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- Transitional provisions to the revision of the Stock Corporation Act of June 19, 2020
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- Art. 5 lit. d FADP
- Art. 5 lit. f und g FADP
- Art. 6 para. 3-5 FADP
- Art. 6 Abs. 6 and 7 FADP
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- Art. 3 CCC (Convention on Cybercrime)
- Art. 4 CCC (Convention on Cybercrime)
- Art. 5 CCC (Convention on Cybercrime)
- Art. 6 CCC (Convention on Cybercrime)
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- Art. 8 CCC (Convention on Cybercrime)
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- Art. 11 CCC (Convention on Cybercrime)
- Art. 12 CCC (Convention on Cybercrime)
- Art. 16 CCC (Convention on Cybercrime)
- Art. 18 CCC (Convention on Cybercrime)
- Art. 25 CCC (Convention on Cybercrime)
- Art. 27 CCC (Convention on Cybercrime)
- Art. 28 CCC (Convention on Cybercrime)
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- Art. 32 CCC (Convention on Cybercrime)
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- Art. 34 CCC (Convention on Cybercrime)
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- Art. 2a para. 1-2 and 4-5 AMLA
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FEDERAL CONSTITUTION
FEDERAL ACT ON DIRECT FEDERAL TAX
MEDICAL DEVICES ORDINANCE
CODE OF OBLIGATIONS
FEDERAL LAW ON PRIVATE INTERNATIONAL LAW
LUGANO CONVENTION
CODE OF CRIMINAL PROCEDURE
CIVIL PROCEDURE CODE
FEDERAL ACT ON POLITICAL RIGHTS
CIVIL CODE
FEDERAL ACT ON CARTELS AND OTHER RESTRAINTS OF COMPETITION
FEDERAL ACT ON INTERNATIONAL MUTUAL ASSISTANCE IN CRIMINAL MATTERS
DEBT ENFORCEMENT AND BANKRUPTCY ACT
FEDERAL ACT ON DATA PROTECTION
CRIMINAL CODE
CYBERCRIME CONVENTION
COMMERCIAL REGISTER ORDINANCE
FEDERAL ACT ON COMBATING MONEY LAUNDERING AND TERRORIST FINANCING
FREEDOM OF INFORMATION ACT
FEDERAL ACT ON THE INTERNATIONAL TRANSFER OF CULTURAL PROPERTY
FEDERAL ACT ON MEDICINAL PRODUCTS AND MEDICAL DEVICES
TAX HARMONISATION ACT
- I. Overview
- II. Regarding Art. 13 para. 1 StHG
- III. On Art. 13 para. 2 StHG
- IV. Regarding Art. 13 para. 3 StHG
- V. Regarding Art. 13 para. 4 StHG
- Bibliography
- Materials
I. Overview
1 Art. 13 of the Federal Act on Direct Taxation (StHG) contains the key substantive provisions defining the scope of the wealth tax base for natural persons. The provision specifies which assets are subject to wealth taxation. As previously noted, the Federal Supreme Court imposes strict guidelines on the cantons regarding the determination of the taxable base. This key principle will be further clarified in the following discussion.
II. Regarding Art. 13 para. 1 StHG
A. Principle
2 According to the harmonization provision of Art. 13 para. 1 StHG, the entire net worth is subject to wealth tax. From this, the Federal Supreme Court derives both the totality principle and the net principle in its case law.
3 According to the former, all assets—in wealth tax terminology, all taxable assets—must be included in the tax base. Under the net principle, all associated liabilities must be deducted from the total of taxable assets. This is intended—as mentioned—to reflect the guiding principle of taxation according to economic capacity.
4 The definition of net assets enshrined in para. 1 of Art. 13 StHG is binding on the cantons insofar as they are prohibited from subjecting assets to taxation that do not fall under this definition. Conversely, however, this also means that the cantons may not exclude assets that are part of net worth from wealth taxation.
B. Harmonized Concept of Wealth
1. Interpretation
5 According to Federal Supreme Court case law, the concept of assets encompasses “all monetary rights to property, claims, and equity interests to which a person is entitled under civil law and which are legally enforceable, whether of a real or personal nature, regardless of whether the assets are private or business-related, movable or immovable.”
