Decisions of the Swiss Federal Supreme Court (CW - 2026)

Overview of the Swiss Federal Supreme Court’s tax law decisions published between July 20 and 26, 2026:

Judgment of June 17, 2026 (9C_463/2025, 9C_464/2025): Cantonal and Municipal Taxes 2016 (Aargau); The issue in dispute was whether a bequest of 795 registered shares was taxable as income from employment. The sole shareholder had, in the absence of suitable heirs, partially sold the shares to the long-time managing director under a purchase and inheritance agreement dating from 2001 and bequeathed the remainder. The Aargau tax authorities treated the bequest (CHF 8.25 million) as earned income, a ruling that the Administrative Court overturned. The Federal Supreme Court held that a close connection to the employment relationship does not preclude a tax-exempt bequest. The lower court’s assessment—that the focus was on corporate succession rather than compensation for work performed—was not arbitrary, given the transfer of all shares and the uncertain timing of the acquisition at the time the inheritance agreement was concluded (which actually occurred 15 years later). The appeal by the Cantonal Tax Office was dismissed; the appeal by the municipality was not considered.
Judgment of June 25, 2026 (9C_555/2025): Federal, cantonal, and municipal taxes for 2021 (Zurich); Discretionary Assessment; The petitioner, a self-employed physician, was assessed based on a discretionary estimate of a taxable income of CHF 1,200,000 due to his failure to file a tax return. The Cantonal Tax Office declined to consider his objection on the grounds of insufficient justification, a decision upheld by the cantonal courts. The Federal Supreme Court confirmed that, given the incomplete information, the subsequently submitted annual financial statements showing a profit of approximately CHF 353,000 did not render the assessment manifestly incorrect, and that—as a prerequisite for proceedings—no extension of time may be granted if the grounds for the objection are insufficient. The Federal Supreme Court also ruled out the invalidity of the discretionary assessment due to the absence of arbitrary or punitive action on the part of the authorities. The taxpayer’s appeal was dismissed.
Judgment of May 29, 2026 (9C_436/2025): Cantonal and municipal taxes for 2012 and 2013 (Geneva); Tax evasion; the issue in dispute was whether, in the context of a back-tax and penalty proceeding for the years 2012 and 2013 concerning cantonal and municipal taxes, an income of CHF 200,000—which the Geneva tax administration had adopted as a lump-sum amount from an expense-based taxation assessment in the Canton of Valais—could be attributed to the taxpayer. The adoption of the lump-sum amount was deemed arbitrary because an assessment amount determined under the expenditure-based taxation system cannot automatically be used in an ordinary assessment of actual income, and because the evidence submitted and the objections to parallel back-tax assessments against the taxpayer’s now-divorced ex-husband had not been sufficiently considered. Furthermore, it is not clear why the allocation was made only for cantonal and municipal taxes, but not for direct federal tax. The taxpayer’s appeal is upheld, and the case is remanded to the tax administration for further investigation and for a reassessment of the cantonal and municipal taxes.

Non-occurrence: