Valuation of out-of-canton real estate in inter-cantonal tax allocation: relevance of the qualification by the canton of location

Facts

Parties and instances: The spouses A.A. and B.A. (appellants) contested the asset valuation of their real estate located in the canton of Thurgau by the Zurich cantonal tax office for the 2020 tax period. The Zurich Tax Appeals Court partially granted their appeal, while the Zurich Administrative Court restored the tax office’s objection decision. The appellants filed an appeal against this judgment with the Federal Supreme Court in public law matters.

Facts of the case: The appellants are owners of various plots of land in the canton of Zurich and, to the extent of one-third, of several plots of land located in the canton of Thurgau, some of which are leased and used for agricultural or forestry purposes. For the 2020 tax period, they were assessed in the canton of Zurich with a taxable wealth of CHF 3,290,000, whereby the Thurgau real estate was not taken into account at the declared yield value of CHF 14,733 but at the market value of CHF 856,265 (after allocation difference: CHF 893,494). The appellants objected to this and requested valuation at yield value.

Considerations

Uniform valuation as a constitutional necessity: The Federal Supreme Court emphasises that for inter-cantonal tax allocation, a uniform valuation of assets is required in order to fully deduct debts and interest on debt and thus comply with taxation according to economic ability to pay (Art. 127 para. 2 Cst.). This requires a uniform valuation standard, which is ensured by the allocation factors of the Swiss Tax Conference (STC) (paras. 4.1, 6.1-6.4).

Relevance of the qualification by the canton of location: Since real estate ownership is generally subject to the tax jurisdiction of the canton of location (special tax domicile), the question of whether a plot of land is considered to be used for agricultural or forestry purposes and thus to be valued at yield value must be determined according to the qualification by the canton of location. The canton of Zurich may not qualify the Thurgau real estate differently, as this would violate the cantonal sovereignty of Thurgau and lead to double taxation (paras. 5.4, 6.5).

Proportionality and constitutional balancing: The prohibition of disadvantageous treatment (Art. 127 para. 3 Cst.) takes a back seat to the principle of avoiding inter-cantonal double taxation and taxation according to economic ability to pay. Unequal treatment is objectively justified, as the appellants, unlike taxpayers…