6 A right has “monetary value” if it is either marketable or has a use or utility value. It further follows that the marketability of an asset is not a mandatory requirement for taxability, which is why, for example, restricted employee shares also constitute taxable assets. Pure entitlements, on the other hand, are not subject to wealth tax due to their lack of enforceability under civil law. If there is merely a vague prospect of a possible future acquisition of a right to an asset, this is also not subject to wealth tax.
7 Balances held with occupational pension funds (2nd pillar) and with recognized forms of tied self-pension plans (Pillar 3a) are exempt from wealth tax pursuant to the federal provision of Art. 84 BVG, provided they are not yet due. This results from the fact that the insured person cannot freely dispose of the corresponding assets—they are subject to statutory withdrawal requirements (see Art. 30a et seq. BVG in conjunction with Art. 3 BVV 3) and are therefore not available as taxable monetary rights within the meaning of Art. 13 para. 1 StHG. The taxpayer lacks the necessary economic freedom of disposal over these assets. According to unanimous practice, vested benefits are also subject to wealth tax only upon maturity—i.e., upon cash payment. The situation is different for assets in voluntary pension plans (Pillar 3b). These are subject to wealth tax, as they are generally freely available and thus have a realizable monetary value. Furthermore, future entitlements under the AHV, IV, and SUVA are not subject to wealth tax, as it is unclear whether the taxpayer will ever draw upon them.
2. Classification of Assets
8 In tax practice, (taxable) assets are divided into real property and movable property, which has different consequences with regard to the valuation rules established in administrative practice. The Federal Supreme Court notes, however, that the Federal Tax Act (StHG) does not specify the criteria according to which net assets are to be classified into real property and movable property. The aforementioned division thus falls, in principle, within the discretion of the cantons.
9 In legal doctrine, taxable movable assets specifically include cash, postal and bank deposits, monetary claims, listed and unlisted securities, as well as gold and other precious metals. Cryptocurrencies (namely Bitcoin, Ether, and other tokens) as well as other digital assets generally constitute taxable movable private assets under current administrative practice, provided they have a realizable monetary value. They thus fall under the definition of assets in Art. 13 para. 1 StHG.
10 Taxable immovable assets primarily include real estate as well as those independent and permanent rights that can be entered in the land register, namely building rights and water rights within the meaning of civil law. In this context as well, the Federal Supreme Court clarified that the StHG does not further define the term “real property,” but rather uses it primarily in the context of real property gains tax and—within the framework of wealth tax—in relation to land used for agricultural and forestry purposes pursuant to Art. 14 para. 2 StHG. Whether and how wealth taxation is linked to the nature of the property is thus, according to the highest court’s case law, generally left to cantonal law.
3. Case Studies of Federal Supreme Court Interventions
11 The Federal Supreme Court has already intervened on several occasions to correct the classification of an asset as taxable property. While this was accompanied by a concretization of the harmonization requirements, it simultaneously restricted the cantons’ discretion. The following case studies are intended to provide an overview in this regard:
The Federal Supreme Court classified life insurance policies without a surrender value as non-taxable assets. Specifically, “non-redeemable entitlements to periodic payments such as annuities or life annuities, spousal or child support payments, benefice payments, or rights of residence” are exempt from wealth tax, “because the value of these entitlements is limited to the claim to the individual periodic payments.”
In contrast, life annuities with a surrender value are subject to wealth tax during the annuity term to the extent of the actual surrender value.
Assets with a realizable monetary value constitute taxable assets, even if they are functionally or spatially connected to the household. Thus, photovoltaic systems whose generated electricity is fed into the public grid and for which a feed-in tariff is paid cannot be classified as household goods or personal effects. Regardless of whether they are designed to be mobile, they are therefore subject to wealth tax.
4. Debt Deduction
12 The net principle implies that taxpayers are entitled to deduct debts existing at the end of the year from their assets. The deduction of liabilities is mandatory due to the structure of the tax as a tax on total net assets, although the StHG does not explicitly regulate the deduction of liabilities. Restrictions on the deduction of liabilities by the cantons are generally—with corresponding exceptions to be discussed below—to be classified as violations of the harmonization requirements.
