By Marcus Altenburg, Managing Partner, Goldblum and Partners AG, Zürich/Zug

The Swiss Federal Supreme Court has not made Zug or Schwyz letterbox structures safe. It has done something narrower, but commercially important: it has required cantons to prove where a company’s effective management actually takes place. A director’s residence may still be decisive — but only as a factual conclusion, not as a legal shortcut.

Switzerland’s cantonal tax gap continues to drive domicile disputes. Zug’s combined corporate rate sits below 12%; Zurich’s approaches 20%. According to CRIF data, 301 companies moved their headquarters from Zurich to Zug in 2024. This gap has triggered increased scrutiny by higher-tax cantons, particularly where a company’s statutory seat is in Zug, Schwyz or Appenzell but its directors, shareholders or operational links point elsewhere. A 2024 evidentiary ruling, followed by a series of 2025 domicile cases, has recalibrated how cantons must prove the place of effective management.

What changed

·       A director’s residence creates no subsidiary tax domicile by default.

·       If no place of effective management outside the registered seat can be proven with sufficient probability, unlimited tax liability outside the seat canton is excluded.

·       The burden of proof remains on the canton claiming jurisdiction.

·       The recent case law does not create a safe harbour for letterbox structures. It prevents cantons from replacing proof with a presumption.

The case law line

The evidentiary framework was adjusted in 9C_591/2023 of 2 April 2024. The Court replaced the previous “very probable” standard with “preponderant probability”, but framed this as evidentiary relief — not as a reversal of the burden of proof.

9C_73/2024 of 26 February 2025, designated for official publication, is the leading decision. A director’s residence may, on the facts, indicate the place of effective management. But it cannot serve as an automatic subsidiary domicile when no geographical centre of gravity can be established. The only connecting factors under harmonised cantonal tax law remain the registered seat and the place of effective management.

9C_504/2024 of 19 March 2025 confirmed the principle.

9C_547/2023 of 8 April 2025 applied it to the textbook Zurich–Zug scenario. A. AG had moved its seat from Zurich to Zug in 2014, renting a shared office for CHF 1,200 per year. The sole director and 95% shareholder lived in Zurich and spent around 90% of his working time abroad. Zurich treated the Zug seat as a letterbox and assessed A. AG in Zurich for 2015 to 2019. The lower courts agreed. The Federal Supreme Court reversed: without proof of a geographical centre of management, Zurich could not retreat to the director’s residence as a fallback. The Court imposed CHF 3,000 in costs and CHF 5,000 in party compensation on Zurich.

9C_488/2023 of 25 April 2025 applied the same reasoning.

9C_558/2024 of 29 April 2025 marks the boundary. The lower court had established — with sufficient evidence — that the directors’ residences in Zurich coincided with the actual centre of management. The Federal Supreme Court upheld Zurich’s jurisdiction. The new framework protects companies whose management is genuinely dispersed or located at the seat — not those whose management is provably concentrated at a director’s home.

On the procedural side, 9C_489/2024 of 1 May 2025 confirmed that the prohibition of intercantonal double taxation does not automatically trigger revision of a final assessment. Taxpayers cannot wait for parallel assessments to become final and expect an automatic revision later.

What it means for international groups

Foreign-controlled Swiss subsidiaries are among the main beneficiaries. The common setup — a foreign UBO appointing a single Swiss-resident director to a Zug or Schwyz AG — has often led to cantonal domicile inquiries. Such inquiries now require positive proof of the management centre, not merely an inference drawn from a director’s address.

IP-holding and pure-holding structures in low-tax cantons also gain a stronger procedural position. The underlying logic has not changed: a letterbox without operational substance remains vulnerable if another canton can establish an alternative management centre.

One caveat is essential. In intercantonal cases, the registered seat remains decisive if the canton challenging it cannot prove a different place of effective management. This should not be confused with treaty residence or international place-of-effective-management analysis. The 2025 chain does not directly resolve disputes with foreign tax authorities or dual-residence analyses under the Switzerland–Germany, Switzerland–UK or comparable double-tax agreements. The analysis is also separate from Pillar 2 substance: GloBE looks at payroll and tangible assets, while the Swiss domicile cases turn on where management decisions are actually made.

The defensive evidence file

Companies should document, in real time:

·       Dedicated or demonstrably available office space, not merely a domiciliation address.

·       Local staff, local service providers or recurring executive presence.

·       Board minutes documenting the venue and participants of each meeting.

·       Travel logs for non-resident directors as defensive evidence.

·       Administrative, IT, telephony and banking infrastructure linked to the seat.

·       Annual substance review with dated supporting documents.

The procedural window

Act early. Once a canton opens a domicile inquiry (Steuerdomizilverfahren), the procedural window matters more than ever. After 9C_489/2024, no automatic remedy exists if a parallel assessment has become final. Contest jurisdiction at the first opportunity, document the centre of management before the audit team frames the facts, and treat substance review as a recurring exercise rather than a one-off corporate housekeeping task.