Intercantonal fiscal sovereignty: determining tax domicile and the center of vital interests for an elderly and dependent couple

Federal Supreme Court, 02.04.2026, 9C_73/2025

Facts

In 2004, a couple (born in 1936 and 1937) transferred ownership of their family home in U. (ZH) to their daughter as an advancement on inheritance and officially announced their move to a rented apartment in V. (ZG).

In 2021, following doubts regarding the reality of this residence, the tax authority of the city of U. (ZH) reported the case to the Zurich cantonal tax administration. In November 2022, the latter opened tax back-payment and tax evasion proceedings for the 2012 to 2016 tax periods, asserting that the couple's actual tax domicile had never left the canton of Zurich. In May 2023, it issued a formal decision claiming tax sovereignty for those years.

The taxpayers (the husband and the heirs of the wife, who passed away in 2019) contested this decision. The Administrative Court of the canton of Zurich ruled in their favor in December 2024 and annulled the tax back-payment decision. The Zurich cantonal tax administration then appealed to the Federal Supreme Court. The canton of Zug, which collected the taxes for the years in dispute, is also a party to the proceedings and invokes the statute of limitations on the canton of Zurich's right to tax.

Law

The Federal Supreme Court reiterates the fundamental principles governing the determination of intercantonal tax domicile, which is the place of unlimited tax liability.

1. Concept of tax domicile (art. 3 LHID): The tax domicile of a natural person is located at the place where they reside with the intention of establishing themselves permanently. This concept is based onart. 23 para. 1 of the Civil Code.

1. Center of vital interests: According to established case law, the determination of domicile does not depend on the taxpayer's subjective intent, but on a set of objective facts recognizable by third parties. The tax domicile is located at the place that constitutes the person's center of vital interests.
2. Evaluation criteria: When ties exist with multiple locations, the domicile is the one where the relations are closest. The analysis is based on an overall assessment of the circumstances, including:

1. The place of habitual residence.

1. Family and personal ties (place of residence of the spouse, children, social relationships, participation in community life).

1. Professional activities.

1. Housing conditions. For retired persons or those no longer engaged in significant gainful employment, if time spent is distributed equally between several locations, housing conditions and personal and family relationships take on predominant weight.

1. Statute of limitations on the right to tax: A canton may lose its right to tax if it delays asserting it excessively. Three cumulative conditions must be met: (a) the canton knew or could have known the facts justifying its jurisdiction, (b) it waited an excessive amount of time before acting, and (c) another canton has, in good faith, collected taxes that should be refunded. In the context of a tax reassessment procedure, the canton must act without unjustified delay as soon as it becomes aware of the relevant facts.

1. Burden of proof: The tax authority claiming fiscal sovereignty must prove the facts upon which it is based. The Federal Supreme Court specifies that the required standard of proof is not absolute certainty, but rather a preponderance of probability, especially when full proof is inherently difficult to provide.

Application to the specific case

The Federal Supreme Court conducts a detailed analysis of the facts and applies the aforementioned legal principles.

1. Rejection of the statute of limitations defense: The Court dismisses the argument put forward by the canton of Zug. It finds that the canton of Zurich acted with sufficient diligence. Initial doubts arose in 2021, an investigation was conducted, and the tax reassessment procedure was opened in November 2022. This timeframe is not considered an excessive delay justifying the forfeiture of the right to tax.

1. Critique of the lower court's decision: The Federal Supreme Court rules that the Zurich Administrative Court committed an error of law in its reasoning. The lower court incorrectly postulated the existence of a "natural presumption of maintaining domicile" in Zug, which Zurich should have overturned. The Federal Supreme Court corrects this approach: there is no presumption to be overturned. The only relevant question is to determine, based on an overall assessment of all indicators, where the couple's center of vital interests was located during the years 2012-2016.

1. Analysis of indicators and determination of domicile: The Federal Supreme Court proceeds with its own assessment of the facts and concludes that the couple's center of vital interests was in U. (ZH):

1. Family and social ties: This element is deemed decisive. The couple's daughter, who provided them with constant and intensive care ("24 hours a day," according to an inheritance agreement), resided in the neighboring house in U. (ZH). Their children and grandchildren also lived in the canton of Zurich. Social relationships (membership in a local community, visits from relatives) were exclusively concentrated in Zurich. Conversely, no social or family ties could be established in the canton of Zug.

1. Health status and assistance: The couple's health deteriorated significantly during the period in question (diabetes, reduced mobility for the husband; multiple sclerosis and wheelchair use for the wife). This increasing dependency made the proximity and assistance of their daughter in Zurich essential. Their primary care physician was also located in Zurich.

1. Housing conditions: The house in U. (ZH), although owned by their daughter, was significantly more spacious (279 m²) and better suited for the presence of nursing staff than the 100 m² apartment in V. (ZG). Furthermore, the couple's furniture remained in the Zurich house.

1. Professional activities: The husband's residual activity (a mandate in a holding company in Zug and another in a foundation in Zurich) is considered a low-weight criterion given their advanced age and state of health.

By weighing all these elements, the Federal Supreme Court concludes that the ties to the canton of Zurich were clearly predominant.

Outcome

The Federal Supreme Court allows the appeal by the Zurich cantonal tax administration and annuls the judgment of the Administrative Court of the canton of Zurich.

It finds that the couple's tax domicile for the 2012 to 2016 tax periods was in U. (ZH) and that fiscal sovereignty belongs to the canton of Zurich.

Consequently, it annuls the final tax assessments of the canton of Zug for the years 2012 to 2016 and orders the latter to refund the taxes unduly collected from the taxpayers. The costs of the federal proceedings are borne by the taxpayers. The case is remanded to the lower court for a new decision on the costs and legal fees of the cantonal proceedings.

Silex tax newsletter published in collaboration with Anna Vladau, Attorney at Law