13 In particular, a provision that would limit the deduction of liabilities to those owed to domestic creditors would be incompatible with the StHG. Conversely, a limitation on the deduction of liabilities is permissible and objectively necessary to the extent that assets are not subject to the tax jurisdiction of the canton in question, namely when they are taxable in another canton or abroad. In these cases, the debt deduction is determined in accordance with the provisions of intercantonal or international double taxation law, which typically results in a proportional allocation of the debts—corresponding to the location of the assets. However, this may lead to the proportionate debts and debt interest allocated to foreign jurisdictions being disregarded due to the unilateral tax laws applicable there. Harmonization in this context arises directly from the intercantonal prohibition of double taxation and not from Art. 13 StHG.
14 As mentioned, the Federal Supreme Court imposes strict guidelines on the cantons regarding the tax base. Regarding the concept of debt, individual indications of a harmonized definition of debt can also be derived from case law.
15 In tax practice, all debts for which the taxpayer is legally liable are deductible. According to the Federal Supreme Court, the prerequisite for their deduction is that, as of the relevant reference date, a fixed and legally enforceable debt exists, the fulfillment of which is seriously expected. However, the liability need not be due at that time. Furthermore, there must be an economic connection between the deductible liability and the asset. Liabilities that do not reduce the economic value of a taxable asset cannot therefore be deducted.
16 Liabilities are generally deductible to the extent of their nominal value but, like receivables, are subject to the general valuation rules. Easements and public restrictions on ownership do not constitute liabilities for wealth tax purposes. Cantonal regulations provide for different requirements and procedures for their consideration for wealth tax purposes, depending on the type of liability. The following list provides an overview of some cantonal arrangements and indicates whether the Federal Supreme Court has already deemed them compatible with the harmonization requirements:
Joint and several liabilities can generally be deducted only to the extent that the taxpayer is personally liable to third parties, due to existing recourse options. The Federal Supreme Court has found this provision to be compatible with the harmonization requirements.
Guarantee debts are to be treated for tax purposes in the same way as joint and several debts and may be deducted only to the extent that the guarantor is liable under civil law. The Federal Supreme Court also considers this provision to be compatible with the StHG.
Although the harmonization requirement of Art. 13 para. 2 StHG addresses the attribution of usufructuary assets, it does not explicitly address the deduction of debts encumbering those assets. From a tax system perspective, it appears appropriate to allow the deduction of those debts for which the usufructuary is personally liable. The Federal Supreme Court also states that the taxpayer “may deduct from the assets his debts and the debts of all other persons whose assets he is required to tax.”
The partners of partnerships may deduct the partnership’s debts from their assets on a pro rata basis—in accordance with the allocation rules. As far as can be ascertained, the Federal Supreme Court has not yet explicitly ruled on the treatment of partnership debts, at least with regard to the harmonization requirements for wealth tax. In the area of income tax, however, Art. 10 para. 1 DBG, among other provisions, stipulates that the income of partnerships must be allocated to the individual partners on a pro rata basis—in accordance with the partnership agreement or, alternatively, the discretionary statutory provisions. Legal doctrine assumes that the allocation rule applies not only to income but also to assets.
In the case of contingent claims and those with an indefinite maturity date—for example, where certificates of loss exist for a claim—the probability of the actual debt obligation being enforced must be taken into account.
Merely potential, purely prospective, and time-barred debts cannot be deducted—mirroring the rules governing taxable assets. According to Federal Supreme Court case law, this includes, in particular, non-redeemable rights to periodic payments such as annuities or life annuities, spousal or child support payments, benefice payments, or residential rights, because the value of these rights is limited to the entitlement to the individual periodic payments.
C. Social deduction or tax-exempt minimum
17 In practice, the cantons regularly grant a social deduction for wealth tax, or a tax-exempt minimum asset is exempt from wealth tax. This tax-exempt minimum asset may also be linked to other social purposes. The canton of St. Gallen, for example, grants a tax-exempt minimum asset of CHF 75,000 plus CHF 20,000 for each minor child under the parental care or custody of the taxpayer.
