Decisions of the Swiss Federal Supreme CourtCW 21 - 2025)

Overview of the tax rulings of the Swiss Federal Supreme Court published between May 19 - 25, 2025:

Judgment of April 24, 2025 (9C_491/2024): The tax qualification of a provision for WEKO fines, and accordingly the denial of deductibility, can take place at the time of reversal, even if the formation was classified as tax deductible in the previous year. Dismissal of the complainant's appeal.
Judgment of April 29, 2025 (9C_422/2024): State and municipal taxes 2020 (Zurich); tax domicile; A AG submitted the completed tax return of the Canton of Obwalden to the Cantonal Tax Office Zurich with regard to the 2020 tax period. In it, 10% of the taxable profit was allocated to the canton of Obwalden as the canton of domicile as part of a tax separation. The remaining profit was allocated proportionally at 10% to the canton of Obwalden and 90% to the canton of Zurich. However, the Federal Supreme Court (like all lower courts) came to the conclusion that the place of effective management and the main tax domicile of A AG (according to the relevant standard of proof of overwhelming probability) was in the canton of Zurich and that it had not been proven that there was a permanent establishment in the canton of Obwalden. Dismissal of the taxpayer's appeal.
Judgment of April 29, 2025 (9C_558/2024): State and municipal taxes 2017-2022 (Zurich); tax domicile; A. AG, with its registered office in the canton of Zug, had as its main purpose the acquisition and management of participations and exercised a pure holding function. A. AG held subsidiaries and sub-subsidiaries in the Canton of Zurich. The only members of the board of directors and shareholders of A. AG were a married couple resident in the Canton of Zurich. In the course of clarifying the tax domicile of A. AG, the Zurich Cantonal Tax Office - after A. AG had refused to cooperate in the tax domicile proceedings - ruled on the basis of various indications that the tax domicile of A. AG was in all probability at the place of residence of the two board members and shareholders (no rental expenses in Zug, operating activities in Zurich). This assessment was confirmed by all court instances and most recently also by the Federal Supreme Court. The latter also held that there was no inadmissible assumption of a subsidiary domicile based on existing evidence for the domicile in Zurich. Dismissal of the company's appeal.
Judgment of April 29, 2025 (9C_570/2024): State and municipal taxes 2017-2022 (Zurich); tax domicile; As in the very similar judgment of April 29, 2025 (9C_558/2024), it was disputed whether the unlimited tax liability of A. AG in the period in question was in the canton of Zurich and not - as claimed - in the canton of Zug. As in the aforementioned judgment, A. AG performed a holding function and held a real estate company with properties in the canton of Zurich until 2019 (the company was transferred to the parent company of A. AG in 2019). A person resident in the Canton of Zurich was a member of the Board of Directors with sole signing authority. As in the ruling of April 29, 2025 (9C_558/2024), the Cantonal Tax Office Zurich came to the conclusion - after A. AG also refused to cooperate in the tax domicile proceedings - based on various indications that the tax domicile of A. AG was overwhelmingly likely to be at the residence of the Board of Directors (no rental expenses in Zug, operational activities in Zurich). This assessment was upheld by all court instances, including most recently by the Federal Supreme Court. The latter also held that there was no inadmissible assumption of a subsidiary domicile due to existing indications for the registered office in Zurich. Dismissal of the company's appeal.
Judgment of April 29, 2025 (9C_424/2024): State and municipal taxes 2016-2018 (Zurich); the subject of the proceedings was, as in the very similar judgment of April 29, 2025 (9C_569/2024), whether the unlimited tax liability of the taxable holding company was in the canton of Obwalden or in the canton of Zurich. In this case, however, the Federal Supreme Court fully agreed with the appellant taxpayer, as not all members of the board of directors were resident in the canton of Zurich and the lower court failed to establish the actual management at a specific location in the canton of Zurich. The fact that the majority of the board members reside in the canton of Zurich is therefore not sufficient to assume actual management in the canton of Zurich on this basis alone. Appeal of the taxpayers upheld.
Judgment of April 29, 2025 (9C_569/2024): State and municipal taxes 2016-2018 (Zurich); the subject of the proceedings was whether the unlimited tax liability of the taxable holding company was in the canton of Obwalden or in the canton of Zurich. Due to the residence of all board members in the canton of Zurich and the fact that two board members were responsible for the operational management of the subsidiary domiciled in the canton of Zurich, the Federal Supreme Court found sufficient evidence to conclude with a high degree of probability that the company was managed in the canton of Zurich. The taxpayer did not succeed in demonstrating why the place of actual management was in Obwalden, particularly because the rental agreement for the premises it rented was more akin to a domicile agreement. With regard to the taxes already paid in the canton of Obwalden, the Federal Supreme Court ruled in favor of the taxpayer's contingent request for a refund of the taxes already paid. Partial approval of the taxpayers' appeal.
Judgment of May 12, 2025 (9F_4/2025): Direct federal tax and state and municipal taxes 2020 (Valais); A. is resident in the United Kingdom and owns a studio in the municipality of V. In its ruling of January 30, 2025 9C_522/2024, the FSC dismissed an appeal by the taxpayer. The "violations of the law" alleged by the applicant cannot be substantiated in this case. The request for an appeal proves to be manifestly unfounded. Dismissal of the taxpayer's appeal.