Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week from 18 to 24 March 2019.

  • Judgment of 28 February 2019 (2C_620/2018): ICC-IFD 2006 (Vaud); the complainants do not succeed in explaining the increase in their assets by approximately CHF 300,000, which is why the tax authority offset a corresponding amount against them as income. In particular, the evidence submitted by the complainants did not plausibly demonstrate this change in their wealth. Dismissal of the complainants' appeal.
  • Judgment of 28 February 2019 (2C_110/2018): Direct Federal Tax and Cantonal and Municipal Taxes 2008-2011 (Geneva); one of the complainants (couple) is involved in a partnership in the UK and argues that he maintains a permanent establishment in the UK through the partnership. The corresponding income is therefore not taxable in Switzerland on the basis of Article 6(1) DBG. However, the activities of various consultants working from home or with clients in the UK do not constitute a permanent establishment or substantial business activity in the sense of a permanent establishment. Dismissal of the appellants' appeal.
  • Judgment of 26 February 2019 (2C_449/2017): Direct Federal Tax and State and Municipal Taxes 2005 (Bern); tax fines; an after-tax and tax evasion procedure was initiated against the respondent (BG) in 2013 after he had received income in 2005 from C. GmbH (including a vehicle used privately by his then partner and a family trip); after the objection was rejected, the Federal Supreme Court appealed to the Tax Appeal Commission of the Canton of Berne, which suspended the after-tax proceedings; by decision of 20 September 2016, it lifted the tax fines against the Federal Supreme Court; the Tax Administration BE appealed against this decision to the Administrative Court, which dismissed the appeal; before the Federal Supreme Court, it is questionable whether the facts of the tax evasion (Art. 175 para. 1 DBG) is fulfilled; the Tax Appeal Commission of the Canton of Berne lacked a tax reduction with reference to the triangular theory; if a company, on the basis of a shareholding relationship, does not pay pecuniary benefits to a shareholder but to a third party who is related to a shareholder, the question arises as to whom these benefits are to be allocated for income tax purposes (E. 2.4); in the present case, C. GmbH paid various payments in kind to the Federal Court of Justice; it is also established that the Federal Court of Justice was affiliated with one of the two shareholders of C. GmbH - namely his sister; moreover, because the payments did not stand up to a comparison with third parties, the lower instance was forced to assume that the payments were based on the sister's shareholding; the Federal Court of Justice follows this view and states that the Federal Court of Justice was the de facto managing director of C. GmbH. GmbH; this function specifically allowed him to address the invoices for the family trip to C. GmbH and to have them paid by it; as regards the leased vehicle, the formal managing directors and not the Federal Court of Justice had signed a leasing contract for C. GmbH; however, by merely signing the contract, C. GmbH had not yet rendered a payment in kind to anybody; only the subsequent transfer of the vehicle free of charge for private use to the BG's female partner constituted a payment in kind (see BVerfGE 18, p. 1). E. 2.5.3); the Federal Supreme Court goes into more detail on the case law on payments in kind to related parties (E. 2.6.1 et seq.); the payments of C. GmbH are to be recorded for income tax purposes with the Federal Supreme Court, where they led to an addition to assets; the Federal Supreme Court affirms the tax reduction and a causal connection between the taxpayer's conduct and the tax reduction (E. 3.2); with reference to the binding findings of the lower court in the criminal judgment of the High Court of the Canton of Berne on intent, the Federal Supreme Court also confirms the subjective elements of the offence (E. 4.3); this is followed by comments on the level of penalty of the fine, whereby in the specific case, it was taken into account to aggravate the penalty that the Federal Supreme Court used a sophisticated system to obtain tax advantages by granting the C. GmbH has charged private expenses and used straw men to obtain tax advantages (E. 5.2); since the legal situation under the Tax Harmonisation Act (Art. 56 para. 1 StHG) for cantonal and municipal taxes is the same as for direct federal taxes, the Federal Supreme Court refers to the federal tax law statements; approval of the appeal.
  • Judgment of 11 March 2019 (2C_30/2019): Real estate profit tax 2013 (Basel-Landschaft); the loss credit is linked to a profit tax assessment which (after neutralisation of the gross profit) closes with an operating loss; however, the legally valid assessment ruling for the 2013 tax period shows a taxable profit, which is opposed to a loss credit from the outset; in the event of a conflict between profit tax and real estate profit tax assessment, Section 120 para. 3 StG/BL provides that the real estate profit tax assessment is supplemented if a loss is to be credited retroactively in accordance with § 79.3 StG/BL; the lower instance acted in accordance with this provision; the taxpayers' application essentially aims to "skip" the appeal proceedings; the lower instance was therefore allowed to leave open, in accordance with federal law, whether the legally valid profit tax assessment "can be corrected retroactively at best"; dismissal of the complainant's appeal.
  • Ruling of 11 March 2019 (2C_34/2018): Cantonal and communal tax, direct federal tax 2010 (Geneva); tax neutrality in the case of a holding demerger if, like the demerged holding company, it held two participations; the participations themselves fulfilled the operating requirement, which is why this applies as a consequence to the holding company (transparency); the profit tax-neutral demerger is also tax-neutral for the shareholders (private assets); dismissal of the tax authority's appeal.

Non-occurrence decisions / inadmissible complaints:

Decisions are listed chronologically by publication date.

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