Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week of 6 - 12 November 2017.

  • Judgment of 3 November 2017 (final decision in proceedings 2C_201/2016; not yet published, see still judgment of 26 October 2017 or our contribution of 5 November 2017): The Federal Tax Administration (FTA) may, within the framework of international administrative assistance procedures in tax matters, provide the requesting state with information on the status of the procedure (practice of "status updates"). The Federal Administrative Court has still denied this question due to the lack of a legal basis. The information provided to Spain in the present case, according to which "a complaint has been filed and the proceedings are pending before the federal courts" is in conformity with the law, according to the Federal Supreme Court (cf. the media release of the Federal Supreme Court).
  • Judgment of 4 October 2017 (2C_377/2017): Cantonal tax and direct federal tax 2011 (Valais); in accordance with Art. 589 para. 1 of the Swiss Civil Code, the deceased's debts, which are recorded in the inventory, as well as the assets are transferred to the heir, who takes over the inheritance under public inventory. This applies to public law claims only insofar as public law expressly reserves the validity of this provision. Art. 165 para. 4 DBG and Art. 165 StG/VS state that tax claims in public inventories do not have to be registered. This is appropriate, since the public inventory serves to protect against surprises and tax claims against the testator are the rule; the invocation of the protection of legitimate expectations fails in the present case, since it must have been clear to the heirs that the tax amounts for the year of death of the testator could not have been definitively assessed at all (see BVerfGE 101, 286 (3)). Art. 162 para. 1 DBG or Art. 162 para. 1 StG/VS) and the tax claim for 2011 has furthermore been included in the public inventory with the remark "provisionally (pro rata)"; dismissal of the appeals.
  • Judgment of 19 October 2017 (2C_806/2017): Direct federal tax and cantonal and communal tax 2004, 2005, 2007 and 2011; in the present case no violation of the right to be heard and of the nemo-tenetur principle
  • Judgment of 4 October 2017 (2C_1166/2016, 2C_1167/2016): Direct federal tax and cantonal tax 2013 (Fribourg); real estate maintenance costs; in the present case, it was disputed whether repair or maintenance costs in the business sector are excluded from deduction from the outset - at least if the book value of the property had previously been depreciated to the same extent; the complainant's view that self-employed persons or legal entities should not be able to deduct certain costs for the maintenance of (depreciated) real estate in addition to the costs of acquisition, production or increase in value finds no basis in federal tax legislation. There is no corrective norm according to which repair costs for (depreciated) commercial properties - irrespective of any increase in value - would have to be capitalised (cf. Art. 58 para. 1 lit. b DBG in connection with Art. 18 para. 3 DBG); furthermore, the link between maintenance costs and depreciation is not necessary even from an economic perspective; the deduction of property costs for commercial properties can only be refused if the expenses actually have a value-enhancing character, which means that, as with private properties, it must be examined whether maintenance costs maintain or enhance value in individual cases; since the concept of (real estate) maintenance costs within the scope of the StHG is not interpreted differently in cantonal law than in the area of direct federal tax, with regard to cantonal tax reference is made to the above; rejection of complaints; cf. see also Daniel Dillier on ludwigpartner.blog.
  • Judgment of 20 October 2017 (2C_309/2017): Dog tax; the local law of Vallorbe (VD) provides that recipients of supplementary benefits do not have to pay dog tax. There is no exception with regard to recipients of the "revenu d'insertion" (integration income). Since the profile of the recipient of such an integration income does not differ significantly from that of a recipient of supplementary benefits, the Vallorbe municipality's regulation violates the principle of equal treatment.
  • Judgment of 23 October 2017 (2C_745/2015), official publication provided: Customs; inward processing traffic; the Directorate General of Customs (OZD) issued a total of seven inward processing authorisations to a declarant established in the canton of Aargau. The decrees allowed the declarant to place specified goods (mostly fruit juice concentrates) under the inward processing procedure until the import deadline. At the same time, the OZD ordered the export of the goods within 12 months of the import of the goods in question (export deadline) and the settlement of accounts using a specific form ("inward processing under the suspension or refund procedure - settlement application") within 60 days (settlement deadline). Subsequently, the corresponding exports were incorrectly coded. The responsible customs district directorate rejected an application for recoding due to the expiry of the deadline. The Federal Administrative Court dismissed an appeal against this in its ruling of 29 June 2015 (A-201/2015) (see our article of 12 November 2017). According to the Federal Court, the proper completion of the inward processing procedure requires proof that the goods brought into the customs territory are re-exported as compensating products within the prescribed period (Art. 168 (2) lit. b ZV). If the procedure is not properly completed, the Federal Customs Administration (FCA) must dispose of the import duty. In the present case, the person liable to pay duty has not properly completed the inward processing procedure and, by entering the wrong clearance code, has indicated that the goods are to