Overview of tax law decisions of the Swiss Federal Supreme Court published between July 24 - 30, 2023:

  • Judgment of June 19, 2023 (9C_701/2022): Withholding tax, tax periods 2017-2018; refund; The question in dispute here is whether a sole shareholder is entitled to a refund of withholding tax as a result of non-cash benefits provided by the company, or whether a case of "merely" negligent non-declaration pursuant to Art. 23 para. 2 VStG exists in this case. Proof of intent is deemed to have been furnished if it is established with sufficient certainty that the taxpayer was aware of the incorrectness or incompleteness of the information provided. If this knowledge is proven, it is to be assumed that he also acted with intent, i.e. intended to deceive the tax authorities and aimed at an underestimation (direct intent) or at least accepted it (contingent intent). In view of the private expenses booked over the years (expenses that were obviously not justified by business reasons) or the unbooked income (invoices received privately), it is not possible to speak of an oversight and at least the contingent intent is deemed to have been established. Accordingly, the taxpayer was rightfully denied the refund of the withholding tax. Dismissal of the taxpayer's appeal.
  • Judgment of 23 June 2023 (9C_682/2022 and 9C_683/2022) - intended for publication: Direct Federal Tax and State and Municipal Taxes 2017 (Basel-Landschaft); A footballer (taxpayer) entered into an employment contract with a football club based in the United Arab Emirates (UAE) with a term ending on August 1, 2015. The employment contract was terminated prematurely and with immediate effect by agreement dated July 9, 2013. This agreement provided for the payment of compensation of approximately EUR 2.3 million, with payment to be staggered (5 partial payments between July 30, 2013 and June 30, 2015). On July 13, 2013, the taxpayer moved his residence together with his wife first to the canton BS and finally to the canton BL before the end of 2013. After two payments, the UAE Club took the position that the remaining payments were time-barred under UAE law. The taxpayer successfully defended itself against this, whereupon the UAE Club made the outstanding payments (approximately CHF 1.8 million) in 2017. In January 2018, the taxpayers informed the tax administrations of the cantons BL and BS that the 2013-2015 tax returns were incomplete because they had not listed the claims against the VAE Club in particular. However, the tax administration of the BL canton added the CHF 1.8 million to the 2017 taxable income. The appeal filed by the taxpayers against this decision was upheld by the BL Cantonal Court. The Federal Supreme Court now had to examine whether the income accrued to the taxpayer in the 2017 tax period and was taxable and, if so, whether this taxation was contrary to the DTA-AE. The Federal Supreme Court came to the conclusion that the taxpayer could in principle only acquire a fixed claim to the relevant payment when the individual installments became due (not already when the agreement of July 9, 2013 was concluded) (so-called debit method). In the present case, however, this had to be deviated from and the installments only constituted an acquisition of assets under tax law at the time of the payment in 2017 because the VAE Club unequivocally disclosed its unwillingness to pay (plea of limitation). According to the Federal Supreme Court, the benefit in question does not fall under Art. 17 para. 1 DBA-AE (artists and sportsmen) because it was not received for an activity personally performed in the UAE, but rather corresponds more to compensation for loss of earnings. In the context of the interpretation of Art. 15 para. 1 DBA-AE, the Federal Supreme Court clarified its case law on the consideration of amendments to the OECD-MC after the conclusion of a DTA to the effect that the significance of later commentaries for the interpretation process is comparable to that of other literature or court rulings. According to the Federal Supreme Court, the UAE does not have a right of taxation under Art. 15 para. 1 DBA-AE either, because the payment in question does not constitute consideration for employment (rather, it is similar to a compensation payment). The payment is therefore subject to taxation under Swiss internal law and to Switzerland's right of taxation under international law. Appeal of the BL tax administration upheld.
  • Judgment of 21 June 2023 (9C_650/2022): State and municipal taxes St. Gallen 2008-2013; tax evasion; The Criminal Matters and Investigations Division of the Federal Tax Administration (ASU) forwarded a report on B, who is the sole director of A AG and C AG, to the Cantonal Tax Office St. Gallen, which subsequently opened an investigation against A AG. The Federal Supreme Court confirms in the present case that a penalty order of the tax authorities based solely on the ASU investigation results is admissible. Neither the right to be heard, nor the ECHR rights, nor procedural principles on the part of the ASU or the KSTA SG were violated in the present case. The taxpayer could not prove to what extent the depreciation of fictitious fixed assets or expenses of fictitious services from C AG were real. Dismissal of the complainant's appeal.
  • Judgment of 26 June 2023 (9C_619/2022): State and municipal taxes and direct federal tax 2014-2015 (Ticino); Withholding tax; The question and issue to be examined in the present case was whether the lower court was right to waive a credit for the withholding tax already deducted in the ordinary proceedings pursuant to Art. 90 para. 2 aDBG. The Federal Supreme Court concludes that the argument put forward by the lower court that the complainant had an influence on the deduction of the withholding tax by the employer, since he remained the sole managing director until January 13, 2015 and thereafter still its "dominus" and that therefore a credit should be waived, violates the principle of legality. The Federal Supreme Court also denies the existence of tax avoidance. Approval of the taxpayer's appeal.


Decisions are listed chronologically by publication date.