18 The exemptions or social deductions provided for in wealth tax are not intended to exclude a minimum amount necessary for securing one’s livelihood from the tax base, but merely aim to protect smaller fortunes from excessive state encroachment on assets. In short, they thus fulfill a purely tariff-related function. However, it cannot be ruled out that a very high exemption could violate harmonization law, since in such a case net assets would no longer be taxed. If, for example, a canton were to provide that the wealth tax would apply only to assets of CHF 1,000,000 or more, this would likely constitute a violation of harmonization law. As far as can be seen, however, the Federal Supreme Court has not yet ruled on this issue.
19 The definition of the tax base for wealth tax is also harmonized in terms of time—not by Art. 13, but by Art. 17 para. 1 StHG.
III. On Art. 13 para. 2 StHG
A. Attribution of taxable assets
20 The StHG expressly regulates the attribution of taxable assets in connection with usufruct relationships in Art. 13 para. 2 StHG. The fact that the StHG contains only this specific rule regarding the allocation of assets is interpreted to mean that, in all other cases, the ownership relationships under civil law are generally decisive.
21 In the case of assets held in joint or undivided ownership, civil law relationships are again decisive for their allocation for property tax purposes. In the case of 50% joint or undivided ownership, therefore, half of the property tax value would be subject to tax.
22 However, a different allocation is justified where another person exercises actual control over the asset and holds a position analogous to that of an owner, such that this person appears to be the beneficial owner. In this context, Reich cites, for example, the purchaser of real property who, although not yet registered as the owner in the land register, has already assumed the benefits and risks.
23 The harmonization requirements regarding the tax attribution of assets are binding on the cantons and serve to ensure a coherent system in this area. In terms of procedural law, this means that the Federal Supreme Court has discretion to review whether the attribution rule chosen by a canton is compatible with the provisions of the Federal Tax Harmonization Act (StHG). The following sections will examine several scenarios in which the allocation of taxable assets does not follow civil law relationships or may occasionally lead to difficulties in delineation. The focus here is again on the relevant case law of the Federal Supreme Court and the extent to which this restricts or preserves cantonal discretion.
1. Special Circumstances
a. Usufruct and Similar Legal Relationships
24 According to para. 13(2) of StHG, the usufructuary must pay tax not only on the capitalized value of their usufruct right but on the full value of the asset in question. This attribution to the usufructuary, prescribed by harmonization law, corresponds—at least in the case of formal usufructs—to current practice in all cantons. The usufructuary must therefore declare the market value of the usufruct property as assets pursuant to Art. 14 StHG, but may deduct the debts encumbering it.
25 According to tax law doctrine and, implicitly, also in accordance with the case law of the Federal Supreme Court, the described attribution rule applies not only to formal usufructs but also to comparable, usufruct-like relationships, in particular to de facto usufructs. A de facto usufruct exists when the right of usufruct exists by mutual agreement between the owner and the usufructuary without a legal obligation based on the economic circumstances, or can in fact be inferred from implied conduct. The concept of usufruct must be interpreted in economic terms. However—as emphasized in tax law doctrine—caution is warranted when assuming such an equivalent relationship.
26 The Federal Supreme Court’s case law, however, limits its statements to the fact that tax equivalence between de facto and formal usufructs is not ruled out. The cantons are thus free to treat usufruct-like relationships as equivalent to formal usufruct, which is why various cantonal practices exist in this regard.
27 The cantons’ discretion stems from the fact that the Federal Supreme Court does not rule out tax equivalence, but not from the fact that such equivalence would be mandatory. On the other hand, this means that if a usufruct-like relationship—from an economic perspective—cannot be equated with formal usufruct, the asset in question—in the absence of an explicit attribution rule under harmonization law—must be classified as net assets under Art. 13 para. 1 StHG and allocated to the formal owner under civil law.
b. Right of residence
28 In a recent landmark decision on this matter, the Federal Supreme Court acknowledged the structural parallels between usufruct and the right of residence, but at the same time emphasized the limited scope of the right of residence.
