#1. Legislative history

N. 1 The roots of tax harmonisation reach back to the 1970s. After several failed attempts, the harmonisation article 42quinquies former Federal Constitution was adopted in the referendum of 12 June 1977 (BBl 1976 I 1329; BBl 1977 III 845). The legislative history was characterised by the tension between the need for legal unification to promote a unified economic area on the one hand and the insistence of the cantons on their tax autonomy on the other.

N. 2 The constitutional legislator deliberately chose a limited harmonisation competence. The Dispatch of 10 March 1976 emphasised that only formal, not material tax harmonisation was sought: «The harmonisation shall only extend to tax liability, the subject matter and temporal assessment of taxes, procedural law and tax criminal law» (BBl 1976 I 1361). This fundamental decision was maintained when transferring to Art. 129 new Federal Constitution.

N. 3 The Tax Harmonisation Act (StHG) of 14 December 1990, based on Art. 42quinquies former Federal Constitution, came into force on 1 January 1993 after ten years of deliberation. The cantons were granted a transitional period of eight years to adapt their tax law (Art. 72 para. 1 StHG). This deadline proved too short, which is why the Federal Supreme Court in BGE 131 I 291 granted cantonal governments the competence to enact provisional provisions.

#2. Systematic classification

N. 4 Art. 129 BV is systematically classified in Title 3 «Confederation, Cantons and Communes», Chapter 3 «Financial system». The norm is closely connected with: → Art. 127 BV (Principles of taxation) → Art. 128 BV (Direct taxes) → Art. 134 BV (Exclusion of cantonal and communal taxes) ↔ Art. 3 BV (Federalism) and Art. 47 BV (Autonomy of the cantons)

N. 5 The systematic position clarifies that tax harmonisation is part of the federal division of tasks. It realises the postulate of the unity of the economic order (→ Art. 95 BV) in the tax area, but at the same time respects the federal structure (Häfelin/Haller/Keller/Thurnherr, Bundesstaatsrecht, N 1095).

N. 6 Of central importance is the relationship to Art. 190 BV. The Federal Supreme Court clarified in BGE 131 II 697 that even unconstitutional provisions of the StHG must be enforced due to the duty of application. This considerably restricts the controlling function of the Constitution vis-à-vis harmonisation law.

#3. Factual elements / Content of the norm

#a) Basic competence (para. 1)

N. 7 The term «principles» is interpreted controversially. The antinomy of constitutional objectives outlined by Reich characterises the interpretation: On the one hand, only framework legislation should take place, on the other hand effective harmonisation is sought.

N. 8 The Federal Supreme Court tends towards an extensive interpretation. In BGE 130 II 202 it stated that the extent of cantonal possibilities for concretisation must be determined separately for each provision. Practice shows that the Confederation largely exhausts its competence (Vallender, Mittelbare Rechtsetzung, 435).

N. 9 The «direct taxes» comprise, according to the Federal Council's definition, taxes on income and wealth of natural persons as well as on profit and capital of legal persons. Not covered are in particular inheritance and gift taxes as well as capital gains taxes on real estate, although the latter have been partially included in the StHG (Art. 12 StHG).

N. 10 The obligation to take into account the «harmonisation efforts of the cantons» manifests itself primarily in the composition of expert commissions. Materially, however, this requirement has had little effect (Bieri, StR 2009, 92).

#b) Scope of harmonisation (para. 2)

N. 11 The positive description in para. 2 sentence 1 is exhaustive. Harmonisation extends to:

• Tax liability: subjective and objective tax liability (Art. 3–5, 11–13 StHG)
• Subject matter: taxable income and assets (Art. 7, 14 StHG)
• Temporal assessment: tax period and temporal allocation (Art. 40–42 StHG)
• Procedural law: assessment, legal remedies, collection (Art. 43–56 StHG)
• Tax criminal law: criminal offences and procedures (Art. 56–59 StHG)

N. 12 The negative delimitation in para. 2 sentence 2 is not exhaustive («in particular»). The explicitly mentioned exceptions concern:

• Tax scales: progression curve and tariff structure
• Tax rates: percentage or absolute level of tax burden
• Tax exemptions: thresholds and personal deductions

N. 13 This tariff autonomy is the core of the remaining cantonal tax sovereignty. The Federal Supreme Court emphasised in BGE 133 I 206 that this autonomy is nevertheless subject to general constitutional principles, in particular the principle of equality before the law and the principle of taxation according to economic capacity.

#c) Unjustified tax privileges (para. 3)

N. 14 This competence was only inserted in 1993 (Art. 197 no. 9 BV). It targets intercantonal tax competition, in particular lump-sum taxation and holding privileges. The norm has remained largely unused so far (Locher, ASA 2010/11, 440).

