Decisions of the Swiss Federal Supreme Court (CW )

Overview of the Swiss Federal Supreme Court’s tax law decisions published between June 15 and 21, 2026:

‍Judgment of May 19, 2026 (9C_325/2025): Federal, cantonal, and municipal taxes for 2013–2019 (Geneva); securities trading; deduction of losses; a married couple claimed losses from “forex trading” for the years 2013 and 2014 and requested that these losses be classified as commercial securities trading in order to be able to deduct them for tax purposes. From 2012 to 2021, the activity generated a cumulative profit of approximately CHF 829,000, with losses exceeding CHF 12 million. The Federal Supreme Court upheld the denial of the loss deduction: Self-employment requires not only a subjective pursuit of profit—which is practically always present in securities transactions—but also, objectively, a long-term intention to generate a profit. If an activity remains structurally unprofitable over a period of years, without an initial start-up phase or a temporary crisis with prospects for improvement, the objective requirement of a profit motive is lacking—regardless of whether other indications of commercial trading (transaction volume, debt financing) are present. Given such a striking imbalance between profits and losses, the activity must be classified as mere private asset management. Dismissal of the taxpayer’s appeal.
Judgment of May 28, 2026 (9C_90/2026): Inheritance Tax 2019 (Bern); the legal dispute concerns a motion to recuse a judge. On the one hand, the taxpayer filed the recusal motion late. On the other hand, the motion would have had to be dismissed even if it had been filed on time, as there were no valid grounds for recusal. A.’s appeal is therefore dismissed.
Judgment of May 19, 2026 (9C_106/2025): Federal, cantonal, and municipal taxes for 2012–2015 (Solothurn); security measures; the Federal Supreme Court had to determine whether the security orders issued by the cantonal tax office were lawful. It concluded that the security orders were invalid due to a lack of sufficient justification. In particular, it had not been sufficiently substantiated why, despite the assets of approximately CHF 4.3 million already seized in the context of the tax evasion proceedings conducted by the DVS-ASU, additional security for tax and fine claims was deemed necessary. The taxpayer’s appeal was upheld.
‍Judgment of May 21, 2026 (9C_89/2026): VOC tax, tax period 2023/2024, forfeiture of refund claims; the Federal Supreme Court had to determine whether a corrected VOC balance sheet submitted after the deadline set forth in Art. 19(1) VOCV could still be taken into account when calculating the refund claim. It confirmed that the six-month deadline for asserting refund claims constitutes a limitation period. Once the deadline has expired, additional refund claims can no longer be asserted, even if a VOC statement had already been submitted and a refund granted on that basis. The taxpayers’ appeal was dismissed.
Judgment of May 22, 2026 (9C_178/2026): Direct Federal Tax and Cantonal and Municipal Taxes 2013–2016 (Valais); the Federal Supreme Court upheld the classification of gains from the sale of works of art and vehicles as income from self-employment. Given the regular trading activity, the sometimes short holding period, the high margins, and the taxpayer’s specialized and industry knowledge, it could not be assumed that these were tax-exempt private capital gains. Furthermore, the Federal Supreme Court held that a receivable from a company controlled by the taxpayer is, in principle, subject to wealth tax at its nominal value, provided that no concrete risk of default is demonstrated. In addition, the Federal Supreme Court declined to address various other objections due to insufficient grounds. The taxpayer’s appeal was dismissed.
Judgment of May 28, 2026 (9C_83/2026): State and Municipal Taxes for 2018 and 2019 (Zurich); Administrative fine; the Federal Supreme Court upheld an administrative fine of CHF 500 against a taxpayer listed in the register of attorneys who had failed to return the case files sent to him for review within the prescribed time limit, despite a corresponding order and multiple extensions of the deadline. The objections raised regarding arbitrariness, the principle of legality, and proportionality did not render the lower court’s interpretation of cantonal administrative penal law arbitrary. The sanction was imposed for failure to comply with procedural obligations in court proceedings, not for a violation of tax-related obligations to cooperate or comply with procedural requirements. The taxpayer’s appeal was dismissed.
Judgment of May 28, 2026 (9D_24/2025): Administrative fees of the Canton of Zurich for 2024; retroactive waiver of costs; the Federal Supreme Court confirmed that a retroactive waiver of court costs is, in principle, a subsidiary measure to legal aid and does not serve to replace a missed application for legal aid. A waiver of costs may only be considered in cases of financial need that has arisen or worsened after the fact. The appeal was dismissed to the extent that it was considered.
