Calculate Tax Apportionment

Tax apportionment becomes necessary as soon as a person has tax factors in more than one canton. Tax law distinguishes: - Personal affiliation (main tax domicile): at the tax-law place of residence. This canton in principle taxes the entire worldwide income and wealth -- with the exception of factors allocated to another canton. - Economic affiliation (secondary tax domicile): established through property, a business, or a permanent establishment in another canton (Art. 4 StHG). Typical triggers: holiday or rental property, self-employed persons with business premises in two cantons, and weekly commuters. Important: the full income and wealth must be declared in each participating canton; the allocation is then made ex officio.

There are two allocation methods applied in parallel in practice: Object-based allocation -- certain factors are assigned entirely to one canton: - Real estate and its income (rental income, imputed rental value) belong to the canton of location -- as does property maintenance - Permanent establishments: the operating profit is assigned to the permanent establishment canton Proportional allocation -- factors are distributed proportionally: - Debts and debt interest are allocated proportionally based on the location of gross assets - General deductions (insurance premiums, Pillar 3a, social deductions) are distributed by net income

Each canton taxes only its share -- but at the tax rate of the entire worldwide income (progression proviso). Example: Residence in Zurich, rental property in Graubuenden. Total income CHF 150,000, of which net property income GR CHF 20,000. Graubuenden taxes CHF 20,000 at the rate for CHF 150,000. Zurich taxes CHF 130,000 also at the rate for CHF 150,000. This preserves the tax progression: the allocation must not allow someone to slip into lower progression brackets through fragmentation.

Debts and debt interest are not deducted where the loan was taken out, but proportionally to the location of assets (gross assets). Example: 60% of assets as property in canton A, 40% securities at residence B -- debt interest is allocated 60/40, regardless of where the loan runs. This prevents a debtor from concentrating interest in the high-tax canton through clever loan assignment. Interest is first offset against the investment income of the respective canton.