Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week of April 30 - May 6, 2018.
- Judgment of 16 April 2018 (2C_28/2017); official publication planned: Administrative assistance (DTA Switzerland - France); request for administrative assistance based on the DTA-FR. After the French tax authority submitted a request for administrative assistance, it reached an agreement with the respondents on their tax base. The agreement provided, among other things, that if the amounts declared by the respondents were not correct, the whole thing would be null and void and the "correct" tax amount would be levied, together with interest and fines. The respondents argued that the principle of subsidiarity under paragraph XI of the Additional Protocol to the DTA-FR was violated (in the case of exchange of information under Article 28 DTA-FR , the competent authority of the requesting State makes a request only after all the usual means provided for in its internal tax procedure for obtaining the information have been exhausted). The Federal Supreme Court first sets out the distinction between probable relevance (explicitly provided for in Art. 28 DTA -FR ) and subsidiarity (No. XI of the Additional Protocol) (E. 3.3.3). In the present case, the requesting authority had stated in its request for assistance of 11 June 2015 that all possibilities for obtaining information provided for in its domestic tax proceedings and usable at that time had been exhausted. The principle of subsidiarity was therefore complied with. In particular, the fact that the respondents disclosed their tax factors after the submission of the request for assistance is not relevant with regard to the principle of subsidiarity, as the circumstances at the time of the submission of the request for assistance are decisive (E. 3.3.1 and 3.3.4). Since the agreement (between the tax authority and the respondents) provides for the lapse of the agreement if not all income has been fully reported, the present request relates to information that is likely to be material. The information provided by the respondents may be reviewed (E. 4.3). Finally, the respondents invoke the principle of good faith, since they would have received assurances from the requesting tax authorities that no tax proceedings would be initiated against them. In the context of a DTA, however, the principle of good faith only relates to relations between the requested and the requesting state, which is why the respondents cannot invoke a form of protection of legitimate expectations, as known in the Swiss legal system, vis-à-vis their state of residence (France) in the context of a request for administrative assistance (E. 4.4).
- Judgement of 16 April 2018 (2C_1069/2017); official publication planned: Value Added Tax (VAT); discretionary assessment (1 May 2000 - 30 September 2004); appeal against the ruling of the Federal Administrative Court of 8 November 2017 (A-5410/2016; cf. our contribution of 26 November 2017). In this case, the FTA had decided for a sauna club that employed several masseuses that the turnover of the masseuses was to be attributed to the sauna club for VAT purposes. In the absence of corresponding accounting, the FTA had determined the taxable turnover on the basis of the direct taxable turnover of individual masseuses. What was disputed was, on the one hand, the statute of limitations of the tax claims and, on the other hand, the turnover estimated by the FTA. On the question of limitation: The VAT 1994 only provides for a relative limitation period. As already stated with regard to the Direct Federal Tax, it would be offensive and hardly compatible with the principle of equality of laws if the period of limitation for tax claims under the old law could continue to run even if tax claims which arose under the new law and are therefore more recent were already absolutely time-barred. In this respect, the legal regulation is incomplete. This gap must be closed by adopting the general rule according to which a newly provided limitation period (only) begins to run from the time the new law comes into force (E. 2.2.7.). The VAT law of 1999 came into force on 1 January 2001. As a result, Art. 49 para. 4 MWSTG 1999 covered the unresolved VAT cases from the period from 1 January 1995 to 1 January 2001, which is why the absolute statute of limitations came into effect on 1 January 2016 (see also Art. 49 para. 3 SchlT ZGB by analogy; E. 2.2.9.). With regard to the FTA's estimate: The FTA is obliged to make an estimate of the relevant turnover if either no or only incomplete records are available (first type of offence, violation of the formal accounting rules) or if the reported results obviously do not correspond to the actual facts (second type of offence, violation of the substantive accounting rules; E. 2.3.2.). A freely verifiable legal question is whether the facts of the case permit an estimation based on dutiful discretion. If this is the case, it must be clarified whether the previous instance has used an appropriate valuation method. This is also a legal question. The actual valuation or estimate is one of the questions of fact. Correspondingly, the inaccuracy of the FTA's estimate must be comprehensively proven (E. 2.3.3.). The turnover figures used by the FTA are net figures (excluding VAT), not gross figures. In this respect the estimate of the FTA is not objectionable (E. 2.4.). Partial acceptance of the taxpayer's complaint (regarding statute-barred tax periods); otherwise the complaint was rejected.
Decisions are listed chronologically by publication date.
