Overview of tax law decisions of the Swiss Federal Supreme Court published between April 3 - 16, 2023:
- Judgment of 21 December 2022 (2C_890/2019) - intended for publication: Post-claim of customs duties (unjustified preferential customs clearance): At issue is whether the Customs Directorate was allowed to levy subsequent claims for unjustified preferential customs clearance for declarations of origin noted on the customs invoice (so-called invoice declarations), on which the original signature had apparently been missing by mistake. The lower court takes the position that the absence of the valid invoice declaration means the loss of preferential customs clearance. By interpreting Art. 22 para. 8 Protocol 3 2005 (SR 0.632.401.3), it must be determined whether declarations of origin on the invoice can still be submitted subsequently and, if so, after what period of time the levying of a subsequent payment as a result of unjustified preferential clearance is permissible in the present case. The wording of the contract proves to be clear. Invoice declarations may be made out by the exporter after their export, provided that they are presented in the importing country no later than two years after the import of the products concerned. Thus, Art. 25 Prot. 3 2005 for invoice declarations stipulates that the proofs of origin must be submitted to the customs authorities of the importing country in accordance with the procedural rules in force in that country. However, contrary to the previous instance, the statements of the case law according to which subsequent preferential customs clearance is not possible refer to constellations in which it was a matter of verifying the proofs of origin at the request of the importing country or a subsequent application for preferential customs clearance, but no proofs of origin were available. In contrast to the cases already assessed, the declaration and customs clearance in the present case were carried out on a preferential basis from the outset. During the subsequent inspection, it was found that valid declarations of origin were missing from the invoice. It is precisely such invoice declarations that may be submitted retrospectively. This interpretation is also in line with the systematic position. The reservation contained in Art. 25 Prot. 3 2005 does not justify a deviation from specific, express standards such as Art. 22 Para. 8. Contrary to the view of the lower court, the possibility of provisional assessment provided for in Swiss customs law does not satisfy the requirements of Art. 22 Para. 8. Declarations of origin on invoices for values below EUR 6,000 may be made out by the exporter after exportation, provided they are presented in the importing country no later than two years after the importation of the products concerned. Proofs of origin are valid for 4 months from the date of issue in the exporting country. After that, they lose their validity even if the two-year period of Art. 22 par. 8 Prot. 3 2005 is still running. The provision of Art. 22 para. 8 Prot. 3 2005 is applicable even if the national law does not provide for a corresponding subsequent preferential customs clearance. Approval of the complaint of the taxpayer and referral back to the FCA for reassessment.
- Judgment of 13 March 2023 (9C_640/2022): Cantonal taxes 2014-2018 (Ticino); at issue was the denial of a (full) special cantonal deduction for children in post-compulsory education or training. The children were studying in Spain and lived in a property owned by the local parents. The lower court's application of the regulations was not arbitrary or otherwise unconstitutional. Dismissal of the taxpayer's appeal.
- Judgement ofMarch 13, 2023 (9C_644/2022): Real estate gains tax (Graubünden); The lower court rightly based its assessment of whether a real estate company exists on the time of sale of the corresponding shares. The liability for real estate gains tax was thus lawfully affirmed. The objectionable determination of the investment costs is also not arbitrary. Dismissal of the taxpayer's appeal.
- Judgment of March 14, 2023 (9C_611/2022): State and municipal taxes 2016 (Zurich); The decedent left his wife, three children and several properties in the Canton of Zurich. In the appeal proceedings against the decedent's assessment, the children demanded that five properties be valued higher based on a market value appraisal and in view of the inheritance dispute. What was disputed before the Federal Supreme Court and to be examined was how the right of appeal (legitimation) of the three children in the proceedings before the Tax Appeal Court behaved. The BGer protects the opinion of the lower court, according to which the valuation under tax law does not in principle prejudice a dispute under inheritance law. In addition, the tax proceedings should not be misused for the civil enforcement of claims under inheritance law. An interest worthy of protection under tax law was thus to be denied, which is why the appeal for the community of heirs could not be taken with legal effect. Dismissal of the appeal of the children of the decedent.
- Judgment of March 15, 2023 (9C_615/2022): State and municipal taxes and direct federal tax 2017 (Thurgau); Triggered by notification of the legal department, the tax administration opened an after-tax procedure and made various offsets in the taxpayer's assets and income. It was disputed before the Federal Supreme Court and had to be examined whether the offsets were justified. The taxpayer could not prove with his sweeping statements in what way the findings of the lower court were obviously incorrect. The Federal Supreme Court upholds the ruling of the lower court. Dismissal of the taxpayer's appeal.
