Facts
The married couple [A.X.] and [B.X.] lived in [S.] (Canton of Zurich) and declared in their tax returns that [A.X.] was engaged in self-employment as a consultant in Kuala Lumpur (Malaysia). However, the Cantonal Tax Office of Zurich continued to recognize [A.X.] as resident in Switzerland and taxed his entire income and assets. The [X.] couple appealed the resulting assessments for the direct federal taxes 2001-2002 and the cantonal and municipal taxes 1999-2002 to the Administrative Court of the Canton of Zurich, but were unsuccessful in both cases.Considerations
The Federal Court dismissed the administrative court appeals. It concluded that [A.X.] , despite his activity in Malaysia, remained tax-resident in Switzerland and had to pay tax on his entire income and assets here. The Federal Court justified this as follows: - [A.X.] had only a "delivery domicile" with occasional use of office services in Kuala Lumpur, but not a permanent business establishment within the meaning of tax law. Therefore, there was no permanent establishment in Malaysia that would have justified the taxation of his income there. - While the Double Taxation Agreement with Malaysia generally provides that income from employment in the other Contracting State…