Overview of the tax law decisions of the Swiss Federal Supreme Court published between 25 April - 1 May 2022:
- Judgment of 10 December 2021 (2C_263/2020): VAT (2009-2015); Tax avoidance; Intended for publication; A. Ltd. has its registered office in the British Channel Islands and its purpose is to hold, trade, rent and lend works of art. The beneficial owner of the company is B., who was resident in Switzerland during the relevant period. In 2002, the company obtained a declaration of subordination abroad from the FTA and had itself entered in the VAT register. The company imported various works of art into Switzerland, which it made available to B. in return for a rental fee. In an audit for 2002-2004, the FTA only objected to the amount of the rental fee. In a new audit for 2009-2015, the question arose as to whether A. Ltd. operated a business that provided services in Switzerland, whether it was liable to VAT during this period and whether it was therefore entitled to deduct input taxes - namely import taxes incurred on the import of works of art - or whether it should be denied tax liability and the right to deduct input tax due to tax avoidance. According to the Federal Supreme Court, there are certain doubts as to whether the complainant's business activity has a sufficient connection with the domestic market to justify a subjective tax liability. In particular, it is questionable whether the declaration of foreign subordination effectively shifted the place of performance of the rental services of A. Ltd. to Switzerland. However, the question of the legality and the effects of the declaration of subordination abroad can be left open, since there is tax avoidance in any case. Thus, under normal circumstances, the services of A. Ltd. would have had their place abroad and, accordingly, would not have given rise to a tax liability of A. Ltd. in Switzerland. A. Ltd. was only liable to pay tax in Switzerland because it submitted a declaration of subordination abroad and at the same time applied to be entered in the register of persons liable to pay VAT. The sole purpose of the submission of this declaration by A. Ltd. was to be able to claim an input tax deduction and thus offset the import taxes owed on the import of the works of art, which would otherwise have been charged to B. finally. The fact that the FTA did not question the subjective tax liability of A. Ltd. in the context of the earlier tax audit is just as little a basis for the protection of legitimate expectations as the authorisation granted for the foreign subordination declaration (which, incidentally, has more the character of a confirmation). Finally, it is also not objectionable that the FTA, due to the statute of limitations for the tax periods prior to 1 January 2009, assumed within the framework of the factual fiction that applies in the case of tax avoidance, that the tax liability ceased on 1 January 2009 and that an (additional) tax claim from own consumption arose at that time. Dismissal of the appeal of A. Ltd. (exception: tax period 2010, for which the absolute statute of limitations has occurred).
- Judgment of 11 April 2022 (2C_284/2021): Staats- und Kommundesteuern und direkte Bundessteuer 2011 (Waadt); Intended for publication; The dispute is whether the gifts of the properties in question ended the tax deferral based on Art. 18a DBG. The fact that the properties qualify as business assets is no longer disputed before the Federal Supreme Court. The DBG does not specify what is meant by disposal within the meaning of Art. 18a para. 1 DBG. The Federal Supreme Court has made an interpretation. The historical element of interpretation shows that one of the objectives of Art. 18a DBG was to give taxpayers the possibility to apply for a tax deferral in the case of the transfer of a property from the GV to the PV in the context of a corporate restructuring due to the lack of cash flow. It is not clear from the preparatory work that the legislator would have considered the gift. Art. 18a DBG also refers to social security contributions. Should the gift not terminate the tax deferral, the obligation to pay social security contributions on the income from self-employment is transferred to the donee. This is unsatisfactory from a legal system point of view. Systematic interpretation also argues that the concept of alienation also includes the gift. From a teleological point of view, as already mentioned, the legislator did not specifically address the effects of a gratuitous alienation on the deferral. Therefore, it cannot be assumed that the legislator would have considered the retention of the deferral in the case of a gratuitous alienation. The vast majority of the doctrine is of the opinion that the gift does not constitute a sale within the meaning of Art. 18a para. 1 DBG. Locher is of the opposite opinion. Indeed, he is of the opinion that the property transferred to the PV remains partly a business asset for the duration during which the tax deferral runs. Since the deed of gift can only affect part of the PV, it results in the business portion of the property being transferred to the PV, which justifies the taxation of the hidden reserves. Locher's thesis is convincing. The interpretation shows that the concept of alienation provided for in Art. 18a para. 1 DBG also includes the gift and thus the gift terminates the tax deferral. Dismissal of the taxpayer's appeal.
- Judgments of 6 April 2022(2C_1006/2018; 2C_1060/2018; 2C_1061/2018; 2C_1100/2018; 2C_211/2019; 2C_308/2019): Tax domicile decision, intercantonal double taxation (Ticino); In each of the aforementioned rulings, the issue at stake was whether the Ticino tax authorities had correctly assumed the place of actual administration and thus unlimited tax liability in the canton of Ticino for the respective companies, which all had their statutory domicile in Graubünden. This was affirmed after examining the circumstantial evidence in the respective individual cases; dismissal of the taxpayers' appeals (with the exception of 2C_211/2019, where the appeal was partially upheld).
Non-admission / revision requests / write-off:
Decisions are listed chronologically by publication date.
