Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week from 6 to 12 May 2019.

  • Judgement of 28 March 2019 (2C_797/2018): State and municipal taxes (Aargau); the question of the business justification of the write-offs recorded in the 2008 financial year on two properties which belonged to the sole proprietorship of appellant A, who was taxed as a professional property dealer, and which therefore constituted business assets was disputed. These properties were taken over by the complaining spouses from C AG in 2008 (indirectly through a purchase via an intermediate company) and sold the two properties on 1 May 2009 and 4 June 2009 below their market value. The disputed depreciation was claimed in the amount of this difference. Bankruptcy proceedings were initiated on 12 August 2009 against C AG, in which A held 50% of the shares and whose board of directors, managing director and site manager with sole signing authority was also A, and were discontinued on 31 August 2009 due to lack of assets. Since the complainants sold the two properties on 1 May 2009 and 4 June 2009, the Federal Supreme Court is of the opinion that it cannot be claimed that emergency sales by the sole proprietor had already been immediately apparent on the balance sheet date of 31 December 2008. Emergency sales under high time pressure could only have been initiated in 2009. The presentation of the complainants indicates that the decision to (distress) sell the two properties was taken after the failed restructuring in April 2009, when the illiquidity of C AG was established. Extraordinary depreciation of the properties for a loss in value that was already imminent for the individual company in the 2008 financial year would therefore not be taken into account. The description of the complainants could possibly explain a possible capital loss in the 2009 tax period, but not its consideration for tax purposes in the 2008 tax period. Dismissal of the taxpayers' complaint in so far as it is relevant.
  • Judgment of 23 April 2019 (2C_1069/2018): withholding tax; tax period 2015 (Basel-Stadt); the complaining spouses declared in the securities register of their 2015 tax return share certificates of a gallery with a tax value of CHF 634,900 without disclosing the gross income. At issue in these proceedings was whether the complainants' claim for a refund of the withholding tax of CHF 45,500 deducted on the gallery dividend was forfeited. As of 1 January 2019, the conditions for the forfeiture of the withholding tax refund claim have been newly regulated. Pursuant to Art. 23 para. 2 withholding tax law, if the income or assets were negligently not declared in the tax return and subsequently declared in assessment, revision or subsequent tax proceedings that have not yet become final (lit. a) or if the tax authority added them to the income or assets on the basis of its own determination (lit. b), the forfeiture will now not occur. In terms of time, the new law applies to circumstances that have arisen since 1 January 2014, provided that the claim for refund of withholding tax has not yet been decided with final effect(Art. 70d ITA). In the present case, a claim from the 2015 tax period was at issue on which a final decision had not yet been made. Moreover, it was undisputed between the parties that the complainants had erroneously and thus negligently failed to declare the dividend income. Moreover, the cantonal tax administration added the income to the income from its own determination. The requirements of Art. 23 para. 2 lit. b ITA were met and the complainants' claim for restitution was therefore not forfeited. The taxpayers' appeal was upheld.
  • Judgment of 23 April 2019 (2C_49/2018 and 2C_70/2018): 2013 cantonal and communal taxes (Valais); A real estate company held by spouses (appellant) assigns a property to the sons of the spouses for CHF 676,000, whereas the market value recorded by an independent expert is CHF 1,426,000. Under these circumstances, there is a hidden profit distribution of CHF 750,000 to the spouses. In particular, the deduction of a 5% brokerage commission claimed by the complainant is out of the question, since no such commission was paid in the present case and, even if this had been the case, this would not have reduced the pecuniary benefit to the sons in any way. Dismissal of the appellant's appeal. Appeal of the Cantonal Tax Office upheld.

Decisions are listed chronologically by publication date.

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