complex engineering project, constitutes an adequate and relevant allocation criterion.
The Federal Supreme Court finds that the cantonal instance fell into a contradiction: it recognized the construction site as a permanent establishment (which is correct) but then refused to apply the usual allocation criteria for construction companies on the grounds that the site lacked fixed structures. However, if a construction site is classified as a permanent establishment, the corresponding allocation methods must apply.
The Court concludes that the salary-based allocation method agreed upon in the ruling complies with Art. 127 para. 3 of the Federal Constitution.
Outcome
The Federal Supreme Court has upheld the company's appeal. It has set aside the cantonal court's ruling and remanded the case to the Ticino tax authority to reassess taxes for the years 2013 to 2016, applying the profit allocation method stipulated in the tax ruling of October 15, 2013.
Silex tax newsletter published in collaboration with Anna Vladau, Attorney at Law
