In addition to the general rules on income tax, Canton Aargau applies specific rules and practices for certain taxpayer groups, income types and cross-border situations. This page highlights key areas where special rules can be relevant and where careful analysis is required beyond the standard treatment of employment income and basic deductions.

The information below is descriptive in nature and does not replace the detailed wording of Aargau’s tax law or individual tax rulings. Exact treatment depends on the applicable legislation, double tax treaties and administrative practice in the relevant tax year.

New Arrivals and Departures

Special considerations apply if you move into or out of Aargau during the tax year:

• When you move to Aargau, you typically become resident for tax purposes from the date of arrival, provided you establish your main place of living in the canton.
• When you leave Aargau for another canton or abroad, Aargau’s taxing rights generally end on the date of departure, subject to limited tax liability (e.g. on Aargau real estate).
• Income and assets may need to be allocated between different cantons or countries for the year of arrival or departure.

In such cases, the tax return must accurately reflect arrival and departure dates, prior residence and the timing of income. Double taxation agreements and intercantonal allocation rules can significantly influence the final result.

Cross-Border Workers and Non-Residents

Aargau’s location means that cross-border situations are not uncommon. Important aspects include:

• Cross-border commuters who live abroad but work in Aargau may be subject to withholding tax on their Swiss employment income, with allocation and relief governed by double tax treaties.
• Non-residents with limited tax liability (for example, due to a permanent establishment or real estate in Aargau) are taxed only on the income and assets that are taxable in Aargau, but their worldwide income may still be relevant for determining the applicable tax rate (exemption-with-progression method).
• Cross-border pension, director’s fees, and self-employment income can be subject to special allocation rules between Switzerland and the other state involved.

The precise treatment depends on the applicable double tax treaty and the factual pattern (place of work, residence, employer structure, days worked in Switzerland, etc.).

Withholding Tax (Quellensteuer) and Subsequent Ordinary Assessment

Foreign nationals without a permanent residence permit are often taxed via withholding tax on their employment income. Special rules apply where:

• The taxpayer’s income exceeds certain thresholds, triggering a mandatory subsequent ordinary assessment.
• The taxpayer wishes to claim deductions that are not fully reflected in the withholding tax tariff (e.g. significant 3a contributions, childcare costs), and therefore requests a voluntary ordinary assessment.
• The individual’s situation changes (e.g. acquisition of property, change of residence, marriage/ divorce), requiring a recalculation of the tax position.

In a subsequent ordinary assessment, federal, cantonal and communal taxes are recalculated as if the taxpayer were subject to ordinary taxation from the outset, and the withholding tax already paid is credited against the final tax liability.

Investment Income, Dividends and Capital Gains

Aargau follows the general Swiss approach to investment income:

• Interest and dividends are typically taxable as income, subject to any relief mechanisms (e.g. partial participation relief where applicable for qualifying participations).
• Private capital gains on movable assets (for example, gains from privately held shares) are usually tax-free for non-professional investors, whereas professional securities traders may be taxed on such gains as business income.
• Capital gains on Swiss real estate are often taxed under separate real estate gains tax regimes, with specific cantonal rules and holding-period-based tariffs.

Whether someone is considered a professional investor, and how particular gains are treated, can depend on a combination of factors (frequency of trading, use of debt, holding periods, intent, etc.) and may require expert assessment.

Income from Self-Employment and Partnerships

For self-employed individuals and partners in partnerships with activities in Aargau:

• Business profits are taxed as ordinary income at federal, cantonal and communal level.
• A distinction must be made between deductible business expenses and private living costs, with only business-related expenses being deductible.
• Certain hidden profit distributions or non-arm’s length transactions may be recharacterised by the tax authorities.
• Losses can often be carried forward and offset against future business profits, subject to statutory limitations.

Complex cases (e.g. mixed use of assets, intra-group transactions, cross-border service provision) may require closer coordination with the tax authorities or advance rulings.

Employee Participation Plans, Bonuses and Severance Payments

Special rules can apply to certain forms of employment-related income, including:

• Employee share and option plans, where the timing and valuation of taxable income may be governed by specific federal and cantonal rules.
• Long-term incentive plans (LTIs), restricted stock units (RSUs) and similar arrangements, especially when awarded by foreign employers.
• Severance payments and compensation for the loss of employment, which can sometimes be treated differently from regular salary payments.

International assignments, split-payroll arrangements and cross-border stock plans introduce an additional layer of complexity regarding source taxation and treaty allocation of taxing rights.

Pensions and Retirement Income

Pensions and retirement-related income can be subject to special rules, in particular:

• Benefits from the 2nd pillar (occupational pensions) and pillar 3a plans, which may be taxed differently depending on whether they are paid as a lump sum or as an annuity.
• Lump-sum pension payments, which are often taxed at a separate, reduced rate, with specific rules on the interaction between the federal and cantonal levels.
• Cross-border pensions, where double tax treaties can determine which state has the primary taxing right and how relief is granted in the other state.

Timing and structuring of pension withdrawals can have a significant effect on the overall tax burden, especially for mobile individuals or those with pension rights in multiple countries.

Real Estate in Aargau

Ownership of real estate in Aargau is subject to particular tax rules:

• Imputed rental value or rental income must be declared as income, with deductions for mortgage interest and property maintenance subject to the applicable rules.
• Real estate gains tax can apply on the sale of property in Aargau, with tariffs often depending on the holding period and other factors.
• Non-residents owning property in Aargau can be subject to limited tax liability and filing obligations, even if they live in another canton or abroad.

These rules can have important implications for investment decisions and for individuals relocating to or from Aargau.

International Double Taxation and Relief

If a taxpayer has income or assets in more than one country, the interaction between Aargau tax law, federal rules and international tax treaties becomes critical. Common situations include:

• Employment in one country and residence in another,
• Business activities or permanent establishments in multiple jurisdictions,
• Foreign investment income and foreign pensions.

Relief mechanisms may involve:

• Exemption with progression,
• Credit methods, and
• Specific treaty provisions for pensions, directors’ fees and other income types.

The actual relief granted is highly dependent on the wording of the relevant double tax treaty and the facts of the case.

Practical Guidance

The special rules discussed on this page show that Aargau income taxation can become significantly more complex in situations involving:

• Cross-border work or residence,
• Withholding tax and subsequent ordinary assessments,
• Employee participation plans and complex remuneration structures,
• Self-employment, business income or real estate in Aargau, and
• International pensions and multiple sources of retirement income.

In such cases, it is often advisable to obtain personalised advice and, where appropriate, to clarify the tax treatment with the authorities in advance. The other sections of the Aargau income tax guide – Rates, Deductions, Filing Requirements and Examples – provide the general framework within which these special rules operate.