Judgment of May 21, 2026 (9C_295/2025): Real Estate Gains Tax 2022 (St. Gallen); value-enhancing expenses; Real estate brokerage commission; the issue in dispute was whether a commission of CHF 255,000 paid to an affiliated company, as well as additional construction costs, should be considered investment costs. The Federal Supreme Court confirmed that the claimed commission was not deductible due to a lack of evidence of a specific brokerage activity that was causal to the sale. It also held that the taxpayer was required to prove the value-enhancing nature of construction expenses. Since the distinction between value-enhancing and value-preserving expenses was not sufficiently documented, the deductible portion was to be determined at the tax authority’s discretion. The taxpayer’s appeal was dismissed.
Judgment of May 21, 2026 (9C_594/2025): Real Estate Gains Tax 2023 (St. Gallen), holding period discount; the issue in dispute was whether the calculation of the holding period discount should be based on the original acquisition of the properties (1987 and 1997, respectively) or on their reclassification from business to private assets in 2013. The Federal Supreme Court confirmed that the holding period is relevant only for the period covered by the real estate gains tax. Since the 2023 real estate gains tax covered only the increase in value since 2013, the holding period began only upon the transfer back to private assets. The minimum period of 15 years had not been met. The taxpayers’ appeal was dismissed.
Judgment of May 21, 2026 (9C_663/2025): State and Municipal Taxes 2020 (Schwyz); the issue in dispute is whether double taxation within the meaning of Art. 127(3) of the Federal Constitution occurred in the 2020 tax period due to the Schwyz tax administration’s refusal to recognize the loss carryforward. The parties generally agree that the operating loss incurred in the canton of Schwyz during the 2019 tax period should have been offset against the real estate gain in the canton of Zurich for the 2019 tax period. The 2019 assessment decisions became final without being challenged, and the 2019 tax period is not the subject of the present proceedings; therefore, any discussion regarding the offset of losses in the 2019 tax period is unnecessary. There is no indication that double taxation exists for the 2020 tax period. Dismissal of the appeal filed by the taxpayer, A. AG.
Judgment of May 18, 2026 (9C_38/2026): Federal Direct Tax and Cantonal and Municipal Taxes 2010–2016 (Vaud); see also our article below on the parallel judgment of May 18, 2026 (9C_39/2026)
Judgment of May 18, 2026 (9C_39/2026): Direct federal tax and cantonal and municipal taxes for 2010–2016 (Vaud); benefits in kind. Based on value-added tax and withholding tax audits conducted by the Federal Tax Administration (FTA), the tax authority initiated a back-tax assessment proceeding against the majority shareholder of a company. At issue were various expenses claimed to be business-related for client events, trips to racetracks and ski resorts, sponsorship activities, and parking spaces near the shareholder’s residence. The Federal Supreme Court upheld the lower court’s finding that these constituted benefits in kind. In particular, confirmations and witness statements prepared retrospectively could not substitute for the missing evidence of a business-related purpose. Furthermore, the Federal Supreme Court held that, with regard to direct taxes, the tax authorities are not bound by the FTA’s assessment in VAT or withholding tax proceedings. However, the 2010 tax period was time-barred due to the expiration of the 15-year statute of limitations. The appeal was partially granted with respect to the 2010 tax period and dismissed in all other respects.
Judgment of May 28, 2026 (9C_326/2025): Withholding Tax 2017–2018 (Valais); The dispute concerned the right to a refund of withholding tax. In addition to his work as a sole proprietor, the petitioner held half of the shares in a corporation headquartered in the canton of Valais. A loan granted by this corporation to the appellant’s sole proprietorship was classified by the Valais cantonal tax administration as a benefit in kind or a hidden distribution of profits in the amount of CHF 204,000, on the grounds that it did not comply with the arm’s-length principle. The appellant did not report this benefit in kind or hidden distribution of profits in his tax return—despite repeated reminders from the tax administration. The Federal Supreme Court upheld the denial of the claim for a refund; the taxpayer had acted with at least conditional intent, as he had been sufficiently informed by the tax administration of his obligation to declare the amount. Therefore, mere negligence did not apply. The taxpayer’s appeal was dismissed.