THE
NOTION OF DOMICILE AND RESIDENCE UNDER
SWISS
INTERNAL
TAX LAW According to articles 3 and 6 of the Federal Act on Direct Federal Taxation of 14 December 1990 (LIFD; RS 642.11), individuals domiciled or resident have unlimited tax liability in Switzerland. This means that when they are considered under tax law to be domiciled or staying in Switzerland, they are taxed on their worldwide income. For the purposes of tax law, a person has their domicile in Switzerland when they live in the country with the intention of making it their long-term home. A person is staying in Switzerland when, without any significant interruption, they live there for at least 30 days and carry out gainful activity. The Federal Act on the Harmonization of Direct Taxation at Cantonal and Communal Levels of 14 December 1990 (LHID; RS 642.14), covering cantonal and communal taxes, contains almost identical provisions although the concepts of domicile and residence do not exactly mirror those established for direct federal taxation.
A) Tax domiciliation in Switzerland Domiciliation in tax legislation is an autonomous civil law notion, although the definition given by tax law is very close to article 23 of the Swiss Civil Code. Two cumulative criteria are required to establish a tax domicile. The first, living in a given place, is objective while the second, the intention to make a long-term home there, is subjective. To fulfil the first condition, an individual needs to be present in a certain place. The place in question is where the person spends their nights, and not where they work during the daytime. The law does not give any minimum duration, and it does not matter if the person only stays for a set or limited amount of time. The second condition refers to where the centre of the individual’s personal and economic interests is located. Once again, there is no requirement for the taxpayer to intend to make this place the centre of their vital interests for an unlimited period of time or indefinitely. Please also note that the place where a person files their paperwork or exercises their political rights (political domicile) is not decisive. It is simply a pointer towards their tax domicile. Similarly, when deciding where an individual’s personal interests are located, the authorities look at objective criteria and not solely declarations by the individual. Consequently, it is not possible to freely choose your tax domicile. 7 rue des Alpes, 1201 Geneva • T +41 (0)22 906 85 00 • F +41 (0)22 906 85 01 info@croce-associes.ch • www.croce-associes.ch
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