Public law appeal against the decision of the Tax Court of the Court of Appeal of the Canton of Ticino regarding inheritance tax

Facts

The case concerns the determination of international tax sovereignty for the inheritance tax of Baron [A.A.] , who died on 24 December 1996. The deceased owned real estate in Kürten, Germany, and Ascona, Switzerland. The Inheritance and Gift Tax Office of the Canton of Ticino considered the Swiss domicile to be prevalent and notified the deceased's children of inheritance taxes totaling CHF 4'391'856.50.

The deceased's children, [B.A.] , [C.A.] , and [D.] , filed a public law appeal against the decision of the Tax Court of the Court of Appeal of the Canton of Ticino, arguing that the German domicile should prevail and that taxation should therefore be limited to the value of the properties located in Ticino.

Considerations

The Federal Court examined the issue of international tax sovereignty and applied Art. 4 of the Convention of 30 November 1978 between the Swiss Confederation and the Federal Republic of Germany to avoid double taxation in the field of inheritance taxes. The Court established that the place where the deceased maintained a permanent home is to be determined by assessing the specific circumstances and that the notion of permanent home is not defined by the Convention.

The Cantonal Court cited Art. 4 para. 2 of the Convention, which establishes a sequence of criteria to resolve the conflict that arises when, according to the provisions of the first paragraph, the deceased was domiciled in both contracting states. The Court applied the criterion of permanent home and established that the deceased had two homes at his disposal that he used regularly, i.e., both permanent in the sense of Art. 4 para. 2 lett. a of the Convention.

The Court then examined the center of the deceased's vital interests and established that he had moved to Ticino to live with his wife in their permanent home in Ascona. The Court…