Overview of the tax law decisions of the Swiss Federal Supreme Court published during the week of 22 - 28 March 2021.

  • Judgment of 2 March 2021 (2C_872/2020): Direct Federal Tax and State and Municipal Taxes 2018 (St. Gallen): a capital debt of the shareholder only subsequently mutates into a simulated loan if the will to repay ceases to exist. By claiming that they had already lost their will to repay before the 2018 tax year, the respondents contradict their tax returns in which they had fully claimed the current account debt up to and including 2017. The lower court violated federal law by enjoining the IRS from further clarification. It should have assumed, based on the respondents' abuse of rights with the IRS, that the respondents did not lose the will to repay until the 2018 tax year. Respondents documented this loss of repayment intent by failing to declare the debt on their tax return for that tax year. It follows that the respondents received a pecuniary benefit in the 2018 tax year; the appeal of the Cantonal Tax Office is upheld.
  • Rulings of 19 February 2021 (2C_1071/2020, 2C_1072/2020): Direct federal tax and state and municipal taxes 2006-2009 (Solothurn): In the present case, the sole shareholder objected to the offsets from monetary benefits from B. AG (dismissal of the appeal of B. AG cf. our article of 28 July 2019). Furthermore, the husband complains about too low depreciations of a BL-property and a too high income tax value of a SO-property. In the absence of sufficient disputes, no incorrectness can be shown; dismissal of the taxpayer's appeal.
  • Judgment of 8 March 2021 (2C_864/2020): Cantonal and communal taxes 2016 (Valais); The question in this case is whether A. acquired the property in trust for the simple partnership consisting of D. AG and E. Based on a notice on fiduciary relationships issued by the FTA, the lower court found that the requirements for the tax consideration of a fiduciary relationship were not met. In the present case, there was no remuneration for the trustee and the ratio of the mortgage debt to the market value was above 50%. Likewise, there are no serious reasons for the involvement of a trustee, since D. AG, as a real estate company, could have carried out this transaction itself. Dismissal of the taxpayer's appeal.
  • Judgment of 3 March 2021 (2C_1025/2020): Direct federal tax and state and municipal taxes 2003-2005 (Ticino); post-tax proceedings; the forfeiture period for the assessment of a post-tax for the 2005 tax period expired at the end of 2020. The decision of the lower court is annulled in this respect. The apportionment of the pre-instance court costs remains unchanged. Partial approval of the taxpayer's appeal.
  • Judgment of 3 March 2021 (2C_1055/2020): Direct Federal Tax and Cantonal and Communal Taxes 2016 (Zug and Zurich); The Federal Supreme Court refused to stay the Federal Supreme Court proceedings for lack of substantiation of the legally relevant influence of the pending proceedings before the Federal Criminal Court on the present proceedings. The complainant complained that both the Canton of Zurich, as the canton of departure, and the Canton of Zug, as the canton of arrival, had proceeded with the assessment. In the complainant's view, the canton of Zug should have taken the lead. The Federal Supreme Court states that it cannot be deduced from Art. 22 para. 1 of the Federal Tax Act that only the canton of arrival can act as the tax assessor, whereupon the canton of departure, Zurich, must to a certain extent take over the tax factors of the canton of arrival. Rather, in such a constellation, only intercantonal double taxation can be claimed. Dismissal of the taxpayer's appeal.
  • Judgment of 3 March 2021 (2C_984/2019): Direct federal tax and state and municipal taxes 2006-2010 (Ticino); Obvious incorrectness of the discretionary assessment was not presented in a legally adequate manner; Dismissal of the taxpayer's appeal.
  • Judgment of 2 March 2021 (2C_701/2020): Compulsory military service levy, substitute exemption; the person liable for the levy was exempted from the compulsory military service levy after completing recruit school (RS) had caused or aggravated a psychological condition in him. The dispute is whether the person liable for the levy is exempt from the levy only for the year in which he was found unfit for service or also for the following years. The lower court found that the person liable to pay the levy had already suffered from mental illness prior to the military service and that this illness was only temporarily aggravated by the military service. In doing so, it rightly gave greater weight to the assessment reports of the military doctors and the military insurance than to those of the treating doctors. Dismissal of the complaint of the person liable for the levy.
  • Judgment of 3 March 2021 (2C_37/2021 and 2C_38/2021): Staats- und Gemeindesteuern Aargau (2016); Principle of legality; The decree on the adjustment of imputed rental values withstands the principle of legality. In the present case, the complainant did not succeed in proving that the general-abstract adjustment decree led to an untenable and arbitrary result in her individual-concrete case. Dismissal of the appeal.
  • Judgment of 9 March 2021 (2C_1001/2020): fee for increased public use (Art. 62d RVOG); the ETH briefly occupied a section of the adjacent parcel of land owned by the City of Zurich for a conversion; for this, the City of Zurich charged the ETH a fee on the basis of increased public use; according to the Federal Supreme Court, the tax exemption under Art. According to the Federal Supreme Court, the exemption from taxation under Art. 62d RVOG does not include the causal charges on the federal properties; however, this is irrelevant, since in the present case it is a question of a charge for the use of a property and not a charge on the property of the ETH itself; Art. 62d RVOG therefore does not preclude the levying of the charge; dismissal of the appeal of the ETH.
  • Judgment of 25. February 2021 (2C_1031/2020): Real Estate Profit Tax 2018 (Zurich); In 2009, the taxpayer AG purchased an undeveloped plot of land; It allocated the acquisition costs to fixed assets in its books; On the site, it planned and projected an office complex; Meanwhile, parking spaces were rented on the property; In 2018, the taxpayer sold the undeveloped land, together with the rights to the building project and the legally valid building permit, to an unrelated party; In addition to the land at issue, the taxpayer held another parcel of land, which it developed and subsequently sold. The taxpayer considered itself to be a commercial real estate trader and claimed additional expenses in its real estate gains tax return; the taxpayer's status as a commercial real estate trader was in dispute; the Federal Supreme Court upheld the lower court's finding that the taxpayer had proceeded in a planned and systematic manner, that the listing of the properties under the fixed assets was comprehensible, justifiable and reasonable against the background of the services rendered (construction and planning activities). The Federal Supreme Court upheld the lower court's finding that the taxpayer acted in a planned and systematic manner, that the inclusion of the properties under fixed assets was comprehensible against the backdrop of the services rendered (construction and planning activities), that there was no need to speak of classic investment properties and that the taxpayer therefore qualified as a commercial property trader.

Decisions not to enter proceedings / decision on costs:

Decisions are listed chronologically by publication date.

Tax topics covered in this post:
Income Tax
Other Taxes
Property Gains Tax
International Tax
Treaties
Wealth Tax