For example, if a married couple owns a vacation home abroad in addition to their condominium in Switzerland, they must include this information on their tax return. Although the vacation home is taxed abroad, its assessed value counts as assets in Switzerland. The imputed rental income—minus maintenance costs and mortgage interest—counts as income. If a net imputed rental income of 15,000 francs is added to the couple’s income of 120,000 francs, the taxable income consequently rises to 135,000 francs. In this example, this results in an increase in taxes of 1,700 francs.

Through what is known as “tax allocation,” both assets and liabilities are distributed among the various tax domiciles: In the context of this example, this means that a portion of the debt on the Swiss apartment is transferred to the debt-free vacation home. As a result, the assets subject to taxation in Switzerland increase. The same applies to any interest on debt, as this is also allocated. Interest on the foreign vacation home can be deducted in Switzerland only for the purpose of determining the tax rate.