Determination of tax residence

Many employees commute daily or regularly between their place of residence and workplace, or are even registered as weekly residents at their workplace. This raises the question of which canton is entitled to levy taxes. According to the jurisprudence of the Federal Court, the place where a person has their center of life has the tax authority.

According to the Federal Court, the tax domicile of a non-self-employed person is generally the place where they reside with the intention of permanent stay. The tax center of life interests is determined by the totality of objective, external circumstances from which these interests can be derived. This requires careful consideration and weighting of all professional, family, and life circumstances. On June 6, 2018, the Federal Court assessed a case that brought the tax authority between Zurich and Valais into dispute. A single taxpayer, who had her civil law residence in Valais since birth, had been employed in the Canton of Zurich since 2008 and rented an apartment there from 2013. She was registered in Zurich as a weekly resident. In Valais, she continued to maintain her friendships and participated in clubs. In addition, a room in her parents' house was permanently available to her. In February 2016, the cantonal tax office of Zurich claimed tax sovereignty with a domicile decree, against which the woman filed an objection. She was asked to provide detailed information about her stays on weekends and to substantiate this with electricity and telephone bills, bank statements, and descriptions of her personal and social relationships in Zurich and Valais. She submitted her agenda, a confirmation from her parents, electricity and telephone bills, and a bank statement from her Valais bank, and named Valais colleagues as witnesses. Nevertheless, the objection and the appeal to the tax appeal court were dismissed. As the next instance, the administrative court saw the center of life in the Canton of Zurich, applying the natural presumption developed by jurisprudence that the center of life of a single person over thirty years old who has been at the workplace for more than five years could be presumed there. Moreover, the taxpayer did not give up her apartment after terminating the job and was in Canton Valais on just over half of the weekends in 2015. Therefore, the taxpayer appealed the decision to the Federal Court. The judges in Lausanne confirmed the approach of the lower courts. For married persons, the personal and family contacts to the family place would regularly be given more weight than those to the workplace, if the person concerned is non-self-employed, does not hold a managerial position, and returns daily or regularly to the family place on weekends. The same applies to single persons, with parents and siblings representing the family. The attachment to the parental family is usually looser than that among spouses, which is why higher requirements would apply. The practice-based presumption that relationships of single persons to the workplace come to the forefront when the person has passed the age of thirty and/or has been continuously at the same foreign location for more than five years, was correctly applied by the lower court. The presumption can only be refuted by demonstrating that the single person regularly returns home at least once a week to the place of the family with which they are particularly closely connected, and where they maintain other personal and social relationships. In the present case, although it is undisputed that the taxpayer continues to maintain relationships to the family place, it has not been sufficiently proven that these relationships outweigh those in Zurich, which is why her tax domicile lies in the Canton of Zurich.

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