Canton Zug must repay paid taxes

Despite having an apartment in the canton of Zug, the Federal Supreme Court ruled that the couple's centre of life was in the canton of Zurich. The Canton of Zug must now refund the cantonal and municipal taxes already paid.
 

According to a recently published ruling by the Federal Supreme Court (Bundesgericht), an elderly couple was liable for taxes in the canton of Zurich, not Zug, between 2012 and 2016. Switzerland's highest court thereby overturned a decision by the Zurich Administrative Court (Verwaltungsgericht), and sided with the Zurich cantonal tax office (Steueramt), which had appealed the decision. The Canton of Zug must now refund the cantonal and municipal taxes already paid by the couple for these years.

According to the ruling, the couple lived in the canton of Zurich until 2004. In that year, they transferred their semi-detached house to their daughter, and claimed to reside in a 3.5-room apartment in Zug. In 2019, the couple moved into another property in the Canton of Zurich, owned by their daughter, as tenants.

Where is their centre of life?
Despite having an apartment in Zug, it was clear to the Federal Supreme Court that the couple's centre of life was in Zurich between 2012 and 2016. The ruling made no mention of the years before that, and the tax years 2017 and 2018 were also not addressed, as the regular tax assessments were still pending.

According to the ruling, the decisive factor is the strong family and personal ties to Zurich. The couple maintained a close relationship with their daughter, who also cared for her parents as their health deteriorated. Medical treatments in the canton of Zurich and membership in a local community were also mentioned. In contrast, the ruling states that "no family or personal ties whatsoever" were evident in the canton of Zug.

Uncertainties surrounding residency
According to the Federal Supreme Court, the living situation of the couple also points to Zurich being their centre of life - even though the electricity consumption in their Zug apartment indicates "intensive" use. The couple regularly stayed in the above-mentioned semi-detached house in Zurich, which also offers more space than their residence in Zug. The court also considered the proximity of their daughter, who provides care for the couple, as an indication that their centre of life is in Zurich.

The tax dispute began in 2021. Following a report from the municipal tax office in the canton of Zurich regarding uncertainties surrounding the couple's residency, the cantonal tax office initiated a supplementary tax assessment and penalty procedure (Nachsteuer- und Bussenverfahren) in November 2022 and claimed the right to tax the couple.

The Canton of Zug argued that Zurich had forfeited its right to tax the couple for the above-mentioned tax periods because the tax office had reacted too late. The Federal Supreme Court rejected this argument: There was no question of "undue delay."