What is a tax allocation?

If a taxpayer is liable for taxes in multiple countries, cantons, or municipalities, both the total income and the total assets are distributed to the main and various auxiliary tax domiciles to avoid double taxation.

Levels of Tax Apportionment

Intercommunal tax apportionment is discussed when the main and auxiliary tax domiciles are in the same canton but in different municipalities. In the case of intercantonal and international tax apportionment, the main and auxiliary tax domiciles are located in different cantons or countries. For legal entities, the main tax domicile is located at the company's headquarters or the place of actual administration. The ownership of operational sites or properties in other municipalities establishes auxiliary tax domiciles there.

Ratio Determination for Intercantonal Companies

To calculate the quotas for intercantonal companies, there are two different procedures. In the direct method, taxes are calculated based on the individual balance sheets and profit and loss statements of each operational site. The direct method requires separate accounting and is typically applied when each operational site functions as independent businesses. If no separate balance sheets and profit and loss statements are created, tax apportionment using the indirect method is applied. The overall capital, for example, based on the location of the assets, is proportionally divided. The apportionment of total profit is done for service companies based on revenues and for manufacturing companies based on the employed economic factors of labor and capital. The taxation of shares always occurs at the rate of the whole – thus, it is not possible to circumvent the progression effect through tax apportionment.

Tax declaration for companies made easy – with Taxea.ch

‍You can easily create your company's tax declaration using our tax app taxea. Learn more about taxea here www.taxea.ch