Decisions of the Swiss Federal Supreme CourtCW 13 - 2025)

Overview of the tax rulings of the Swiss Federal Supreme Court published between March 24 - 30, 2025:

Judgment of February 14, 2025 (9C_279/2024) - for publication: Property gains tax 2019 (Zurich); Taxpayer A formed a simple partnership together with other persons to acquire and convert a property. Subsequently, the property was divided between the partners of the simple partnership by means of a publicly notarized declaration of foundation with the allocation of condominium ownership to "sole ownership". The question in dispute here is whether the allocation of condominium ownership is capable of triggering real estate gains tax. Contrary to the lower court, the Federal Supreme Court comes to the conclusion that although the allocation of condominium ownership shares, just like ordinary co-ownership, results in a tax settlement, this is limited to quota shifts between the previous members of the ordinary partnership. Accordingly, the real estate gains tax is to be limited to the marginal quota shift of A in the present case. Partial approval of the taxpayer's appeal.‍
Judgment of February 28, 2025 (9C_432/2024): Direct federal tax and cantonal taxes 2014-2015 (Ticino); in dispute is a provision in connection with risks of loss. In order to be recognized for tax purposes, the provision must have been booked correctly, which was not the case here, as the accounts prepared by A. SA contained neither a reference to work carried out by D. nor a corresponding provision. Dismissal of the appeal by A. SA.‍‍
Judgment of March 7, 2025 (9C_439/2024): VAT 2015 - 2019; The dispute concerns the VAT qualification of the "brokerage service against brokerage fee (execution)" provided by A. AG provides. A. AG takes the view that this is not a taxable ancillary service of investment advice or asset management. The Federal Administrative Court, on the other hand, took the view that the execution service provided as part of the asset management mandates was an ancillary service to taxable investment advice or asset management. The FTA went further than the Federal Administrative Court, stating that there was no independent brokerage exempt from VAT pursuant to Art. 21 para. 2 no. 19 lit. a - e MWSTG, as A. AG had an interest of its own in carrying out the transactions, which is why it could not be assumed that the brokerage services were exempt from VAT. The Federal Supreme Court agreed with the FTA's reasoning. Dismissal of the appeal by A. AG.‍‍
Judgment of March 11, 2025 (9C_676/2024): Military service tax 2020 - 2021; in dispute is whether A. was correctly subject to the military service tax. He was 32 years old in 2019. Since January 1, 2019, all Swiss men who are not assigned to an army unit and do not perform civilian service have been subject to the military service tax until the age of 37. Dismissal of the appeal by A.‍
Judgment of February 26, 2025 (9C_73/2024) - for publication: State and municipal taxes 2017-2021 (St. Gallen); tax domicile; A. GmbH had its registered office in Zug until mid-2022. Its sole managing director and owner of A. GmbH was resident in the canton of St. Gallen. As part of tax domicile proceedings, the tax office of the Canton of St. Gallen determined that the place of actual management of the company was in the Canton of St. Gallen or at the residence of the sole managing director. The company appealed this decision to the Federal Supreme Court. The court confirmed the assessment of the lower court(s) and in particular rejected the complaints of arbitrary determination of the facts and violation of the right to be heard. However, clarifying the lower court's assessment, the Federal Supreme Court held that the managing director's place of residence did not constitute a subsidiary tax domicile of the legal entity if it could not be established where its entrepreneurial decisions were made and its business was conducted. Taking into account the reduced standard of proof of preponderance of probability and the limited verifiability of the findings of fact, the lower courts were nevertheless able to reach the conclusion without arbitrariness that the place of actual management of A. GmbH was at the domicile of its managing director and indirect owner on the basis of the evidence presented. Dismissal of the company's appeal.‍
Judgment of February 26, 2025 (9C_74/2024): State and municipal taxes 2017-2021 (St. Gallen); tax domicile; This judgment is essentially based on the same facts as the judgment of 9C_73/2024 of February 26, 2025. Reference should therefore be made to the corresponding summary.‍
Judgment of February 28, 2025 (9C_606/2024) - scheduled for publication: Loi 13'030 du canton de Genève sur les estimations fiscales de certains immeubles (LEFI); A. argues that Art. 2 para. 2 p. 2 LEFI 2022, Art. 52 para. 5 p. 2 and 3 as well as Art. 8 para. 2 LEFI 2022 violate Art. 14 and 17 StHG as well as Art. 8 and Art. 127 BV. Art. 2 para. 2 LEFI 2022 stipulates that from the second tax period after this law comes into force, the tax value specified in para. 1 will be adjusted annually to the Geneva consumer price index, whereby the annual indexation may not exceed 1 %. Based on data from the "Office genevois de la statistique" for the period 2018-2023, it can be seen that the prices of single-family homes increased by 29.57% and the prices of condominiums by 13.29% during this period. If the values were indexed only according to the Geneva Consumer Price Index, which only rose by 4.45% in these years, this would lead to a systematic undervaluation of the properties concerned. Art. 2 para. 2 and Art. 8 para. 2 LEFI 2022 are therefore declared null and void. Partial approval of the complaint of A.‍‍
Judgment of March 10, 2025 (9C_746/2023): Direct federal tax and cantonal and communal taxes 2017 (Vaud); in dispute is compliance with the deadline for making the advance on costs. A. GmbH has argued that its former representative did not serve it with the ruling on time and that it was therefore unable to make the required advance on costs on time. The failure or negligence of the authorized representative is attributable to the party itself and does not justify the restoration of the deadline. Dismissal of the appeal by A. GmbH.‍
Judgment of March 4, 2025 (9C_609/2024) - scheduled for publication: Direkte Bundessteuer und Staats- und Gemeindesteuern 2022 (Zurich); At issue was whether the respondent was entitled to claim an underutilization deduction on the imputed rental value, as confirmed by the lower court. Until the separation, the respondent lived in a family home together with his ex-wife and their two children, which the couple held in equal shares via a simple partnership. After the separation, the respondent continued to live in the property with one of the two sons. As part of the property settlement, the respondent took over sole ownership of the property. While the tax authorities granted the deduction for unused property on the imputed rental value until the divorce, they refused to do so after the divorce was finalized. The cantonal tax office and the tax appeals court took the view that, by taking over the property as sole owner, the existence of a reserve of space was the taxpayer's own fault and that the case was equivalent to the (new) acquisition of a property that was too large from the outset. In addition, the takeover of a property by way of divorce does not correspond to the model case that would entitle the owner to a deduction for underutilization. The Administrative Court of the Canton of Zurich rejected this view and confirmed that the acquisition of a property as a result of a property settlement was not detrimental and should be treated in the same way as the acquisition of a property as part of the division of an inheritance. The Federal Supreme Court did not agree with this reasoning and confirmed the very restrictive admissibility of the sub-use deduction. Approval of the tax office's appeal.‍
Judgment of March 10, 2025 (9C_140/2024): Military service tax 2018-2020; the taxpayer prevailed against the responsible office before the Tax and Expropriation Court of the Canton of Basel-Landschaft (BL) (nullity of the 2018-2020 assessment decrees). The BL Cantonal Court did not accept the appeal lodged against this by the responsible office. The Federal Tax Administration (FTA) lodged an appeal against the decision not to intervene with the Federal Supreme Court in matters of public law. Dismissal of the FTA's appeal.