- Judgment of 13 October 2022 (2C_643/2021): Direct Federal Tax 2017 (Thurgau); commercial (quasi) real estate trader; In the present case, the tax authorities did not arbitrarily reclassify the real estate gain from private, tax-free capital gain into taxable income from self-employment. The property sold was held for only 5.5 years, was 75% leveraged, and the couple invested a great deal of time and their acquired expertise in planning and increasing the value of their sixth investment property, which goes beyond ordinary private asset management. The taxpayers failed to demonstrate how the factual findings were arbitrary or the legal assessments were contrary to federal law. Dismissal of the taxpayers' appeal.
- Judgement ofMarch 17, 2023 (9C_678/2021) - intended for publication: Direct Federal Tax and State and Municipal Taxes 2015 (Nidwalden); An AG acquired a hotel property in Germany. The majority of the purchase price was attributable to a heritable building right sold by the sole shareholder as heritable building right holder of the AG. In connection with the acquisition of the hotel property, the AG assumed mortgage debts from the sole shareholder. The AG (partially) offset the recourse claim against the sole shareholder arising from this assumption of debt against the sole shareholder's claim arising from the transfer of the building lease. The AG recognized the property on the assets side (far) below the acquisition value and accordingly did not recognize the assumed mortgage debt on the liabilities side or recognized it only in part. Later, the sole shareholder took over the mortgage debt again from the AG free of charge. The property was finally sold in the course of the liquidation of the AG. The cantonal tax office calculated the difference between the sales proceeds and the book value as liquidation profit from hidden capital contributions as income for the sole shareholder. Before the Federal Supreme Court (Bundesgerichtshof, BGer), the substantive questions arose as to whether the gratuitous assumption of debt by the sole shareholder was rightly characterized as a hidden capital contribution and whether the distribution of hidden capital contributions was rightly deemed taxable by the lower court on the basis of Art. 20 para. 1 lit. c DBG. The BGer came to the conclusion that the assumption of debt without consideration by the sole shareholder was a capital contribution within the meaning of Art. 20 para. 3 DBG. Because the AG had not reflected the release from the mortgage debt by the sole shareholder in its books, there was a hidden capital contribution. Contrary to the opinion of the FTA (circular no. 29c dated December 23, 2022), according to the BGer also hidden (not only separately disclosed, i.e. open) capital contributions can be repaid tax-free pursuant to Art. 20 para. 3 DBG. However, the Federal Supreme Court emphasized that this only applies to income tax and, due to the explicit wording of Art. 5 para. 1bis VStG, not also to withholding tax. Appeal of the sole shareholder upheld.
- Judgment of March 20, 2023 (9C_720/2022): Cantonal and communal taxes 2012 (Aargau); purchase of pension fund; The lower court added the same BVG purchase amount twice, on the one hand, to the net income of the income statement and, on the other hand, under the heading "Offset of recognized BVG increase purchases". In doing so, it obviously determined the facts incorrectly. The taxpayer's appeal is upheld.
- Judgment of March 20, 2023 (9C_721/2022): Cantonal and communal taxes 2013 (Aargau); The purchase into the 2nd pillar of the self-employed architect A was offset twice, once in his tax return and a second time in his income statement; Approval of the taxpayer's appeal.
- Judgment of March 21, 2023 (9C_106/2023): Real estate gains tax (Graubünden); The debt collection and bankruptcy office sold a property to the complainant by private treaty on May 20, 2019. After the previous owner of the property had not paid the real estate gains tax, the tax administration gave him the option to pay it in installments until June 30, 2024. Since the full tax amount had not been paid by June 10, 2021, the tax administration had its statutory lien registered. This procedure of the tax administration was approved by the lower court. The complainant does not succeed in showing how the lower court violated the prohibition of arbitrariness, the principle of legality or good faith. Dismissal of the complaint of the property owner.
- Judgment of March 27, 2023 (9F_3/2023): State and municipal taxes and direct federal tax 2016 (Vaud); Revision; The appellant is not able to show which facts the Federal Supreme Court overlooked in the context of the non-appeal ruling 9C_681/2022 of January 25, 2023. Dismissal of the appeal.
- Judgment of March 20, 2023 (2C_354/2022): State and municipal taxes Basel-Stadt and direct federal tax 2017; the separation of maintenance contributions in the relationship between Switzerland and Germany is in dispute; the maintenance contributions of A to his former wife were separated in the ratio of net income due to the residence and gainful employment of his current wife in Germany; according to the Federal Supreme Court, maintenance contributions are general deductions which, in the present case, have no direct connection with a specific income generation, which is why the proportional distribution according to the situation of the net income was appropriate; dismissal of the taxpayer's appeal.
- Judgment of March 13, 2023 (9C_603/2022): Cantonal Taxes 2012-2015 (Geneva); The taxable equity of the investment fund with direct real estate was rightly determined in accordance with the regulations on property taxation and by applying the valuation rules under tax law instead of in accordance with the CISA accounting. Dismissal of the taxpayer's appeal.
Nnon-compliance and write-off decisions:
Decisions are listed chronologically by publication date.