Partial approval of the complaint against the Canton of Zurich due to violation of the prohibition of intercantonal double taxation

Facts

The complainants, [A.X.] and the community of heirs of the deceased [B.X.] , are active as real estate traders in several cantons. In 2003, they generated profits from the sale of real estate in the Canton of Zurich, which they recorded in their accounting with CHF 13'954'640. The profits were recorded by the competent communal property gain tax commissions with the Zurich property gain tax. In 2003, the complainants also sold their share of one-third of a development in [M.] , Canton of Aargau, to their co-partners for CHF 51'474'056.

The Cantonal Tax Office of Zurich estimated the complainants for the Zurich cantonal and communal taxes 2003 with a taxable income of CHF 496'300 and a taxable wealth of CHF 41'439'000. In the intercantonal tax allocation, the Cantonal Tax Office recognized a share of CHF 740'723 from the claimed previous year's losses of a total of CHF 4'099'151 at the expense of the main tax domicile [L.] , and attributed the majority of the loss share of CHF 3'197'599 to the Canton of Aargau.

The complainants filed a complaint against the taxation of the Canton of Aargau and claimed that the Canton of Aargau had taken into account the property gains incurred in the Canton of Zurich in full for the tax rate determination and had only partially taken over the previous year's loss remaining in the Canton of Zurich. They requested that the taxable income be reduced to CHF 4'443'821.

The Administrative Court of the Canton of Aargau dismissed the complaint. The complainants then filed a complaint with the Federal Court and claimed that the Canton of Zurich had not taken into account the Zurich property gains in the intercantonal tax allocation, which would lead to double taxation.

Considerations

1. Admissibility of the complaint

The complaint against the decision of the Administrative Court of the Canton of Aargau is admissible. The complainants are affected by the contested decision and are entitled to file a complaint. The complaint meets the formal requirements and is timely.

2. Intercantonal double taxation

The Federal Court examines whether intercantonal double taxation exists. Such exists if a taxpayer is subject to taxation by two or more cantons for the…