29 The Federal Supreme Court thus clarified that a property encumbered with a right of residence is, for wealth tax purposes, attributable to the civil law owner and not to the holder of the right of residence. Once again, the Federal Supreme Court intervened in this regard to harmonize the cantonal discretion.
c. Trust Relationships
30 Assets held by a third party within the framework of a trust relationship are attributable for wealth tax purposes to the beneficial owner—i.e., the settlor. Although the Federal Act on Wealth Tax (StHG) does not contain a special provision—analogous to that for usufruct—for trust relationships. However, the Federal Supreme Court clarifies that a taxpayer’s net assets include not only assets in which the taxpayer holds a usufruct, but also those to which the taxpayer is the beneficial owner as the settlor. This applies at least in cases where the fiduciary relationship is sufficiently proven. Such trust relationships constitute genuine fiduciary legal transactions that must also be recognized under tax law. Tax recognition follows the general principle that civil law relationships are generally decisive for tax classification. Consequently, a deviating cantonal rule regarding attribution in trust relationships would be incompatible with harmonization law.
d. Trusts
31 Swiss tax law contains no separate statutory provisions regarding the tax treatment of trusts. With the publication of Circular No. 30 of the Swiss Tax Conference (KS 30 SSK) on the tax treatment of trusts, there has been at least a partial harmonization of cantonal practices. It is undisputed that a trust is not a taxable entity. Consequently, the attribution of trust assets based on civil law ownership relationships is not possible, which is why the treatment of trusts for wealth tax purposes must be based on an economic approach.
32 The type of trust is decisive for the wealth tax treatment of trusts. A distinction is made between revocable and irrevocable trusts. In the case of revocable trusts, there is no definitive transfer of assets, which is why, according to prevailing tax law doctrine, the trust assets continue to be attributed to the settlor.
33 In the case of irrevocable trusts, a further distinction must be made between fixed-interest and discretionary trusts. The administrative practice established in KS 30 SSK treats fixed-interest trusts for wealth tax purposes as a usufruct arrangement, with the beneficiary as the usufructuary. The Federal Supreme Court clarified in this regard that this tax-law equivalence of the beneficiary of an irrevocable fixed-interest trust with a usufructuary is, in principle, consistent with Federal Supreme Court case law. According to this view, both the trust assets and the income derived therefrom are attributable to the beneficiary for wealth tax purposes. However, the Federal Supreme Court did not comment on whether a provision deviating from KS 30 SSK regarding the wealth tax treatment of an irrevocable fixed-interest trust would be compatible with the Federal Tax Act (StHG).
34 Difficulties arose regarding the determination of the scope of the wealth tax base to be attributed to the beneficiary. The administrative practice set forth in KS 30 SSK provides that the beneficiary is subject to wealth tax on his or her share of the trust assets. If this share cannot be determined, the income may be capitalized instead.
35 Following this Supreme Court decision, the administrative practice for the aforementioned scenario must be revised such that the beneficiary—provided their share of the trust assets cannot be determined—must be taxed on the basis of the capitalized income. Cantonal administrative practices that generally allocate the beneficiary’s share of the trust assets to the wealth tax base—without this share being clearly determinable—are likely to prove inconsistent with harmonization.
36 In the case of an irrevocable discretionary trust, however, there is no basis for attribution, as the beneficiaries hold only prospective rights and the settlor has relinquished his power of disposal, so that the trust assets remain, in principle, exempt from wealth tax.
37The administrative practice set forth in KS 30 SSK concludes from this circumstance that there is a tax loophole and continues to classify trusts with a settlor resident in Switzerland as “revocable” for tax purposes, attributing the assets and the resulting income to the settlor. If the settlor is resident abroad, however, the attribution does not apply. This differential treatment has been criticized in legal scholarship. As far as can be seen, the Federal Supreme Court has not yet ruled on this issue. As discussed in detail elsewhere, the transfer of assets into a “cloud”—whether into an irrevocable discretionary trust or into foundation structures—poses a major challenge for a comprehensive wealth tax system such as Switzerland’s. In other words, there is a significant risk that an overly liberal practice regarding the recognition of assets held in an Irrevocable Discretionary Trust (as convincing as it may seem at first glance) would call into question the very effectiveness of a wealth tax. Accordingly, a strict administrative practice may be justified on the grounds that the purpose of the wealth tax would otherwise be undermined, since assets could otherwise be shifted into a tax-free zone.
e. Groups of Persons
38 By definition, only natural persons can be subjects of the wealth tax. Although the StHG lacks a provision comparable to Art. 10 para. 1 DBG regarding the attribution of assets of groups of persons, tax law doctrine assumes that these assets are to be attributed to the members analogously to the income tax rules.
