Decisions of the Swiss Federal Court (CW 16 - 2019 )

Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week from 15 to 21 April 2019.

Judgment of 25 March 2019 (2C_425/2018): Direct Federal Tax and State and Municipal Taxes (Zurich); request for a stay of proceedings; the tax commissioner involved in the proceedings was biased in that he had filed a criminal complaint for tax fraud against the complainant's beneficial owner during the current consultation period in the underlying tax evasion proceedings. "The Administrative Court [lower instance] must be granted that the filing of a criminal complaint is based on official duty and as such cannot establish an obligation to stand trial. However, in its legal assessment of the time lapse, the lower court ignores the fact that the competent tax commissioner [...] formed a final opinion before the end of the exchange of letters and expressed this externally by filing a criminal complaint in combined proceedings. He could therefore no longer be considered by the complainant as unbiased. (E. 5.2.). The complaint is partially upheld to the extent that it can be upheld. The application for a leave to intervene is well founded as regards a tax inspector and the contested judgment must therefore be set aside. The case is referred back to the Cantonal Tax Office Zurich for (re-)processing of the pending proceedings against the complainant by an impartial commissioner.

Judgment of 25 March 2019 (2C_426/2018): Direct federal tax and state and local taxes (Zurich); for details see the above judgment of 25 March 2019 (2C_425/2018).

Judgment of 26 March 2019 (2C_615/2018): Administrative assistance DTA (CH-NL). In a request dated 13 May 2016, the Dutch tax administration requested administrative assistance from the FTA. The request refers to A. GmbH as 'Participating (legal) person(s) in Switzerland' and B., residing in Amsterdam, and the companies C. Holding and D., domiciled in Rotterdam, as 'Participating (legal) person(s) in the Netherlands'. The requesting authority lists income tax and corporation tax for the period from 1 March 2010 to 31 December 2015 as the types of tax concerned by the request, which, according to the requesting authority, is based on an 'audit of B's tax obligations' by the Dutch tax authorities. As part of this audit, the Dutch tax authorities are investigating the acquisition of all shares in E. by B. in August 2010 and the financing of this transaction. The requesting authority requested, inter alia, the transmission of the annual accounts and profit tax returns of A. GmbH for the period from 1 March 2010 to 31 December 2015 and the disclosure of the managing directors, authorised signatories, shareholders and beneficial owners. After the FTA had obtained the relevant information and documents from A. GmbH and the tax authorities of the Canton of Zug, it issued a final ruling addressed to A. GmbH on 12 September 2017. The FTA indicated that it would assist the requesting authority and provide it with the requested information, except for tax returns. On 26 October 2017, A. GmbH filed an appeal against this order with the Federal Administrative Court, which in its ruling of 29 June 2018 protected the final decision of the FTA and dismissed the appeal of A. GmbH to the extent that it was upheld. In an appeal in matters of public law dated 16 July 2018, A. GmbH (the appellant) seeks to have the judgment of the lower court set aside and to refuse administrative assistance in its entirety, possibly also to have all information and documents relating to uninvolved third parties segregated or blackened and possibly to have them returned to the lower court for re-evaluation. The Federal Supreme Court dismisses the appeal to the extent that it is upheld. It examined the administrative assistance procedure based on Article 26, para. 1 DBA CH-NL and the question of probable materiality under the Tax Office Assistance Act. According to the Federal Supreme Court, the requirement of probable materiality is already met if, at the time of the application, there is a reasonable possibility that the requested information will prove to be material. The likely relevance of the documents or information requested must already be apparent from the request for assistance. Once the requested documents have been produced, the competent authority of the requested State must assess whether the information in question is likely to be relevant to the collection of the tax. The "presumably" has a double meaning: the requesting state must foresee the relevance and therefore assert it in the request for assistance and the requested state must only provide documents that are presumably relevant and refers to BGE 143 II 185 E. 3.3.2 p. 194 and, after detailed examination, affirms the probable relevance within the meaning of Article 26, para. 1 DBA CH-NL (E. 3.5); Article 26, para. 3 letters a and b DBA CH-NL in conjunction with Art. 8(1) StAhiG and Art. 123 ff. DBG do not preclude Switzerland's obligation to provide administrative assistance in the present case (E. 4.7); the question according to which the provision of administrative assistance violates the Ordre Public, which Art. 26 para. 3 c DTA CH-NL reserves, is left open by the Federal Supreme Court, as there is no violation of the speciality principle (E. 6.4); violation of the subsidiarity principle is negated (E. 7 f.).