Prohibition of intercantonal double taxation – Part 1: What is it and what does it cover?

In Switzerland, not only the Confederation but also the cantons (and partly the municipalities) have their own tax authorities. This can lead to uncertainties about in which canton a certain income must be taxed. In order to prevent someone from being taxed twice on the same income, Switzerland observes the prohibition of inter-cantonal double taxation. What this is and what it encompasses will be explained in the first part of our two-part series of articles.

What is inter-cantonal double taxation?

‍Many people in Switzerland have income from multiple sources. Often, these sources come from different cantons. In such situations, the question may arise as to which canton is allowed to tax which income/benefit. When a taxable income is taxed by two different cantons in the same tax period, it constitutes effective double taxation. This is prohibited according to Art. 127 Para. 3 of the Federal Constitution.

‍How is inter-cantonal double taxation addressed?

‍Until today, there is no legislative specification of the prohibition of inter-cantonal double taxation. Its regulations have mostly been developed in jurisprudence and doctrine. Peripherally, inter-cantonal double taxation is regulated by the Tax Harmonization Act (StHG). This act harmonizes the cantonal tax laws so that the same criteria are used when assessing taxable income, leading to fewer conflicts.

‍Which taxes are covered by the double taxation prohibition?

‍The prohibition of inter-cantonal double taxation includes income tax (including wealth taxes as well as profit and capital taxes), personal taxes, church taxes, inheritance and gift taxes, as well as real estate transfer taxes and stamp duties. Could you be affected by inter-cantonal double taxation? Findea would be happy to advise you and help you keep your taxes straightforward and hassle-free.

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