39 In the case of communities of heirs, the statutory or testamentary succession must generally be taken as the basis. However, if the heirs agree on a different arrangement, the partition agreement or the actual partition carried out is decisive for wealth tax purposes—unlike what is typically the case with inheritance tax. The debts of partnerships are generally deductible according to the same distribution mechanism.
40 For shareholders in collective investment schemes with direct real estate holdings, para. 3 contains specific harmonization provisions regarding the treatment for wealth tax purposes.
f. Leasing
41 Leasing essentially constitutes a form of financing that enables the use of assets without immediately acquiring ownership of them. During the lease term, the leased assets generally remain the property of the lessor under civil law. Accordingly, leased assets are not attributable to the lessee for wealth tax purposes, unlike, for example, in the case of usufruct.
IV. Regarding Art. 13 para. 3 StHG
A. In General
42 For units in collective investment schemes with direct real estate holdings, Art. 13 para. 3 StHG provides a specific taxation rule under which only the difference in value between the fund’s total assets and its direct real estate holdings is taxable.
43 This provision is necessary insofar as collective investment schemes generally do not constitute independent taxable entities as long as they do not hold direct real estate holdings. Without a special harmonization provision, the entire fund assets would be taxed on a pro rata basis among the unit holders. However, Art. 20 para. 1 StHG treats investment funds with direct real estate holdings as legal entities to ensure that the real estate can be taxed at the fund’s location. This prior taxation of the real estate must be taken into account when valuing the fund units. This provision aims, particularly in intercantonal relations, to avoid both economic double taxation and tax loopholes.
B. Determination of the taxable assets of collective investment schemes with direct real estate holdings
44 To avoid double taxation, the holder of fund shares must, for wealth tax purposes, include only that portion of the fund’s assets that is not attributable to the investment fund’s direct real estate holdings.
45 The wording of the law is, however, imprecise in that it fails to take into account the liabilities of the collective investment scheme. It would be more systematically correct to base the calculation on the difference between the fund’s total net assets and the net assets attributable to direct real estate holdings.
V. Regarding Art. 13 para. 4 StHG
A. Harmonization Provisions Regarding Exempt Assets
46 In principle, only assets that either do not give rise to a legally enforceable claim to monetary rights or are expressly exempted from taxation under the StHG are tax-exempt. Household goods and personal effects are explicitly exempted under para. 13(4) StHG.
1. Household goods and personal effects
47 The Federal Supreme Court defines household goods as those assets that serve residential purposes, are located in the home or household, and form part of the standard furnishings. In this context, it cites, for example, furniture, kitchen fixtures, household and garden tools, as well as electronic devices and hi-fi systems. Personal effects, by contrast, comprise those assets that are primarily intended for everyday personal use and not primarily for investment purposes. It is irrelevant whether the items are located in one’s own household. What is decisive is their ongoing personal use.
48The distinction between tax-exempt household goods or personal effects and taxable capital investments is sometimes difficult. According to legal doctrine, items such as paintings, jewelry, or carpets are not tax-exempt if their investment character clearly predominates. The decisive factor is not only an unusually high value, but an overall assessment of the circumstances, namely investment suitability, intended purpose, and actual use, as well as the taxpayer’s financial circumstances and the rest of the household furnishings.
49 Several cantonal administrative practices provide, for example, that motor vehicles, boats, riding horses, and art collections, as well as valuable collections—such as musical instruments—do not count as household goods or personal effects. As far as can be ascertained, the Federal Supreme Court has not yet ruled on this practice.
