Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week of 13 - 19 August 2018.

  • Judgment of 30 July 2018 (2C_610/2018): Withholding tax; the Federal Supreme Court recalls the case law according to which only those who have duly declared the income - and not only the shares - in their tax return are entitled to a refund. The fact that the cantonal tax authorities have chosen an internal organisation aimed at facilitating cross-checking of the information provided by the taxpayer with that contained in the tax files of third parties, in this case the company, does not affect the scope of application of Articles 124(2) and 125(1) DBA. Rejection of the taxpayer's complaint.
  • Judgment of 16 July 2018 (2C_330/2017): State and municipal taxes of the Canton of Zurich 2013; direct federal tax 2013; it was disputed whether the depreciation of a property with an apartment building in the amount of 7.2% in 2013 was justified on business grounds (the degressive rate according to leaflet A 1995 - Business operations of the FTA in the case of joint accounting of land and buildings was 1.5% p.a.) The building had been demolished in 2015 for new construction, and this was already foreseeable in 2013 (building application submitted, although it was not expected to be rejected). The building was in regular use until it was demolished. In accordance with the terminology of the DBG (but not the new accounting law), the write-down made is an extraordinary write-down. For them to be admissible, there must have been a final or at least permanent loss of value. This is not apparent purely on account of the planned demolition. In the sense of an obiter dictum, the Federal Court confirmed that even if buildings and land are entered in the balance sheet together, the tax value or the market value of a property does not necessarily constitute the lower limit within the framework of normal depreciation. Accordingly, it cannot be ruled out that, in the case of land with buildings on top and joint accounting for land and buildings, the book value may be lower than the tax value or fair value of the land after demolition of the buildings. However, this does not mean that the acquisition value of the property is the lowest limit for depreciation. The principle that land is not subject to any age rating should continue to be taken into account. The system of individual valuation - as opposed to the system of joint valuation - allows total depreciation of the building, but not depreciation on land (see E. 3.4.1.); rejection of the taxpayers' complaint.
  • Judgment of 18 July 2018 (2C_284/2017): Reclaim of withholding tax (in accordance with DBA); tax years 2009-2011; The aDBA CH-NL applies in the present procedure, as the current DBA CH-NL (in force since 9 November 2011) only applies to the tax years from 1 January 2012 (cf. Art. 29 para. 1 DBA CH-NL). In the present case, the complainant taxpayer - a pension foundation domiciled in the Netherlands - held a stake of less than 25% in the Swiss joint stock company, whereby only a stake of at least 25% entitles it to full reimbursement. The withholding tax had already been refunded to the extent of 20% of the gross dividend based on Art. 9 aDBA CH-NL. According to the Federal Supreme Court, it cannot rely on Art. 10 aDBA CH-NL to obtain full reimbursement. The prohibition of discrimination in Art. 10 aDBA CH-NL applies in addition to the distribution rule in Art. 9 aDBA CH-NL and serves to exclude tax discrimination based on nationality or similar grounds (E. 3.1). It represents a double taxation correction mechanism designed to reduce differentiations under national law (E. 3.2). Whether the (full) refund is made on the basis of the VStG or whether a (full or only partial) refund is granted on the basis of the DTA does not depend on the nationality of the taxpayers applying for a refund, but solely on their tax residence (E. 3.3). Rejection of the taxpayers' complaint.
  • Judgment of 17 July 2018 (2C_948/2017): State and municipal taxes 2012 (Aargau); liquidation profit; it was disputed whether the property in question was suitable for agricultural use at the time of the private withdrawal and was therefore subject to privileged taxation within the meaning of Article 8(1) StHG and §27(4) StG of the Canton of Aargau According to the clear wording of Article 6(1) of the Civil Code, the question of whether a plot of land is suitable for agricultural use is primarily based on the objective suitability of the land and not on the subjective current use. Subjective criteria can only be considered if specific conditions are met and only exceptionally (E. 4.3). The respondent was not able to convincingly demonstrate to what extent the land was objectively no longer suitable for agricultural use. Nor have there been any major structural changes since the original agricultural use that would make future agricultural use impossible (E. 4.3). Acceptance of the taxpayers' complaint in so far as it can be acted upon.
  • Judgment of 25 July 2018 (2C_963/2017): State and municipal taxes 2006 (Aargau); profits from the sale of agricultural and forestry land are only subject to income tax at cantonal level up to the amount of the investment costs (reintroduced depreciation); the capital gain is subject to property gains tax, as is the case for natural persons without business assets. At the federal level and in dualistic cantons (such as the canton of Aargau), profits earned by self-employed persons from the sale of non-agricultural and forestry land held as business assets are subject to income tax in their entirety (E. 2.3.2.). The previous controversial issue was the taxation of capital gains on real estate of business assets from private withdrawal and the related question of whether the sold properties qualify as agricultural and forestry. The Federal Supreme Court states that the concept of agricultural or forestry land is not defined in the StHG. In the absence of any indications of agricultural use existing at the time of the private withdrawal, the land in question and the buildings located on it cannot be regarded as agricultural buildings and structures within the meaning of Article 2(2)(a) of the Civil Code. The appeal is dismissed in so far as it is admissible.

Non-occurrence decisions / inadmissible complaints:

Decisions are listed chronologically by publication date.

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