Decisions of the Swiss Federal Supreme CourtCW 17 - 2025)

Overview of the tax rulings of the Swiss Federal Supreme Court published between April 21 - 27, 2025:

Judgment of March 25, 2025 (9C_602/2024): Direct federal tax and cantonal taxes 2021 (intercantonal double taxation); If a tax sovereignty decision has already been issued and no action is taken against it, the taxpayer has a duty to cooperate with the tax authority in the relevant tax proceedings. They cannot suddenly dispute their unlimited tax liability in the canton of Ticino without a significant change in their situation. Dismissal of the appeal of the taxpayer A. AG.
Judgment of March 27, 2025 (9C_710/2024): VAT 2014-2017; The dispute is whether the appellant A. AG is the tax successor of B. AG. The services offered by A. AG are almost identical to those of B. AG. Furthermore, A. AG seamlessly took over seven employees of B. AG and parts of the pool of consultants. In addition, the same person served as Chairman of the Board of Directors of A. AG and B. AG. He also took over the logo and the online presence of B. AG. In view of these circumstances, it can be assumed that A. AG has taken over a self-contained part of the assets and business of B. AG and is therefore to be regarded as the tax successor. Dismissal of the appeal of A. AG with regard to the tax periods 2015 - 2017, and partial approval with regard to the tax period 2014, as this is already time-barred.
Judgment of March 31, 2025 (9C_430/2024): Direct federal tax and state and municipal taxes 2022 (Lucerne); The dispute is whether the Lucerne tax office rightly did not exempt the association A. from tax liability due to its non-profit status. According to the findings of the Lucerne tax office, the active and direct purpose of the A. association is limited to the project planning and administration of the so-called cantonal initiative D. This is a political activity. Anyone who collects signatures for a popular initiative is not acting altruistically, but is endeavoring to help their own political views achieve a breakthrough. It is therefore not unlawful for predominantly politically active organizations, regardless of the nature of the political objectives pursued, not to be considered charitable under tax law and therefore not to be exempt from tax liability. Dismissal of the appeal by the taxable association A.‍
Judgment of April 1, 2025 (9C_607/2022) - for publication: State and municipal taxes 2014-2018 (Zurich); binding effect of a tax domicile decision. It was disputed whether a tax domicile decision that has become legally binding precludes the examination or dispute of the tax liability in the context of the assessment procedure. While the cantonal authorities essentially took the view that the question of tax domicile constituted a res iudicata in view of the legally binding tax domicile decision, the Federal Supreme Court, in a departure from its previous practice, came out in favor of the conclusion that higher authorities, and thus the Federal Supreme Court in particular, could not be bound by the result of a tax domicile decision. Thus, the determination decision of the tax domicile is merely a preliminary or interim decision that does not become legally binding. Taxpayer's appeal upheld and referred back to the tax office.‍
Judgment of April 03, 2025 (9C_380/2024): Direct federal tax and cantonal and communal taxes 2012 - 2017 (Geneva); At issue is whether the lower instance was right to deny the deduction of risk provisions and "kickbacks". The lower court found that A. was self-employed and that this activity was in competition with his salaried employment. A. was unable to show that there was an immediate and almost certain risk that he would have to compensate his employer in the relevant tax periods. A purely hypothetical payment obligation does not justify a provision. With regard to the "kickbacks", there were no documents that made it possible to qualify the amounts allegedly paid to the two business partners D. and E. and to verify their business justification. Dismissal of the appeal by taxpayer A.‍
Judgment of April 8, 2025 (9C_500/2024): Direct federal tax and state and municipal taxes 2017 - 2020 (Bern); The dispute is whether the fines for breach of procedural obligations were lawfully issued, as the taxpayer claims that he was not sufficiently reminded by the tax administration. The reminders were sent and delivered by A Mail Plus. The taxpayer could not argue against this, which refuted proper delivery. Further procedural objections also come to nothing. Dismissal of the appeal by taxpayer A.‍
Judgment of April 4, 2025 (9C_6/2025): Real estate gains tax 2021 (St. Gallen); The dispute is whether a personal commission is not recognized as an expense for tax purposes. The appellant A. is the sole authorized signatory and managing partner, and the appellant B. is an employee of C. GmbH, which they commissioned as a broker. In view of the close economic and personal ties and the alignment of interests between the contracting parties, the commission paid by A. and B. to C. GmbH cannot be deducted as an allowable expense, as it is a commission paid by the parties themselves. Dismissal of the appeal by A. and B.‍
Judgment of April 8, 2025 (9C_362/2024): Direct federal tax and cantonal and communal taxes 2014 (Geneva); At issue is the determination of the liquidation profit of the sole proprietorship and, in this context, the valuation of the sole proprietorship. The lower court assessed the relationship between A. and his son and the managers of the former sole proprietorship as related parties and therefore did not classify the transaction in the amount of CHF 4.25 million as being in line with the arm's length principle. The practitioner method used by the lower court for the valuation is not objectionable. Dismissal of the appeal by taxpayers A. and B.‍
Judgment of April 11, 2025 (9C_199/2024) - for publication: Property gains tax (St. Gallen); the proceeds from the sale of a property are in dispute. The Federal Supreme Court has already had to rule several times on the composition of the proceeds when a person sells a property to a corporation in which they hold a stake. It has ruled that it is not objectionable for a canton to recognize as proceeds not only the purchase price but also the increase in the value of the participation if the purchase price is below the market value(BGE 143 II 33 E. 3.2.5). In a case concerning the Canton of Zurich, it recently considered that the difference between the market value and the sale price may be considered an additional benefit in favor of the testator (see judgment of 26 October 2023 9C_335/2023 E. 3.7.1, see also our article of 26 November 2023). Accordingly, hidden capital contributions are not to be considered strictly under civil law. For tax system reasons, this approach is particularly recommended for cantons that have adopted the dualistic system. This is because it allows them to ensure that an increase in value is accounted for for property gains tax purposes if it is converted into an increase in value of company shares by means of a hidden capital contribution and thus - subject to a subsequent change in ownership in accordance with Art. 12 para. 2 lit. a StHG - removed from the scope of application of property gains tax or any taxation. Partial upholding of A.'s appeal by referring the case back to the lower court so that it can firstly determine the extent to which A. held a stake in B. AG and secondly either adjust the calculation of the increase in value of the shares to his stake or refrain from levying real estate gains tax due to a mixed gift.