Attention, this is the heavy stuff! ATF publication planned

Taxpayers live abroad but pay tax in Switzerland because they own property there. During the year, they move to Switzerland. The tax authorities carry out a single assessment, covering both the period abroad and the period in Switzerland. The taxpayers request two assessments: one for the period (less than a year) abroad and one for the period (less than a year) in Switzerland.

The tax authorities are refusing to issue two distinct tax assessments.

👉 Cantonal judges cover the tax authorities.

The federal judges recall the existence of Article 40 of the LIFD, namely that (i) «if the conditions for taxation are only met during part of the tax period, the tax is levied on the income earned during that period» and that (ii) «for periodically earned income, the tax rate is determined taking into account income calculated over twelve months». (cons. 7.4)

The doctrine is not unanimous regarding the effects of a change in subjection during the same tax period in an international context on the calculation of tax and the applicable tax rate. (recital 7.5)

The federal judges are analysing Art. 4b of the LHD (cons. 7.6).

Federal judges say the tax period must be split into two tax assessments. This approach «better takes into account the actual ability of the appellant and his ex-wife to contribute, unlike what the previous judges found. Indeed, although the annualisation of income based on Art. 40 para. 3 LITL is based on a «fictitious» calculation, it comes closer to economic reality as it is based on the appellant's Swiss income and offers a fairer approach, particularly in comparison with taxpayers domiciled in Switzerland for the entire tax period who only have Swiss income. While it is true that any foreign income would be taken into account for individuals subject to unlimited tax liability throughout the entire tax period to determine the tax rate, it remains that this foreign income cannot «compensate» for the months during which a taxpayer received no income in Switzerland. This is how the tax rate is determined for a person subject to unlimited tax liability in Switzerland only for part of the year in the absence of a prior economic link, particularly through property ownership.» (cons. 9.3.1.)

The ruling is in French. This is a Vaudois case.

Federal Tribunal, judgment 9C_416/2024, of 14 August 2025