Point in time of a land purchase

In the tax period 2013, the married couple A.C. and B.C. had their tax-relevant domicile in the municipality U. in the Canton of Zurich. At the beginning of the same year, they concluded a contract with E. AG and V. AG regarding a condominium property still to be developed in the municipality W. in the Canton of Aargau.

The contract was entered in the land register in March 2013. The development of the property should be completed by 1 July 2014 at the latest and be ready for the couple to move in. The total purchase price for the property amounted to CHF 818'000, of which advance payments of CHF 163'000 and CHF 80'000 were already made in 2013. The final payment was made before the keys were handed over on 20 June 2014.

In the summer of 2016, the tax commission of the municipality of W. of the canton of Aargau decreed the spouses' economic affiliation for the year 2013 due to the purchase of the property. The couple filed an objection against this decree with the tax commission as well as an appeal and complaint with the competent administrative courts of the canton (Special Administrative Court and Administrative Court). The Administrative Court of the Canton of Aargau argued that the economic affiliation of the spouses to the Canton of Aargau was already triggered with the purchase agreement at the beginning of 2013. The power of disposal over the property had already been legally transferred. Also, no taxation on the part of the seller had been applied, which consequently indicated taxes at the expense of the buyers. Furthermore, the Administrative Court referred to the practice of the Federal Supreme Court regarding realisation upon conclusion of a purchase agreement.

The spouses were not satisfied with these arguments of the Administrative Court and filed an appeal in public law matters with the Federal Supreme Court in February 2018, requesting that the taxation of the spouses in 2013 by the municipality of W. in the canton of Aargau should not be allowed due to the lack of economic affiliation. The Federal Supreme Court dismissed the appeal in its decision of 21 February 2018(2C_133/2018) with the following reasons.

Legal harmonisation requirements

In its considerations, the Federal Supreme Court first dealt with the harmonisation-law requirements regarding economic affiliation and the effects on tax liability (Art. 4 para. 1 StHG). According to the Federal Supreme Court, the prohibition of intercantonal double taxation pursuant to Art. 68 para. 2 StHG must also be observed.

Relevant date of the acquisition of real estate

The Federal Supreme Court then examined whether the lower court had concluded in accordance with federal law that the complainants had already acquired real estate in the Canton of Aargau in 2013 and as a result had established economic affiliation and a limited tax liability. In doing so, it examined the tax regulations of the Canton of Aargau. Section 20, paragraph 1, sentence 1 of the Tax Act, which is based on the Federal Tax Act (DBG), states that the limited tax liability begins when taxable assets are acquired in the canton.

In the present case, the purchase contract was concluded between the parties on 20 February 2013. According to the Federal Supreme Court, the qualification of the contract is irrelevant from a tax point of view. However, the entry in the land register on 25 March 2013 was decisive. With the entry in the land register, the complainants acquired legal power of disposal over the property on the said date. The fact that the transfer of possession and risk was not to take place until July 2014 was not detrimental to this.

The Federal Supreme Court also addressed the divergence between the wording of Art. 4 para. 1 StHG and Art. 4 para. 1 lit. c DBG. Article 4 para. 1 of the StHG, which was relevant in this case, standardised the economic affiliation on the basis of "ownership" and "use". The wording was thus narrower than Art. 4 para. 1 lit. c of the Federal Tax Act. However, the meaning of both provisions as the decisive result of interpretation was relevant and the same in the present case with the acquisition of the property. From this, the Federal Supreme Court concluded that the economic affiliation to a community already occurs with the acquisition of the property. The lower court had therefore decided in accordance with federal law that the complainants had already become economically affiliated to the Canton of Aargau in 2013.

Double taxation is not evident

The Federal Supreme Court responded to the complainants' further objection that the taxation in 2013 in the Canton of Aargau would result in double taxation for them as follows: With reference to the explanations provided by the lower court regarding the payments made by the complainants to E.AG and V.AG (sellers), it stated that the sellers had only received book money. Thus, the taxation only arose at the level of the landowners. This argument of the complainants was therefore also wrong.


For all the above reasons, the Federal Supreme Court concluded that the Canton of Aargau was permitted to consider the couple as economically affiliated as early as 2013. Therefore, the acquisition with land re-gister entry and thus the legal authority to dispose of a property is decisive. If a property continues to be developed and ownership and the actual power of disposal only take place at a later date, this does not hinder economic affiliation.