Facts
On October 23, 2017, the Cantonal Council of the Canton of Zurich adopted a partial revision of the Tax Act, which introduced the previously not permissible offsetting of operating losses against period-related gains from the sale of real estate assets. The new § 224a Tax Act/ZH regulates this "Offsetting of Business Losses".
Swiss citizen A. filed a public law appeal against this legislative amendment. He requested the repeal of § 224a Tax Act/ZH.
Considerations
The Federal Supreme Court dismisses the appeal. It states that, unlike the intertemporal loss offsetting that the Federal Act on the Harmonization of Direct Taxes of Cantons and Municipalities (StHG) mandatorily provides for, the cross-tax offsetting of operating losses against gains from the sale of business assets is left to the cantons with a monistic system. With the exception of the Canton of Zurich, all cantons with a monistic system have introduced this possibility.
The Federal Supreme Court considers the offsetting of operating losses against real estate gains in the Canton of Zurich to be constitutionally compliant. It corresponds to the principle of taxation according to economic performance and does not violate the principle of legal equality. Even if the loss offsetting can have a stronger impact in the case of high real estate gains taxes than in the case of income or profit taxes, this is the…