N. 15 The indeterminate legal concept «unjustified» requires concretisation by law or jurisprudence. Legal doctrine demands restrained application so as not to excessively restrict tax competition (Feld/Schaltegger, StR 2009, 735).

#4. Legal consequences

N. 16 The primary legal consequence is the Confederation's obligation to enact harmonisation provisions. This obligation was fulfilled with the StHG. The StHG acts as framework legislation that requires transformation into cantonal law (Meister, ST 1993, 300).

N. 17 The following obligations arise for the cantons:

• Adaptation of cantonal law to the requirements of the StHG
• Observance of federal legal definitions
• Uniform application of law in the harmonised area

N. 18 The Federal Supreme Court enforces these obligations through various legal remedies:

• Administrative court appeal according to Art. 73 StHG (BGE 130 II 65)
• Abstract judicial review for unconstitutional cantonal laws
• Individual complaint for erroneous application of law

N. 19 The violation of harmonisation law requirements leads to the annulment of the cantonal norm or ruling. In case of default by cantonal legislation, the StHG comes into force directly (Art. 72 para. 2 StHG).

#5. Disputed issues

N. 20 The central disputed issue concerns the scope for design by the cantons in the harmonised area. One view emphasises the «principle» nature of federal competence and derives from this that cantons must retain leeway even outside the explicitly excluded areas. The opposing position argues with the goal of a unified economic area and advocates for a narrow interpretation of cantonal scope.

N. 21 The scope of tariff autonomy is also controversial. While Oberson (Droit fiscal suisse, § 1 N 45) advocates comprehensive cantonal freedom in tariff design, others warn of constitutional limits. The Federal Supreme Court clarified in BGE 133 I 206 that tariff autonomy is also subject to the principle of equality before the law.

N. 22 The admissibility of material tax harmonisation is discussed in legal doctrine. Feld/Schaltegger (StR 2009, 740) reject this as unconstitutional, while other authors favour a constitutional revision. The political discussion has intensified with the OECD minimum taxation.

N. 23 Finally, the role of municipalities is disputed. While Rhinow/Schefer/Uebersax (Verfassungsrecht, N 3142) see municipalities as indirectly affected, the Federal Supreme Court emphasises in BGE 141 I 235 that harmonisation primarily concerns the Confederation-canton relationship.

#6. Practical guidance

N. 24 For cantonal legislation, the following applies: harmonisation law requirements must be implemented mandatorily. For questions of interpretation, orientation on Federal Supreme Court jurisprudence is recommended, which tends to have a unifying effect.

N. 25 Taxpayers cannot rely on cantonal law that violates harmonisation requirements. The Federal Supreme Court applies the StHG directly in cases of clear violations. This applies in particular to procedural provisions (Cavelti, ASA 1993/94, 360).

N. 26 For intercantonal tax apportionment, the methodology prescribed by harmonisation law is mandatory. Deviating cantonal agreements are irrelevant (BGE 148 I 65).

N. 27 Future development will be shaped by international requirements (OECD minimum tax) and digitalisation. The constitutional framework enables adaptations within the existing division of competences; larger reforms would require a constitutional amendment (Yersin, ASA 1995/96, 115).

#I. Constitutional foundations of tax harmonisation

BGE 130 II 202 of 2 March 2004
Capital gains tax on real estate; administrative appeal under Art. 73 THA in tax harmonisation
The administrative appeal under Art. 73 para. 1 THA is also admissible insofar as the cantons have been left discretion within the framework of harmonised law.

«The Tax Harmonisation Act, as a framework or outline law, generally requires transformation into cantonal law. The extent of cantonal implementation possibilities and federal legal obligations must be determined separately for each individual provision. Insofar as the federal legislator grants the cantonal legislator discretionary scope, the Federal Supreme Court's examination authority is governed by the principles applicable to constitutional appeals.»

BGE 130 II 65 of 1 January 2003
Procedural harmonisation; appeal instances
The cantons must create a uniform system of appeals for direct federal tax and harmonised cantonal taxes.

«According to Art. 145 para. 1 DITA in conjunction with Art. 50 para. 3 THA, a canton that allows for the appeal decision to be referred to a further administrative-independent instance for harmonised cantonal taxes is obliged to provide the same legal remedy path for direct federal tax as well.»

#II. Delimitation of harmonised and non-harmonised areas

BGE 141 I 78 of 21 June 1994 (published 2015)
Cantonal tax amnesty; reduced tax rates for penalty-free voluntary disclosure
Art. 129 para. 2 BV does not include the cantonal autonomy over tax rates when harmonised areas are concerned.

«The introduction of reduced tax rates for penalty-free voluntary disclosure violates the corresponding provisions of the THA, and the application of these tax rates cannot be justified by invoking Art. 129 para. 2 BV. The reference to Art. 129 para. 2 BV does not help, since this provision only guarantees the cantonal autonomy over tax rates insofar as areas not covered by harmonisation are affected.»