2. Scope of the harmonization provision
50 The list of tax-exempt assets under harmonization law is exhaustive. This means that neither can further tax-exempt assets be established through interpretation, nor are the cantons authorized to exempt additional assets from taxation.
51This exception must be understood in light of Art. 13 para. 1 StHG, which prescribes the taxation of the entire net worth and exempts only these two categories of assets from it. Since the cantons are thus prohibited from providing for further exemptions from the obligation to pay wealth tax, the interpretation of the terms “household goods” and “personal effects” takes on particular significance.
a. Assets without monetary value
52 Furthermore, assets without actual monetary value are not taxable, in particular mementos with merely subjective value. Assets whose monetary value is too indeterminate or uncertain are also exempt from taxation, such as self-generated, non-capitalizable goodwill.
53 Mere future entitlements are not to be regarded as taxable assets due to a lack of sufficient certainty. These include, above all, uncertain prospects of a future legal acquisition, such as claims to future pension benefits, to an inheritance or reversionary inheritance that has not yet accrued, as well as other rights subject to a condition precedent. The same applies to purchase prices for real estate deposited in an escrow account, as long as the transfer of ownership has not yet taken place.
b. Works of art and jewelry
54 The distinction is particularly delicate when it comes to works of art and jewelry. Depending on their purpose, use, and value, they are considered tax-exempt household goods or personal items, or ca9pital investments subject to wealth tax.
55In legal doctrine, three criteria have been established for distinguishing between tax-exempt household goods or personal items and taxable works of art or jewelry: (i) the actual use and intended purpose, which can usually be objectively determined without further ado; (ii) the customary nature of the furnishings in comparison to similar circumstances, whereby, for example, in the case of art, the living situation and the motive for acquisition may also be taken into account; and (iii) in the case of works of art, the question of whether the investment character predominates or whether they are primarily part of the home furnishings. The type of insurance (household contents or separate art insurance) may serve as an indication in this regard but does not constitute an independent criterion.
56 Reference should be made here to Greter’s study, which outlines various cantonal administrative practices regarding this distinction. Several cantons have issued practical guidelines for distinguishing tax-exempt from taxable assets and have in some cases supplemented these with valuation rules. These are regularly based on the classic distinguishing criteria mentioned above, combined with the note that taxpayers are entitled to tax-exempt home furnishings commensurate with their economic circumstances.
57 According to the tax practice of the Canton of Basel-Stadt, works of art up to a total value of CHF 100,000 are tax-exempt, although this limit may be adjusted based on financial circumstances.
58 There are only a limited number of court decisions regarding the distinction between household goods and other assets, with the majority relating to cases from the Canton of Zurich. The following overview of cantonal decisions is intended to provide guidance in this regard.
59 In an older decision, the Tax Appeals Commission of the Canton of Zurich held that works of art with a total value of approximately CHF 2.2 million, in the context of total assets of approximately CHF 7 million, exceeded the customary limit and were therefore subject to wealth tax. In doing so, the court established the guideline—still frequently cited today—that in borderline cases, one must examine, taking economic circumstances into account, whether the value remains within the bounds of what is customary. If this limit is significantly exceeded and the object is capable of achieving substantial increases in value, the investment character generally prevails. Classification as household goods is then ruled out—regardless of the actual use.
60 In a later decision, the Administrative Court of Zurich built upon this and clarified the distinction by establishing a value threshold. A single painting valued at CHF 150,000 is no longer to be classified as tax-exempt household goods, regardless of its use or the taxpayer’s financial circumstances. In doing so, the Administrative Court tightened the practice by classifying individual works of art as taxable assets once they exceed a certain value.
61 This has been criticized in legal scholarship because it means that individual objects can already be subject to declaration without the existence of a collection. Furthermore, it remains unclear at what point a collection can even be said to exist. Such a threshold—which is not enshrined in law and is difficult for taxpayers to predict—is, in the view of legal scholarship, at odds with the principle of legality under tax law.
62 Despite all the criticism in this regard, the Administrative Court of the Canton of Zurich—continuing its established case law—ruled in a recent decision that a painting valued at CHF 2.5 million clearly exceeded what is generally customary for household furnishings.
