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An overview from Tax Partner AG, Taxand Switzerland:
A recent decision by the Swiss Federal Supreme Court (2 April 2024, 9C_591/2023) has clarified the burden of proof for determining the main tax domicile of legal entities in an intercantonal context.
The Court ruled that if a legal entity has its registered office and place of effective management in two different cantons, its main tax domicile is located at the place of effective management. While the burden of proof generally lies with the tax authority, the Court shifted this burden to the taxpayer, requiring them to provide evidence regarding the place of effective management.
Additionally, the Court changed the standard of proof from “very likely” to “predominantly likely.” This change in case law underscores the importance for legal entities with business activities in multiple cantons to maintain appropriate documentation related to their place of effective management.
For further details, Patrik Schwarb and Sabrina Gamma from Tax Partner AG, Taxand Switzerland, summarise the decision in more detail here.
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