Facts
A.X., domiciled in L., Canton of Zurich, is active as a real estate dealer in several cantons. In 2003, he realized real estate gains in the Canton of Zurich, which were subject to the Zurich real estate capital gains tax. Additionally, he sold his share in a development in M., Canton of Aargau.
In the intercantonal tax allocation for the 2003 Zurich state and municipal taxes, the Zurich Cantonal Tax Office only took into account a portion of the claimed prior-year losses of a total of CHF 4,099,151 amounting to CHF 740,723 against the main tax domicile L., and allocated the predominant loss share of CHF 3,197,599 to the Canton of Aargau. The Zurich real estate gains remained unaccounted for.
In the assessment for the 2003 Aargau cantonal and municipal taxes, the Tax Commission of the Municipality of M. took into account the proceeds from the sale of the participation in the development in M. and an amount of CHF 1,566,823 from the prior-year losses claimed in the Canton of Zurich.
The taxpayers filed a public law appeal with the Federal Supreme Court against the Cantons of Zurich and Aargau as well as the Zurich municipalities with real estate gains in 2003 due to a violation of the prohibition of intercantonal double taxation.
Considerations
The Federal Supreme Court upholds the appeal against the Canton of Zurich. It states that the Canton of Zurich must take into account the Zurich real estate gains in its tax allocation in order to create comparable conditions in the intercantonal relationship. By not taking into account the Zurich real estate gains, the Canton of Zurich has violated the prohibition of intercantonal double taxation.
However, the Federal Supreme Court dismisses the appeal against the…