Federal Supreme Court to lower level of evidence in (intercantonal) tax law - Tax and Legal blog


In a new leading decision by the Federal Supreme Court (9C_591/2023, in German), the five judges have spoken out in favour of lowering the level of evidence in (intercantonal) tax law. The decision, which is intended for official publication, means that in tax law the requirements for providing evidence are lowered for the tax administration (and conversely raised for taxpayers). What are the consequences for taxpayers in Switzerland?

Fact Pattern

The taxable company was founded in 2003 with its registered office in the canton of St. Gallen. It had extensive premises (approx. 100m2) in the canton where it was domiciled, where it exhibited product samples and maintained customer contacts. In 2008, it relocated its headquarters to the canton of Appenzell Ausserrhoden and used co-working spaces (approx. 10m2) there in addition to the existing premises in the canton of St. Gallen. The canton of St. Gallen took the view that the place of effective management was still in the canton of St. Gallen. The question arose in which canton the company was subject to unlimited tax liability (and – optionally – whether it had a permanent establishment in the canton of Appenzell Ausserrhoden).

Legal Background

The actual place of effective management of a legal entity is the place where the management of the company comes together, where the main corporate decisions are made and where the company has the real, actual centre of its economic existence. The place of effective management of a legal entity must be distinguished from mere administrative management on the one hand and the activities of the highest corporate bodies on the other.

Court Decision

In this court decision, the general principles regarding the place of unlimited tax liability in intercantonal tax law were not addressed in detail, but rather the requirements for the assessment of evidence. In principle, it has been up to the tax administration to provide proof of unlimited tax liability, whereby the evidence had to appear " highly probable" ("sehr wahrscheinlich") based on the assessment of the evidence.

«In principle, the tax administration must provide evidence of the (residential) domicile for tax purposes. However, the taxpayer may be required to provide counter-evidence for the subjective tax liability it claims to have at a new location if the previous subjective tax liability assumed by the tax administration is considered highly probable.” (2C_431/2014 of December 4, 2014, E. 2.1, in German)

In the new leading decision, however, the Federal Supreme Court has lowered the requirements for the tax administration's assessment of evidence. It is now sufficient for the assessment of evidence to be "more likely than not" ("überwiegend wahrscheinlich").

«To facilitate the assessment of evidence (lowering the level of proof), it must therefore be assumed that the place of effective management of a legal entity is located in the cantonal territory as soon as it is more likely than not that the relevant effective management takes place predominantly at a specific location in the cantonal territory. The taxable legal entity is free to provide evidence to the contrary and to produce evidence that speaks against the place of effective management in the cantonal territory.” (9C_591/2023 of April 2, 2024, E. 3.6.4, in German)

The Federal Supreme Court justifies this (new) lower hurdle on the one hand with a reference to art. 8 Swiss Civil Code on the assessment of evidence and on the other hand to the lower requirements in social insurance law, which is also mass administrative law.


The new leading decision means that in tax law the requirements for providing evidence are lowered for the tax administration (and conversely raised for taxpayers).
It is now sufficient if a fact is "more likely than not" ("überwiegend wahrscheinlich") from the tax administration's point of view instead of "highly probable" ("sehr wahrscheinlich") as before to justify a tax. Based on Deloitte’s assessment, this will result in the cantons having lower hurdles and being able to question a taxpayer's main tax domicile more quickly, for example, and thus impose the obligation to provide counter-evidence on the taxpayer. As a result of the decision, taxpayers are generally required to provide evidence and must document and prove the relevant facts properly. Particularly in intercantonal tax law and in the event of an emerging conflict regarding unlimited tax liability, it may therefore be advisable to promptly seek a declaratory ruling from the Swiss Federal Tax Administration in accordance with art. 108 FDTL (German/French).

If you would like to discuss more on this topic, please do reach out to our key contacts below.

Key contacts

Thomas Hug_blog2

Thomas Hug - Partner, National Tax Office

Thomas is the leader of Deloitte Switzerland's National Tax Office. He has a proven track record of being at the forefront of international tax developments and analysing their impact from a Swiss tax technical perspective. Thomas has published thought-leading articles and books, and is frequently asked by industry groups, universities and tax and accounting associations to make presentations or lead seminars. He serves as a substitute judge at the Zurich Tax Court of Appeal.


Manuel Angehrn110x110

Manuel Angehrn - Director, Global Minimum Taxation

Manuel is a Director with over 10 years of experience in International Tax. He is a Deloitte Switzerland’s Global Minimum Tax subject matter expert. He follows domestic and global tax developments and assesses the impact to Swiss multinationals.



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