Federal Supreme Court, 01/13/2026, 9C_702/2024
Facts
In November 2015, a taxpayer (A.) sold the apartment in U./ZH where he resided to his own company based in the canton of Zug, of which he is the sole shareholder and manager. He officially registered his residence in the canton of Zug. In January 2020, he re-registered in U.________/ZH and bought back his former apartment from his company, which was in liquidation. Suspecting a fictitious domicile, the Zurich tax authorities opened an investigation for the 2017 to 2019 tax periods. The taxpayer provided only very partial cooperation with requests for information. The Zurich tax authority asserted its tax jurisdiction, a position upheld by the Tax Appeals Court. However, the Administrative Court of the canton of Zurich overturned this decision, ruling that the Zurich tax authorities had failed to prove that the taxpayer had returned to the canton. The Zurich tax authorities then appealed to the Federal Supreme Court.
Legal Analysis
The Federal Supreme Court reiterated that an individual's tax domicile is located where they reside with the intention of settling permanently (Art. 3 para. 2 LHID), which corresponds to the center of their vital interests. This determination is not based on the individual's internal intent, but on a set of objective facts recognizable by third parties. Relevant criteria include personal, family, and professional relationships, as well as housing conditions. Official registration is an indicator, but it is not decisive. Although the tax authority bears the burden of proof (inquisitorial principle), the taxpayer has a duty to cooperate, particularly in proceedings aimed at determining tax domicile. A lack of cooperation regarding the facts establishing tax liability may be interpreted to the taxpayer's disadvantage. For a change of domicile to be recognized, it is not necessary to sever all ties with the former place of residence. Above all, the relationships with the new location must appear, in an overall assessment, to be predominant.
Application to the Case
The Federal Supreme Court contradicted the Administrative Court's analysis. The fact that the Zurich tax authorities did not immediately contest the departure in 2015 does not mean they recognized the Zug domicile, especially since a tax reassessment procedure remains possible for previous years. The Federal Supreme Court found that the taxpayer failed in his duty to cooperate by not providing the required documents. This failure was noted as evidence against him. An analysis of the objective facts demonstrates that the center of the taxpayer's vital interests remained in the canton of Zurich during the years in dispute. Specifically:
- He retained control of his former apartment (129 m²) in U.________/ZH through his own company, whose business activities had no connection to real estate.
- His declared residence in the canton of Zug was merely a single room with a shared kitchen, which represents a significant and unexplained decline in his living conditions given his financial situation.
- The lease in Zug was unsigned and the rent was allegedly paid in cash, both of which are indicators of a fictitious domicile.
- No proof of moving, selling, or storing his furniture was provided. These elements, combined with the lack of cooperation, demonstrate that the taxpayer's ties to the canton of Zurich remained predominant.
Outcome
The Federal Supreme Court upheld the appeal by the Zurich cantonal tax administration. It set aside the Administrative Court's judgment and ruled that the taxpayer was subject to tax in the canton of Zurich for the 2017, 2018, and 2019 tax periods. The costs are to be borne by the taxpayer.
Silex Tax Newsletter published in collaboration with Anna Vladau, Attorney at Law
