Decisions of the Swiss Federal Supreme Court (CW 28 - 2024)

Overview of the tax rulings of the Swiss Federal Supreme Court published between July 8 - 14, 2024:

Judgment of June 24, 2024 (9C_775/2023): VAT, tax periods 2013-2017, appeal against the judgment of the Federal Administrative Court of November 6, 2023 (A-534/2022). In dispute is the VAT amount that the FTA is demanding from the appellant due to a tax correction for the years 2013 to 2017. In particular, it must be clarified whether the lower court was entitled to assume that, for the disputed tax periods, only input VAT on the expenses for commercial flights and for independent third parties ("charter flights") is to be allowed, but not for flights for the private use of the aircraft by the beneficial owners. In its ruling, the Federal Supreme Court states that transportation carried out for private purposes by the beneficial owner or related parties can only be regarded as part of a business activity entitling to input tax deduction if it only accounts for a small proportion of the overall use of the aircraft. However, it is undisputed that the volume of private flights involved here amounted to well over 20 % of the total use of the aircraft (2014: 63 %, 2015: 46 %, 2016: 51 % and 2017: 48.5 %). The judges came to the conclusion that the input tax correction for the years 2014 to 2017 should be confirmed. As the absolute limitation period of ten years has been met for the 2013 tax period, the appeal is upheld on this point. The remainder of the appeal is dismissed.
Judgment of June 12, 2024 (2C_956/2022): Administrative assistance DTA CH-FR; The complainant A. raises the question of whether information on a person who acted as an arbitrator in ICSID(International Center for Settlement of Investment Disputes) may be exchanged. The present request for administrative assistance was the subject of a landmark ruling of July 26, 2019, which was partially published (see BGE 146 II 150, see our articles of July 27, 2019, December 8, 2019, December 4, 2022, April 7, 2024 and May 19, 2024). Both the Federal Administrative Court and the Federal Supreme Court came to the conclusion that the complainant had unsuccessfully invoked her functions at the TANU(Tribunal administratif des Nations Unies) and ICSID and the associated immunity to oppose the transfer of Swiss banking information. Dismissal of the appeal by A.
Judgment of June 11, 2024 (9C_37/2023) - scheduled for publication: Direct federal tax and state and municipal taxes 2009, 2010 and 2011 (Grisons); partner works taxation; The parties agreed that the cost-plus method was best suited to determine the taxpayers' compensation in line with third-party comparisons and that the full costs should be used as a basis. What was disputed was what should be positively included in these costs and what should be negatively excluded from them, which specifically concerned the inclusion of taxes and interest on equity. With regard to taxes, the Federal Supreme Court clarified that - contrary to the opinion of the lower court and in line with "Swiss practice" - these were to be taken into account when determining the full costs. With regard to the calculation of the return on equity, the Federal Supreme Court rejected the position of the lower court, according to which this should be based on the ordinance on the deduction for self-financing, especially as this only takes into account the security equity and the interest is not adequate. According to the Federal Supreme Court, the assessment authority is to be followed in this case, meaning that the entire equity capital is to be taken into account and interest is to be paid on it at an equity capital interest rate of 5%. With regard to the cost surcharge of 10% applied by the assessment authority and the Administrative Court, the Federal Supreme Court confirmed that a "(rather) low cost surcharge" was appropriate for a "broad cost base" and set this at 5% in the present case. Against this backdrop, the Federal Supreme Court upheld the appeal and referred the case back to the lower court for reassessment. The latter must also clarify whether there was a concealed profit distribution or whether the disproportion between the benefits was recognizable.