Annulment of the Tax Assessment of the Canton of Schwyz due to Inter-Cantonal Double Taxation

Facts

The married couple A.A. and B.A. had been living in their own home in U./SG since 2010 with their two daughters. A.A. had been practicing as a self-employed physician in V./SZ since June 2011, while B.A. worked in W. in 2018. Until the 2017 tax period, the spouses A. were assessed by the Canton of St. Gallen, with the business assets and income from self-employment being allocated to the Canton of Schwyz. On April 11, 2018, the spouses A. deregistered from U. and registered their civil residence in the municipality of Y./SZ at A.A.'s practice address.

By decision of July 20, 2020, the Tax Administration of the Canton of Schwyz assessed the spouses A. for the 2018 cantonal taxes and the 2018 direct federal tax. For the property in U., a tax allocation was made to the Canton of St. Gallen. The spouses A. filed various legal remedies in the Canton of St. Gallen, without disputing the primary tax liability in the Canton of St. Gallen. In parallel, the spouses A. had filed a request for revision of the 2018 tax assessment in the Canton of Schwyz, which the Tax Administration of the Canton of Schwyz did not consider.

With a complaint in public law matters, A.A. and B.A. requested the annulment of the tax assessment decisions of the Canton of Schwyz for 2018. Alternatively, they requested the annulment of the tax assessment decisions of the Canton of St. Gallen for 2018.

Considerations

The Federal Court annulled the assessment of the Canton of Schwyz, as the appellants had their domicile in the Canton of St. Gallen at the end of the tax period in question and were consequently subject to unlimited tax liability there and not in the Canton of Schwyz. The double assessment of the appellants by the two cantons thus violated the constitutional prohibition of inter-cantonal double taxation under Art. 127 para. 3 of the Federal Constitution.

The Federal Court decided that the previous practice of forfeiting the right of appeal in cases of inter-cantonal double taxation should be abandoned. Forfeiture of the right of appeal can only be assumed in…