BGE 133 I 206 of 1 June 2007
Constitutionality of regressive tax scales; cantonal autonomy over tax rates
The autonomy over tax rates under Art. 129 para. 2 BV remains despite tax harmonisation, but is subject to constitutional limitations.

«Art. 129 para. 2 BV stipulates that tax scales, tax rates and tax exemptions in particular remain excluded from harmonisation. This autonomy over tax rates, which in principle is reserved to the cantons, is however subject to constitutional requirements, notably the principle of equality before the law and the prohibition of arbitrariness.»

#III. Tax harmonisation and cantonal freedom of design

BGE 131 I 291 of 20 April 2005
Provisional valuation regulations by cantonal government; separation of powers
Authority of the cantonal government to issue provisional regulations in case of delayed parliamentary implementation.

«According to Art. 72 para. 3 THA, the cantonal government is authorised and obliged to issue provisional regulations if the cantonal parliament responsible for regulation has not created a legal situation corresponding to the Tax Harmonisation Act in time for 1 January 2001. The Tax Harmonisation Act here takes precedence as more specific federal law over the general constitutional principles of separation of powers.»

BGE 136 I 49 of 25 September 2009
Dividend taxation; constitutional application requirement
The constitutional requirement to apply law excludes review of cantonal regulations that conform to harmonisation requirements.

«The federal Tax Harmonisation Act permits cantons to grant privileges to qualified shareholders of enterprises in the taxation of dividends. The constitutional requirement to apply federal laws excludes review of a cantonal regulation covered by federal law in the framework of abstract judicial review, even if the federal law only entered into force a year later.»

#IV. Practice relating to individual harmonised areas

BGE 131 II 697 of 26 October 2005
Equal tax treatment of single-parent and two-parent families
Art. 11 para. 1 THA is unconstitutional but must be applied by virtue of Art. 191 BV.

«The provision of Art. 11 para. 1 THA, according to which single-parent families and taxpayers with dependent persons are to be granted the same tax reduction as married persons, violates the principle of taxation according to economic capacity and thus Art. 127 para. 2 BV. Nevertheless, this provision must be observed by law-applying authorities by virtue of the application requirement of Art. 191 BV.»

BGE 142 II 182 of 1 January 2016
Local jurisdiction for capital payments
Harmonisation law requirements for jurisdiction regulation.

«The determination of local jurisdiction for federal tax assessment of a capital payment is governed by Art. 105 DITA. For harmonised cantonal and municipal taxes, the corresponding provisions of the THA apply, which in turn refer to federal tax law regulations.»

#V. Intercantonal double taxation and coordination

BGE 148 I 65 of 28 July 2021
Capital tax on associations; prohibition of intercantonal double taxation
Tax harmonisation requires coordination in intercantonal allocation.

«The principles of intercantonal double taxation law must also be observed in the area of capital tax. Art. 127 para. 3 BV prohibits intercantonal double taxation. The harmonisation law provisions specify this prohibition for direct taxes.»

BGE 146 II 111 of 16 December 2019
Tax domicile of legal entities
Harmonisation law coordination when jurisdiction criteria diverge.

«Although the place of actual administration represents the main tax domicile in intercantonal relations, when applying Art. 105 para. 3 DITA, the special federal tax law jurisdiction rules must be observed, which also apply to harmonised cantonal taxes.»

#VI. Municipal taxes and municipal tax sovereignty

BGE 141 I 235 of 19 June 2015
Municipal taxes; intermunicipal distribution
Tax sovereignty of municipalities is conferred by the cantons, not by the Confederation.

«Not the Confederation, but the cantons confer tax sovereignty on the municipalities. Subject to the equal treatment requirement and the prohibition of arbitrariness, the cantons are free to limit the tax competencies of their municipalities. Harmonisation according to Art. 129 BV primarily concerns the relationship between the Confederation and the cantons.»

#VII. Transitional law and legal certainty

BGE 141 II 207 of 9 February 2015
Capital gains tax on real estate; deferral chain for replacement acquisition
The harmonisation law provisions apply from the time set in the transitional arrangements.

«The taxation of capital gains on real estate has been harmonised since 1 January 2001. For situations that become taxable after this date, the federal law requirements apply directly, insofar as cantonal law deviates from them.»

#VIII. Development and outlook

The case law on Art. 129 BV shows a continuous development from the fundamental recognition of the Confederation's harmonisation competence towards a differentiated consideration of the tension between federal harmonisation and cantonal autonomy. In doing so, the Federal Supreme Court has specified both the limits of harmonisation (particularly regarding tax scales and rates) and its mandatory effect in the areas covered. Recent case law increasingly deals with coordination law issues and the practical implementation of harmonisation law requirements within the federal structure.