Taxation of the sale of shares in a real estate company

Facts

The "St. Gotthard AG", founded in 1937, was the owner of a property in Lucerne, on which it operated a hotel with a restaurant. In 1962, the sole shareholder, Ms. X., sold the entirety of the shares of St. Gotthard AG to the Swiss Bank Association (SBV) for several million Swiss francs. The Canton of Solothurn taxed the resulting profit as part of Ms. X.'s taxable income, while the Canton of Lucerne claimed that the sale of the shares was subject to the real estate capital gains tax and the transfer tax in Lucerne.

Considerations

The Federal Supreme Court ruled that the sale of the shares of St. Gotthard AG and the resulting profit were subject to the tax sovereignty of the Canton of Lucerne, as the purchase price essentially reflected the value of the company's property. The taxation of the real estate capital gain belongs to the canton where the property is located, regardless of whether the gain accrues to the owner or a third party.

The Federal Supreme Court rejected the objection of the Canton of Solothurn that the tax claim of the Canton of Lucerne had lapsed. Although the tax authorities of Solothurn could have recognized the conflicting tax claim of the Canton of Lucerne with the exercise of reasonable care, they could not be accused…