Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week from 4 to 10 March 2019.
- Judgment of 15 February 2019 (2C_851/2018); official publication provided: § 224a and § 279 StG/ZH in the version of 23 October 2017 (crediting of operating losses to real estate gains); abstract control of norms; the newly introduced regulation in the Canton of Zurich on the crediting of intra-cantonal operating losses favours the equality of intra-cantonal and inter-cantonal companies and is thus conducive to legal equality. An unconstitutionality of the regulation is therefore to be denied.
- Judgment of 18 February 2019 (2C_435/2017): Direct Federal Tax and State and Municipal Taxes 2006-2010 (Solothurn); contrary to the view of the complainants, Article 130(2), first sentence, DBG does not prescribe a specific methodology as to how income is to be collected according to due discretion. "The fact that the KStA/SO did not start from the turnover and deducted the business-related expenses from it alone does not allow the conclusion to be drawn that the approach would inevitably be contrary to federal law. What is decisive under federal law is rather that the assessment authority chooses a method that does justice to the specific individual situation and leads to a result that is as close to reality as possible. The mixed method, which is based, on the one hand, on a financial statement and, on the other, on the presumed private expenditure, is a reliable and widely used method for direct tax purposes (see only judgments 2C_57/2019 of 1 February 2019; 2C_290/2018 of 25 June 2018; 2C_183/2017 of 6 March 2017). (E. 2.2.4). The taxpayers overlook the fact "that - unlike in the case of the ordinary assessment ruling - it cannot be the responsibility of the Federal Court to carry out a detailed examination of the content of an estimate. Such an approach is inevitably based on various methodological and arithmetical steps. The Federal Supreme Court intervenes only in the event of gross conceptual (with regard to the valuation method) or computational errors (with regard to the actual valuation)" (E. 2.3.1). However, since a dutiful discretionary assessment should correspond as closely as possible to the true circumstances, it would have been up to the assessment authority to estimate the AHV contributions ex officio and to reserve them for balance sheet adjustment (judgment 2A.63/1998 of 12 May 1999 E. 5, in: NStP 54/2000 p. 57). In this respect, the situation is similar to that for the provision for current taxes of legal entities (BGE 141 II 83 E. 5.5 p. 89 f.) (2.3.2). Ultimately, the appeal proves to be well-founded in so far as the assessment authority did not make any provision for AHV contributions. To that extent, it is to be upheld, and the remainder of the appellants' appeal is dismissed.
- Judgment of 20 February 2019 (2C_833/2016): Value Added Tax (VAT) 2008 - 2012; cost premium / management commission co-insurance); the new VAT law distinguishes between a fixing and a reference limitation period. Accordingly, the right to set a tax claim expires five years after the end of the tax period in which the tax claim arose (Art. 42 (1) MWSTG). In the proceedings before the Federal Supreme Court, the limitation period has therefore come to an end with regard to the tax periods 2010 to 2012 and the contested judgment must be set aside in this respect. To this extent the complaint is upheld (E. 2.2). With regard to the 2008 and 2009 tax periods, it is disputed whether the arithmetical parts of the cost premiums attributable to the co-insurers in the co-insurance relationships under discussion in the present case are exempt from tax as part of the insurance premium or whether they are to be qualified as taxable compensation of benefits paid by the complainant as leading insurer to the co-insurers. In the present case, it must be assumed from the correct considerations at first instance, according to which the complainant provided administrative services for the benefit of the co-insurers and was compensated for this provision of services by being granted the cost premium (E. 4). "The lower court considered that the tax exemptions listed in Art. 18 aMWSTG - subject to a different legal regulation - would only apply to services provided directly to final consumers; transactions which precede the tax exemption, so-called prior transactions, are not subject to a false exemption. The legislator had introduced a change of system in this respect in Article 21(3) and (4) of the VAT Act, thus denying further application of the practice based on the theory of prior turnover. According to Art. 21(4) MWSTG, the question of whether a service is exempt from tax is determined solely by its content and independently of who provides or receives the service. These remarks must be fully endorsed' (E. 5.2.1). The VAT Act 1999 is applicable to the 2008 and 2009 tax years. On the basis of the pre-transaction theory applicable under this law, the transactions attributable to the co-insurers cannot be qualified as exempt, since they do not directly concern services supplied to final consumers (E. 5.3.1). In this respect, the judgment of the court of first instance is unobjectionable and the complaint must be dismissed with regard to the 2008 and 2009 tax years.
- Judgment of 25 February 2019 (2C_32/2019): Tax professionnelle commercial of the Canton of Geneva; the reference to the concession fee (instead of the rent) does not prove to be arbitrary and is therefore in conformity with federal law; dismissal of the appellant's appeal.
- Addendum - Judgment of 10 December (2C_607/2017): Direct Federal Tax 2003-2004 and State and Municipal Taxes 2003-2007 (Geneva); the question of the liability of the members of the board of directors and the liquidators for joint and several tax debts in the event of the de facto liquidation of a company, which is controversial in doctrine and left open in the case law of the highest courts (cf. most recently judgment of 14 September 2016 [2C_472/2015], E. 3.3.3.2), was answered in the affirmative for the first time by the Federal Court in the present judgment. X. acquired all shares of B. AG from A. on 25 March 2004 and was entered in the Commercial Register on 30 March 2004 as the only member of the Board of Directors; before X. sold the shares to A. again on 20 October 2004 and resigned as a member of the Board of Directors, B. AG had sold 13 of its 15 properties in just under seven months; on 4 March 2004, B. AG sold all shares of B. AG to A. and was entered in the Commercial Register as the only member of the Board of Directors; on 4 October 2004, B. AG sold all shares of B. AG. On November 11, 2009, the Administrative Court of the Canton of Geneva ordered the dissolution and liquidation of B. AG (whereby the bankruptcy proceedings were discontinued in November 2009 due to lack of assets and the company was deleted from the Commercial Register); the Tax Administration of the Canton of Geneva declared X. The Administrative Court of the Canton of Geneva upheld X.'s appeal at first instance, but the Cour de Justice of the Canton of Geneva overturned the judgment at first instance and referred the matter back to the tax authorities for the determination of the liquidation proceeds; X. Appeal lodged up to the Federal Supreme Court; the Federal Supreme Court judges X's joint and several liability for the direct federal taxes for 2003 and 2004 of B. AG on the basis of Art. 55 para. 1 DBG; as X. was not (no longer) a director, shareholder or liquidator at the time of the formal liquidation of B. AG, the Federal Supreme Court examines the liability on the basis of a mere de facto liquidation; the Federal Supreme Court states that the liability under Art. 55 para. 1 DBG also applies in the case of a de facto liquidation, as is already recognised in the case law on withholding tax under Article 15 para. 1 VStG (E. 5 et seq.); X. had de facto liquidated B. AG by selling almost all of B. AG's assets in less than seven months in 2004, thereby depriving it of its economic substance; the Federal Supreme Court further states that Article 15 para. 1 DBG provides in Article 15 para. 1 that the liquidation of B. AG is to be carried out by a liquidator. 55.1 DBG, in contrast to Article 15.2 VStG, does not provide for a time limit on liability and liability therefore also exists for taxes incurred before the liable party joined the company; however, in the absence of a clear statutory basis, there is no liability for taxes which would only arise after the liable party left the company; X. was therefore only liable for tax debts incurred during his work as de facto liquidator until 20 October 2004; further clarifications were necessary on this and other points, in particular the amount of the liquidation result had to be determined on the basis of the last balance sheet before X's departure and thus the 2003 balance sheet; (partial) acceptance of the complaint and rejection of it.
Decisions are listed chronologically by publication date.
