Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week of 27 November - 3 December 2017.
- Judgment of 10 November 2017 (2C_356/2017): Direct Federal Tax and State and Municipal Taxes 2006-2009 (St. Gallen); the complainants' complaint that the lower court wrongly did not recognise them as self-employed farmers and accordingly also did not allow the costs in connection with the agricultural property to be deducted proves to be unfounded. A self-employed gainful activity presupposes that it is aimed at generating an income from gainful employment in the first place. On the one hand, there must be an intention to make a profit (subjective criterion), and on the other hand, the activity must also be suitable for making a sustainable profit (objective criterion). In the periods in question (and beyond), the complainants not only always made losses - borne by the income from the complainants' main activity - but at no time ever achieved any significant income. Furthermore, the complainants complain about a refusal to deduct property maintenance costs concerning the stable on the agricultural property. The complainants' arguments are not convincing, since the volume of the work carried out, at around CHF 90,000, is very large both in absolute terms and even more so in relation to the value of the building (only CHF 15,800 at the time before the conversion) and the conversions carried out are therefore economically equivalent to a new building and are therefore not deductible. Finally, the appellants complain that the lower court wrongly refused them the deduction of interest on debt. In the present case, there was an international legal relationship (lender resident in South Korea), whereby particularly strict evidentiary requirements apply. According to the complainants, the alleged debt interest had been handed over in cash to a company domiciled in Belize with a postal address in Zug, which in turn had handed the money over to the lender in cash. This procedure appears to be very unusual, especially since there is a developed financial industry in South Korea. The connection between the claimed payments to the Belize-domiciled company and the alleged interest on the loan cannot be established by the complainants. The complainants bear the consequences or the evidentiary disadvantages and burdens of the deliberate interruption of the paper trail. Dismissal of the appeals insofar as they are to be upheld.
- Judgment of 14 November 2017 (2C_354/2017): Staats- und Gemeindesteuern 2015 (Zurich); the only issue in dispute in this case was the regulation of costs in the contested judgment; the Administrative Court of the Canton of Zurich adhered to the statutory fee tariff and refrained from waiving the imposition of costs due to special circumstances (cf. 3 StG/ZH); although the present proceedings were at least partly caused by an administrative error (typographical error in the instructions), the decision on costs by the lower court upheld the prohibition of arbitrariness, especially since the appellant had already been informed in the appeal decision and in the appeal decision (both without costs) that the statutory tariff alone is decisive for the calculation of the tax; dismissal of the appeal.
- Judgment of 13 November 2017 (2C_910/2017): Direct Federal Tax and State and Municipal Taxes 2013 (Basel-Stadt); rejected application for extension or restoration after missing the deadline for payment of an advance on costs for the pre-institutional appeal proceedings (cf. § 30 VRPG/BS); the rejection of the application for restitutio in integrum by the lower court is constitutionally tenable after it has been established that the complainant has issued a retention order to Österreichische Post AG, that he had to expect delivery of the request and that the lower court could thus assume that the fiction of delivery was valid; rejection of the complaints insofar as they are to be taken into account
- Judgment of 13 November 2017 (2C_301/2017): Cantonal taxes 2011 - 2013 (Ticino); intercantonal double taxation; tax residence of the general manager of a Ticino public limited company who returns to his family in the Canton of Aargau on a weekly basis and has a place of residence close to his place of work Since the taxpayer exercises a managerial function, his tax residence for tax purposes must be in the Canton of Ticino under the circumstances described. The disputed tax periods in this case were 2011-2013, but since the Canton of Ticino has delayed asserting its tax claim for 2011, it can only tax from 2012 onwards.
- Judgment of 17 November 2017 (2C_227/2017): Real estate gains tax; in accordance with Art. 82 para. 4 "Loi générale sur les contributions publiques" (Geneva), when selling real estate acquired by inheritance, the relevant purchase price is derived from the market value at the time of inheritance, with inheritance tax being added to the market value. This provision is contrary to federal law and does not correspond to Art. 12 para. 3 lit. a StHG, according to which taxation is deferred in the event of a change of ownership through inheritance (succession, division of an estate, bequest), advance withdrawal of inheritance or gift. Such a deferral means that the acquisition (inheritance) is to be ignored for tax purposes and that in the event of a subsequent sale, the increase in value during the lifetime of the "de cujus" is also to be taxed.
Decisions are listed chronologically by publication date.
