Decisions of the Swiss Federal Supreme CourtCW 30 - 2025)

Overview of the tax rulings of the Swiss Federal Supreme Court published between July 21 - 27, 2025:

Judgment of June 17, 2025 (9C_181/2025): Direct federal tax and cantonal taxes 2015-2018 (Fribourg); The dispute is whether the cantonal court was right to decide that the spouses A. and B. could not apply for a revision of their assessment decisions. In the present case, it is clear from the facts established by the lower court in a manner that is binding on the Federal Supreme Court that the spouses did not assert any new facts. At that time, they were not unaware of the information about the actual income from the Portuguese properties and the associated assets. They also complained of international double taxation. However, the method of exemption subject to progression is permissible. Dismissal of the taxpayers' appeal.
Judgment of June 30, 2025 (9C_70/2025): VAT 2014-2018; The dispute was whether the Federal Administrative Court was right to confirm the determination of the input tax deduction regarding deconstruction and contaminated site remediation costs (see judgment of December 11, 2024 (A-3360/2024) and our article of January 5, 2025). The Federal Supreme Court confirmed that the right to deduct input VAT for costs incurred for demolition and remediation of contaminated sites is based on the previous use of the property. The "previous use" is deemed to be the period from the acquisition to the dismantling/partial demolition of the property, whereby a maximum of 20 years is considered for the calculation of the right to deduct input tax. Against this background, the right to deduct input tax was correctly calculated by the FTA by taking into account the entire 17-year period of use (and not the last use before the demolition) and the appeal was rightly dismissed by the Federal Administrative Court. Dismissal of the taxpayer's appeal.
Judgment of July 01, 2025 (9C_36/2025): Direct federal tax and state and communal taxes 2020 (Vaud); At issue was whether the Administrative Court was right to confirm the cantonal tax administration's refusal to accept the appeal lodged by the appellant - a self-employed lawyer in the canton of Geneva - against the discretionary assessment concerning him. In his objection to the discretionary assessment, the appellant initially asserted obvious errors in the assessment. He only submitted the completed tax return after being advised to do so by the tax office. The tax office redetermined the tax factors on the basis of the tax return received (higher than in the discretionary assessment) and asked the complainant to state whether he was withdrawing his objection. The latter then confirmed that he stood by his objection and that he should also be allowed to deduct the costs of proceedings in connection with a civil law dispute regarding the maintenance of the property (see judgment 9C_37/2025 of July 1, 2025). The cantonal tax administration then submitted a settlement proposal, according to which the objection would be rejected and the tax factors would be determined according to the discretionary assessment. When the appellant again persisted with his objection, the cantonal tax administration declared the objection inadmissible. This decision was confirmed by the Administrative Court. However, the Federal Supreme Court recognized that the original decision not to intervene was contradictory, as the tax office had already substantively accepted the objection when it redetermined the tax factors. The taxpayer's appeal was upheld.
Judgment of July 01, 2025 (9C_37/2025): State and municipal taxes 2020 (Geneva); legal fees as property maintenance costs; The complainant, a lawyer residing in the canton of Vaud and self-employed in the canton of Geneva, complained to the Federal Supreme Court that the legal fees and procedural costs claimed by him in connection with a dispute over allegedly defective painting and plastering work were wrongly not allowed as property maintenance costs for deduction. Before the Federal Supreme Court, however, the appellant was unable to show how the lower court had infringed the law in its assessment. For example, the assertion that the initiation of criminal proceedings was a mandatory requirement in view of potential subsequent proceedings was a mere conjecture. In addition, the appellant was unable to explain the breakdown between the deductible and non-deductible portion of the costs. Dismissal of the taxpayer's appeal.
Judgment of July 02, 2025 (9C_38/2025): Direct federal tax 2023 and state and municipal taxes (Zurich); Due to a lack of substantiation of the appeal against the taxation of pillar 3a capital for married couples instead of the separate cohabitation relationship, the lower court rightly did not accept the taxpayer's appeal.
Judgment of July 03, 2025 (9C_187/2025): Direct federal tax and state and municipal taxes 2020-2021 (Zurich); The question in dispute in this case is whether the taxable company has a sufficient interest worthy of protection in the annulment or amendment of its assessment decision with regard to the formation of a negative reserve in the tax balance sheet. In the case at hand, the company was denied the capitalization of a portion of the production costs in the context of the acquisition of a shareholding from the sole shareholder, as this was partly a non-cash benefit (excessive acquisition price). A negative reserve was assumed for the tax balance sheet to the extent of this non-valeur. With regard to direct federal tax, the creation of a negative reserve has no effect, as only the profit is taxed. With regard to state and municipal taxes, the decisive factor for the absence of an interest worthy of protection is that the formation of a negative reserve has no impact on either commercial law (no reverse authoritativeness of the tax balance sheet) or debt collection and bankruptcy law. Dismissal of the taxpayer's appeal.
Judgment of June 24, 2025 (9C_459/2024): Direct federal tax and state and municipal taxes 2016-2019 (Solothurn); At issue in this case is the deductibility of losses from self-employment of the taxpayers. In this case, the competent tax office and the lower courts assumed that the assessments were made at their discretion, as the accounting documents submitted by the taxpayers were so incorrect that they were deemed to be completely unsuitable. Accordingly, the taxpayers were subject to increased procedural requirements in the further proceedings in order to provide evidence of the obvious inaccuracy. The Federal Supreme Court did not share this assessment, as it was not apparent to the taxpayers that these were or should be discretionary assessments, especially as the mandatory reminder had not been issued in advance. Consequently, the cantonal court would have had to assess all of the documents submitted by the taxpayers during the objection proceedings, including those that were classified as allegedly late because they were not submitted within the objection period, within the framework of the standard standard of proof applicable in ordinary assessment proceedings. Approval of the taxpayer's appeal.