be exported under the normal export customs procedure (declaration error). The binding nature of the accepted customs declaration, however, can lead to disproportionate results in the case of a mere false declaration, which is why the legislator has created the customs law correction (Art. 34 CC), which however requires strict conditions in terms of time and content. The likelihood of an incorrect customs declaration is particularly high in the case of inward and outward processing operations due to their two-dimensional nature. For this reason, the legislator provides for a special application (Art. 59 (4) sentence 1 half-sentence 2 ZG) in cases where inward processing does not result in the proper completion of the procedure, which is capable of reducing the due date of import duties. "The facts of the case shall be substantiated by evidence that the goods entering the customs territory for processing were exported in due time after the processing operation. (E. 3.3.4.). In the opinion of the Federal Supreme Court, Art. 59 (4) of the Customs Code constitutes a lex specialis in comparison with Art. 34 of the Customs Code, since the application is limited in content to the correction in the event of inward processing not having been properly completed, and since the wording of the law stipulates that the application must be submitted "within 60 days of the expiry of the period set". However, the law does not specify what period is meant by this. The Federal Supreme Court states: "If Art. 59 para. 4 sentence 2 of the Federal Act links the 60-day period to the "expiry of the fixed period", this means that the application must be submitted within 60 days of the expiry of the export period. In contrast, the doctrine links the beginning of the period to the settlement period [...] or to the actual export [...]. These views cannot be followed after what has been said, since the grammatical interpretation alone leads to a different result. Consequently, the person liable to pay the customs duty took action in good time. The OZD should thus have responded to the application and checked whether the processed goods "have been demonstrably exported" in accordance with Article 59 (4) sentence 1 sub-sentence 2 ZG. The appeal is well-founded and is upheld. The appealed decision of the Federal Administrative Court is set aside and the case is referred back to the FCA for a substantive reassessment.
  • Judgment of 25 October 2017 (2C_854/2017): Direct federal tax and cantonal and communal tax 2013 (Geneva); the approach of the Geneva tax authorities in calculating the imputed rental value complies with federal law.
  • Judgment of 16 October 2017 (2C_90/2017, 2C_91/2017): Direct federal tax and cantonal and communal tax 2008, 2010, 2011 (Valais); assessment according to dutiful discretion; non-consideration of the VAT due according to the balance tax rate method in the context of the discretionary assessment and corresponding correction by the Tax Appeal Commission, which is the subject of the present proceedings. The Federal Supreme Court states: "If a taxpayer settles according to the balance tax rate method, the expenditure (and thus also the cost of goods) is always higher than if the same business were to settle according to the effective method. The reason for this is that the business that effectively settles its accounts posts the expenses net, i.e. without input tax. As a result, an estimated turnover (norm) based on the cost of goods sold, which corresponds to the gross profit margin customary in the industry, is higher for a company that accounts according to the net tax rate method than if the company had accounted for its costs according to the effective method. (E. 3.3). The correction of the estimate by the Tax Appeal Commission is therefore not objectionable and even proves to be necessary. The appeal lodged against this by the Tax Administration of the Canton of Valais is unfounded and the appeal is dismissed.
  • Judgment of 26 October 2017 (2C_168/2017): Direct Federal Tax 2011 (Schwyz); transposition; the Federal Supreme Court has not followed the complainant's view that Article 20a para. 1 lit. b DBG should be interpreted in a result-oriented manner on the basis of an economic approach in this case. According to the considerations of the Federal Supreme Court, the requirements of Art. 20a para. 1 lit. b DBG can only be met if the seller itself causes the transposition by the sale. In casu, the decisive factor was whether tax avoidance in the sense of the Federal Supreme Court's case law was present (existence of the "objective", "subjective" and "effective" element); in casu, the Federal Supreme Court affirmed the objective element of tax avoidance, since the loan relationship was simulated with regard to the person of the repayment recipient and the chosen procedure did not stand up to a third-party comparison (no collateral and regular interest payments for the loan); Due to the prompt transfer of the loan claim (within one year of the sale of the shares), the lack of security, interest and amortisation by the purchasing company and expressions of the intention to make a gift on the occasion of a ruling request, there was a natural presumption that the transfer of the loan claim was already planned at the time of the sale of the shares. The chosen legal structure was abusively adopted solely in order to save taxes which would have been due if the circumstances had been properly regulated, thus the subjective element of tax avoidance was present; finally, according to the Federal Supreme Court, the procedure chosen by the defendants would have led to considerable tax savings if it had been accepted by the tax authorities (so-called effective element); acceptance of the appeal.

Non-occurrence decisions / inadmissible complaints:

Decisions are listed chronologically by publication date.

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