A Swiss Wipo employee has won the right to pay zero tax in Geneva, after a court ruled that her internationally protected salary cannot be factored into the canton\u2019s wealth tax calculations. The fiscal authorities are appealing the decision that could have broad implications for the city\u2019s international workers.<\/p>\n
Perhaps the best tax is the one that doesn’t have to be paid. On 2 February, a Geneva court handed a significant victory to an international servant ruling that she and her husband owed nothing in cantonal taxes. The couple, who had challenged a tax authority bid to tax them, successfully argued that the levy was confiscatory. The Finance Department confirmed that the tax authority has appealed the ruling, which will now go before the Administrative Chamber of the Court of Justice.<\/p>\n
The husband, an American national, is unemployed. The wife, a Swiss national, earns an annual salary of CHF 145,000 as an international civil servant at the World Intellectual Property Organization (Wipo). When the couple settled in Geneva in 2023, they brought with them assets worth CHF 846,220, which generated CHF 7,324 in returns that year. They duly filed their tax return, declaring no income while properly disclosing their financial assets.<\/p>\n
Tax shield challenged<\/p>\n
Under a headquarters agreement concluded in 1970 between the Swiss federal government and Wipo, the agency\u2019s employees are fully exempt from income tax. Under these conditions, the couple argued that they were justified in declaring zero income. The WIPO employee holds a legitimation card issued to all international civil servants by the Swiss foreign affairs department \u2013 though the guidelines governing the permit require income to be declared even when it is not taxable.<\/p>\n
The cantonal tax authority saw things differently. It argued that the funds credited to the couple\u2019s bank account during the year constituted declarable income \u2013 not to be taxed directly, due to her exemption, but to be factored into the tax shield calculation. The instrument was introduced to prevent wealth tax from becoming confiscatory. Under Geneva law, that threshold is crossed when the wealth tax exceeds 60 per cent of net income.<\/p>\n
Including the wife\u2019s salary in her income figure, the tax authority assessed the couple\u2019s tax liability at roughly CHF 3,700 \u2013 around half the return on their assets and just below the legal minimum of one per cent of net wealth. The officials noted that the spouses had also failed to provide documentation requested to clarify their financial situation, with the burden of proof lying with the taxpayer. Without that, the administration said in its statement it was unable to \u201cdetermine (their) actual ability to pay\u2026and thus rule on the confiscatory nature of the tax\u201d.<\/p>\n
A higher court appeal<\/p>\n
The couple disagreed, arguing that if the salary is exempt from taxation, it could not form part of the \u201ctotal income\u201d used by fiscal authorities to anchor the tax shield.\u00a0 Remove it from the equation, and any wealth tax breaches the threshold and becomes confiscatory.<\/p>\n
The Geneva first-instance court sided with the couple in a terse four-sentence ruling, finding that the Wipo headquarters agreement constitutes a lawfully authorised exemption and that it does not discriminate against other taxpayers. With Geneva\u2019s appeal underway, a higher court will now consider the matter and issue a final decision.<\/p>\n
Without commenting on the specific case, Xavier Oberson, professor of tax law at the University of Geneva, struck a cautious note. \u201cWith this first-instance ruling, it is premature to say whether the case could set a precedent affecting many other international civil servants,\u201d he said.<\/p>\n