Introduction

Determining the main tax domicile of legal entities that operate in different areas of tax jurisdiction or have no or only marginal operational business activities is particularly challenging. The article in "EXPERT FOCUS – October 2025 issue: 'Principal tax domicile of legal entities' shows how carefully this location is assessed and how practice is increasingly focusing on the criterion of "actual management" in particular (Di Giulio / Kaufmann / Braun, 2025). If there is no discernible geographical focus of management or key corporate decisions for localizing the actual management, it cannot automatically be assumed that the actual management of the company is located at the place of residence of the managing director. The localization of the main tax domicile often leads to discussions in practice and is particularly important in the context of avoiding intercantonal and international double taxation.

Legal basis

The following relevant provisions apply to legal entities:

Federal Act on the Harmonization of Direct Taxes of the Cantons and Municipalities (StHG), Art. 20 para. 1: Unlimited tax liability in a canton where the registered office or actual management is located.
Cantonal regulations: For example, in the canton of Bern: Tax Act of the Canton of Bern (StG BE), Art. 76 StG BE: "Legal entities are liable for tax on the basis of personal affiliation if their registered office or actual administration is located in the canton."
Principle of personal affiliation: The statutory registered office may be decisive, but if the actual administration is concentrated in another location, that is where the main tax domicile is located.

Principal tax residence – what matters?

The main tax domicile refers to the canton/municipality that is primarily responsible for assessing a legal entity. The decisive factor is where the actual administration takes place: where the key decisions are made, where the management is based, and where operational management is carried out.

Criteria for actual administration:

Who makes the key corporate decisions (e.g., management, board of directors)?
Where are day-to-day business activities conducted (accounting, controlling, operational management)?
Is there only a statutory registered office without any actual activity (mailbox)?
Were clear structures created, with management decentralized across several cantons or countries?

Latest developments

Federal Supreme Court 9C_547/2023 of April 8, 2025

In decision 9C_547/2023, the Federal Supreme Court ruled that the legal entity (referred to in the proceedings as "A._ AG") was not liable for tax in the canton of Zurich, even though the sole member of the board of directors was resident there. Instead, the main tax domicile was located in the canton of Zug.

Key points of the ruling:

The lower court had assumed that the management was based at the domicile of the board of directors in Zurich. However, the Federal Supreme Court found that no clear geographical focus of management had been proven.
In the absence of such evidence, the place of residence of the managing director may not automatically be considered the place of effective management. This meant that Zurich's tax jurisdiction was revoked.
Significance: The ruling shows that tax authorities cannot automatically assume the place of residence of the board of directors if the operational management is located elsewhere or cannot be clearly proven.

Examples:

Double taxation between cantons

Two cantons may wish to tax the same company for the same tax period. This is possible due to Switzerland's federal structure. However, it contradicts the principle of the intercantonal prohibition of double taxation (Art. 129 para. 3 of the Federal Constitution).

In practice:

If two cantons claim that the main tax domicile is located in their territory, this results in double taxation.
In this case, the company could potentially receive two assessments for the same period, which is a risk.
Tax authorities and courts therefore carefully examine which canton actually has tax jurisdiction based on the above criteria.
In its decision 9C_489/2024 (dated May 1, 2025), the Federal Supreme Court clarified that the prohibition of intercantonal double taxation does not automatically lead to a revision of a legally binding assessment.

recommended actions

Check at an early stage whether your company is actually managed at its registered office.
Document clearly: location of management, board of directors, accounting, decisions.
If management is spread across multiple tax jurisdictions: Determine the geographical center of gravity and record this in business documents.
If you are unsure about your main tax domicile, contact your tax advisor, especially if you are involved in intercantonal or cross-border activities.
Are you relocating your registered office or management? Make sure that the entire tax period is taken into account (unity of the tax period) – changes can have retroactive tax consequences.

Conclusion

The location of a legal entity's main tax domicile is more than just a formal registered office entry: it is about the economic reality and the place of actual management. The Federal Supreme Court's ruling 9C_547/2023 clearly shows that the place of residence of the managing director is not automatically the place of actual management if there are no clear indications to that effect. For your company, this means ensuring consistency between the articles of association and the actual management – because misinterpretations can lead to uncertainty, double taxation, or subsequent reassessments.