Decisions of the Swiss Federal Court (CW 26 - 2018 )

Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week of 25 June - 1 July 2018.

Ruling of 12 June 2018 (2C_199/2017): Direct Federal Tax 2010 (Thurgau); no general protection of legitimate expectations results from the fact that a change in practice occurred after the sale of the property on 21 September 2010. The practice according to BGE 138 II 32 is applicable to all pending assessments (irrespective of the date of the sale); an individual protection of legitimate expectations based on the provisional calculation of the real estate gains tax of the Cantonal Tax Administration is also to be denied; although the complainant agrees that the Cantonal Tax Administration is (also) responsible for levying the direct federal tax, it is also correct that the provisional calculation of the real estate gains tax of the Cantonal Tax Administration is based on the provisional calculation of the real estate gains tax of the Cantonal Tax Administration; it is also correct that the provisional calculation only concerns cantonal taxes, because only cantonal taxes are mentioned and only cantonal enactments are cited; however, this does not mean that the information mentioned contains a qualified silence concerning direct federal tax, as the complainant claims; a claim for the granting of privileged taxation under Art. 18 para. 4 DBG based on Art. 9 BV must be denied; the complainant subeventually requests that the taxed profit of CHF 1,756,233 be reduced by the amount of a replacement purchase of CHF 148,625 and that he be allowed to set aside a replacement purchase reserve as at 31 December 2010. Since the replacement purchase is not disputed in terms of amount and is confirmed on the basis of the definitive real estate gains tax assessment on file, the sub-ventual application is approved; the judgment of the Administrative Court of the Canton of Thurgau of 23 November 2016 is set aside insofar as it refuses to reduce the taxable gain by CHF 148,625; in all other respects, the appellant's appeal is dismissed.

Judgment of 15 June 2018 (2C_197/2017; 2C_198/2017): Direct Federal Tax and State and Municipal Taxes 2014 (Freiburg); the complainant applied for a reduction of the imputed rental value for the horse stalls, since she actually uses only three of the ten stalls that are actually available; the case law developed for the imputed rental value of living space can be transferred to horse stalls without further ado; an under-utilisation deduction presupposes that individual rooms are actually and permanently or long-term not used, which the taxpayer must prove; however, she did not provide such proof; dismissal of the complainant's appeal

Judgment of 18 June 2018 (2C_18/2018): Direct Federal Tax and State and Municipal Taxes 2014 (Neuchâtel); the complainants (spouses) acquired an undeveloped plot of land with a view to the construction of office premises which the husband's company should have rented; in the meantime, the company had found other premises and the project was modified to include the construction of condominium units. Due to this parcelling out, the high proportion of borrowed capital (90%) and the profession of the complainant (civil engineer), it can be assumed that he is self-employed as a real estate agent. For this reason, the proceeds from the sale of the condominium owner units are to be recorded with income tax and not with real estate profit tax. Dismissal of the appellants' appeal.