63 The differing treatment of works of art and jewelry under cantonal wealth tax laws illustrates the function of a framework law, as embodied by the StHG. Nothing in the wording of Art. 13 StHG suggests that either of the two cantonal tax practices outlined—distinction based on traditional criteria or the establishment of a monetary threshold—would violate the requirements of harmonization law.
64 Thus, as long as the Federal Supreme Court does not rule on this matter, it must be assumed—given the cantons’ discretion—that the administrative practices described do not, at the very least, violate the provisions of the StHG.
c. Pets
65Pets constitute a special case, as they are currently regarded under the law as living beings and not as property. This raises the question, even with regard to animals, of whether they are subject to wealth tax or are exempt from it as “household goods.” According to Kunz, animals with an economic purpose—such as farm animals—are to be included in taxable net assets and are thus subject to wealth tax. In this case, the question arises as to the valuation of the animals for wealth tax purposes. It should be noted at the outset that certain cantons have special statutory valuation provisions.
66 For privately kept animals such as cats, dogs, or ornamental birds, however, the distinction is sometimes more difficult to make, particularly in the case of purebred animals. While an ornamental fish aquarium can still be classified as part of the home furnishings, this is hardly the case for a dog. In tax practice, however, pets are generally not treated as other assets subject to declaration, even though certain breeds may well have a considerable market value. In contrast, various cantonal administrative practices require the declaration of privately owned riding horses, without convincingly justifying what the tax-relevant difference is compared to other pets, particularly dogs.
67 In this context, Kunz advocates for a case-by-case assessment, but establishes the basic rule that valuable animals—which, according to the author, may include koi fish, racehorses, and purebred cats—may well be subject to wealth tax. As far as can be seen, however, there is a lack of Federal Supreme Court case law that clarifies the relevant distinction, which is why there is corresponding cantonal discretion in this matter.
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Materials
Baselbieter Steuerbuch, Band 1 – Vermögen 49 Nr. 1 zum steuerfreien Vermögen vom 31.12.2016, https://kanton.baselland.ch/finanz-und-kirchendirektion/steuerverwaltung-steuerbuch/band-1/vermogen/downloads-1/band1_049_01.pdf/@@download/file/band1_049_01.pdf, besucht am 29.1.2026.
Botschaft zu Bundesgesetzen über die Harmonisierung der direkten Steuern der Kantone und Gemeinden sowie über die direkte Bundessteuer (Botschaft über die Steuerharmonisierung) vom 25.5.1983, BBl 1983 III 1 ff., abrufbar unter https://www.fedlex.admin.ch/eli/fga/1983/3_1_1_1/de, besucht am 29.1.2026.
Kanton Basel-Stadt, Wegleitung zur Steuererklärung 2024 für natürliche Personen, https://media.bs.ch/original_file/5dae1c09fc50fa37fac8834b0e29d6c0270137b2/15500-fw-np-ste-24-05-wegleitung.pdf, besucht am 29.1.2026.
Luzerner Steuerbuch, Band 1, § 51 Nr. 1 zum steuerfreien Vermögen vom 1.1.2024, https://steuerbuch.lu.ch/band1/vermoegenssteuer/steuerfreies_vermoegen, besucht am 29.1.2026.
Schweizerische Steuerkonferenz, Kreisschreiben Nr. 30 zur Besteuerung von Trusts vom 22.8.2007, https://www.ssk-csi.ch/fileadmin/dokumente/kreisschreiben/KS_30_d.pdf, besucht am 29.1.2026.
St.Galler Steuerbuch, StB 63 Nr. 1 zum Hausrat und persönlichen Gebrauchsgegenständen vom 1.1.1999, https://www.sg.ch/content/dam/sgch/steuern-finanzen/steuern/steuerbuch/art-53-69-stg/063_1.pdf, besucht am 29.1.2026.
Thurgauer Steuerpraxis, StP 41 Nr. 1 zur Vermögenssteuer, https://steuerpraxis.tg.ch/steuerpraxis/2026-01/stp-41-nr-1-vermogenssteuer, besucht am 29.1.2026.