Decisions of the Swiss Federal Supreme CourtCW 12 - 2025)

Overview of the tax rulings of the Swiss Federal Supreme Court published between March 17 - 23, 2025:

Judgment of February 26, 2025 (9C_301/2024): Direct federal tax and state and municipal taxes 2010-2015 (Ticino); The complainant was managing director of B. SA from 2010 to 2017, which assigned its only remaining claim to C. SA in 2016. The tax administration took the view that the assignment constituted a de facto liquidation and that the appellant, as liquidator, was personally liable for the unpaid taxes from 2010 to 2015 (around CHF 120,000) on the basis of Art. 64 para. 1 StG/TI and Art. 55 para. 1 DBG. The complainant was unable to rebut the presumption of de facto liquidation before the Federal Supreme Court. He was also unsuccessful with his arbitrary objections. Dismissal of the complainant's appeal.
Judgment of February 19, 2025 (9C_625/2023 ) - for publication: Direct federal tax and state and municipal taxes 2019 (Zurich); fluctuation reserve; The tax deductibility of fluctuation reserves is at issue in this case. A AG recognized its securities at the market price on the balance sheet date in accordance with Art. 960b para. 1 CO. It neutralized the price gains achieved in full by forming a value fluctuation reserve. The Federal Supreme Court followed the opinion of the Zurich Cantonal Tax Office and denied the tax deductibility of this reserve formation. The reasons given by the court included the fact that there was no legislative intention to allow such a neutralization of capital gains. In addition, the general principles for the formation of provisions were not adhered to when forming fluctuation reserves. Accordingly, the general risk of future price losses does not justify the formation of provisions for tax purposes, as impending price losses represent future events that have not yet occurred on the balance sheet date and therefore do not justify the formation of a provision. At the same time, however, the Federal Supreme Court did not question the fact that cantons can continue to provide for lump-sum fluctuation reserves - even for individual sectors - but are not obliged to do so. Dismissal of the taxpayer's appeal.

Judgment of February 26, 2025 (9C_666/2024): Direct federal tax and state and municipal taxes 2017 (Schaffhausen); The complainant was employed by B. AG. The B. group of companies also included B. SA, which was owned 50% each by B. AG and its then Chairman of the Board of Directors D. The complainant acquired 10% of the shares in B. SA from D. at the end of 2016. The complainant sold these on to B. AG for double the price in mid-2017. It was disputed and had to be examined whether the difference in the sales price of the two share purchase agreements constituted taxable income or tax-free capital gains. The FSC upheld the lower court and, like the lower court, came to the conclusion that the increase in the purchase price was intended as compensation for the appellant's work and therefore constituted taxable income. There were strong indications that the resale of the shares was already intended at the time of acquisition (in particular credit-financed share purchase by the appellant). Dismissal of the taxpayer's appeal.
Judgment of February 18, 2025 (9C_453/2024): Direct federal tax and state and municipal taxes 2019 (Zurich); A. AG, a real estate company, had its registered office in the canton of Lucerne from December 2015 to December 2020. Prior to that, the registered office was in Zurich, where several properties of A. AG were located. For the tax periods 2015 to 2019, the company was assessed by the Zurich cantonal tax office on a discretionary basis, as A. AG refused to submit complete and properly kept business books with chronologically ordered receipts for the tax periods 2015 to 2019. The Federal Supreme Court confirmed the lower court's assessment and rejected the complaint that the tax factors were obviously incorrectly determined. The Federal Supreme Court also rejected the complaint of a breach of the duty to state reasons. Dismissal of the company's appeal.

Judgment of February 21, 2025 (9C_349/2024): Direct federal tax and state and communal taxes 2021 (Neuchâtel); The taxpayer left Switzerland together with her partner (see judgment 9C_350/2024 of February 21, 2025) and their child at the end of September 2021. Shortly before leaving the country, the taxpayer made occupational pension purchases amounting to CHF 241,500. The cantonal tax office considered these purchases to be tax avoidance and denied the corresponding deduction. It essentially took the view that the purchases had not served to build up an occupational pension plan in Switzerland. This assessment was upheld by the cantonal court. The Federal Supreme Court agreed with the ruling of the lower court and confirmed that the occupational pension purchases made immediately before moving abroad constituted tax avoidance. A possible return to Switzerland could not change this assessment. Dismissal of the taxpayer's appeal.

Judgment of February 21, 2025 (9C_350/2024): Direct federal tax and state and communal taxes 2021 (Neuchâtel); The taxpayer left Switzerland together with his partner (see judgment 9C_349/2024 of February 21, 2025) and their child at the end of September 2021 to take up a new position abroad with another group company. Shortly before leaving the country, the taxpayer made occupational pension purchases amounting to CHF 335,000. The cantonal tax office considered these purchases to be tax avoidance and denied the corresponding deduction. It essentially took the view that the purchases had not served to build up an occupational pension plan in Switzerland. This assessment was upheld by the cantonal court. The Federal Supreme Court agreed with the ruling of the lower court and confirmed that the occupational pension purchases made immediately before moving abroad constituted tax avoidance. A possible return to Switzerland could not change this assessment. Dismissal of the taxpayer's appeal.

Judgment of February 25, 2025 (9C_75/2024) - for publication: Direct federal tax and cantonal and communal taxes 2012 (Geneva); At issue is, on the one hand, the admissibility of the revision request of March 30, 2021 regarding the 2012 tax period and, on the other hand, the deductibility of the compensation claim as business-related costs pursuant to Art. 27 DBG. With regard to the revision request, the Federal Supreme Court came to the conclusion that the reason for the revision was not admissible and that the lower court should have rejected the revision request submitted by A. Pursuant to Art. 27 para. 3 lit. c DBG, fines and monetary penalties are not deductible. Since January 1, 2022, Art. 27 para. 2 lit. f DBG stipulates that profit-absorbing sanctions, provided they are not of a criminal nature, are deductible costs. From a tax perspective, the damages resulting from A.'s tortious conduct cannot be deducted from taxable profits, as they are neither sufficiently closely related to his gainful activity as a lawyer nor result from a risk that is common to this activity, as the court rightly found. Nor can a claim for compensation be equated with profit-skimming sanctions, insofar as they have no punitive purpose. Appeal by the Geneva tax administration upheld.
Judgment of March 5, 2025 (9C_503/2023): VAT; reduction in remuneration (2018), see also judgment A-2397/2022 of 19 June 2023 and our article of 23 July 2023. In order for reductions in remuneration to be recognized, it must be proven that the remuneration in question was also (originally) taxed, which was not proven in the present case. Dismissal of the taxpayer's appeal.

Judgment of March 06, 2025 (9C_568/2024): Municipal taxes 2020 (Solothurn); Free administration of justice; Free administration of justice was not granted due to lack of need. Dismissal of the taxpayer's appeal.

Non-occurrence: