Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week from 29 July to 4 August 2019.

  • Judgment of 11 July 2019 (2C_993/2018): Direct federal tax and cantonal and communal taxes 2005 - 2008 (Vaud); tax avoidance; the conditions for tax avoidance are met in the specific case. On the one hand, an over-indebted company whose purpose was to run a hardware business abandons an unprofitable activity in order to take over a profitable activity, a pharmacy. On the other hand, an individually managed pharmacy sells all its assets and liabilities to a loss-making company. From an economic point of view, such a transaction means making available to the creditors of the loss-making joint stock company the assets resulting from the individually exercised profit-making activity, previously held directly by the shareholder of the said company. However, a trader will normally be more likely to seek to protect the elements of his personal assets and the result of his activity, which he carries out by virtue of the individual control of the creditors of the joint stock company of which he is also the principal shareholder. A design that leads to the opposite effect is economically meaningless. The legal and accounting structure established by the applicant and its shareholder would never have been implemented between independent parties (E. 7.2). The appeal by the tax administration of the canton of Vaud is upheld.
  • Judgement of 15 July 2019 (2C_63/2019): Withholding tax (Geneva); application for restoration of the time limit for appeal; appeal; the appeal is excluded if the applicant submits as grounds for appeal what he could have asserted in the ordinary proceedings with reasonable care (Art. 147 para. 2 DBG). In the present case, it would already have been reasonable for the applicant to demonstrate in the ordinary assessment procedure of 2011 that he is liable for the maintenance of his daughter of full age, who is currently still a student. The taxpayer's complaint is dismissed to the extent that it is admissible.
  • Judgment of 12. July 2019 (2C_359/2019): Direct Federal Tax and State and Municipal Taxes 2010-2012 (Zurich); to be examined were the determination of the tax factors for income from directors' fees, the imputed rental value for an apartment and the non-recognition of a debt interest deduction; the complaint proves to be manifestly unfounded and is dismissed, both as regards the directors' fees (no manifestly incorrect finding of facts by the previous instance), the imputed rental value (not occupying an apartment with the option of own use at any time = being available for own use) and the deduction of debt interest (insufficient proof of actual payment).
  • Judgment of 17 July 2019 (2C_87/2019): Tax jurisdiction as of 1 January 2015 (St. Gallen); weekly resident in Zurich (place of work), registered in the canton of St. Gallen; the place of residence of the weekly resident (respondent) for tax purposes as of 1 January 2015 is disputed; the relevant centre of life interests is determined by the totality of the objective, external circumstances from which these interests can be identified. The Federal Supreme Court states in this regard: "In practice, the relationship of unmarried persons to the place of work comes to the fore if the person has passed the age of thirty and/or has been staying at the same out-of-town location without interruption for more than five years. If at least one of the two criteria is met, there is a natural presumption that the centre of life is at the place of employment or weekly residence. (E. 3.2.2.) However, the cantonal lower court stated in this regard that "the rebuttal of the natural presumption of the main tax domicile does not require complete proof. It must be sufficient if evidence of the weekend residence is proven in a manner that is so weighty and convincing that it can invalidate the presumption of domicile. (E. 4) The Federal Supreme Court comes to the conclusion that, based on the findings of fact by the lower court, the initial situation is factually different from the typical case constellations of federal court jurisdiction. "In summary, it appears that, despite his age and the length of his stay, the respondent succeeds in rebutting the natural presumption that the centre of his life is at the place where he has been staying for a week. The defendant submits in this respect that, in view of the weekly, three-day return to U. [...], the close family relationship and the leisure and club activities, his de facto centre of life interests in U. [...] is the only one in which he is able to pursue his career. [...] lay. The tax office does not succeed in providing evidence to the contrary, in particular with reference to his living conditions and partnership. Finally, the defendant cannot be accused of being in breach of the law. [...] not politically active. In consideration of all the circumstances of the individual case, the lower court rightly concluded that the Canton of Zurich does not have tax jurisdiction. The appeal by the Zurich cantonal tax office is dismissed.
  • Ruling of 12 July 2019 (2C_426/2019): Direct Federal Tax and State and Municipal Taxes 2011 (Bern); the provision of CHF 1,000,000 formed in 1996 with regard to immovable assets (at that time the only asset in the amount of CHF 3,281,975) is no longer justified in business terms in 2008, with the sale of two developed properties. This fact is not altered by the fact that the tax authorities could have announced earlier that the provision was no longer justified and should therefore be reversed. In tax law, (only) the tax factors participate in the legal force. The factual and legal circumstances on which the legally binding assessment ruling is based can be assessed differently at a later date at any time(BGE 140 I 114 E. 2.4.3 p. 120; ruling 2C_551/2018 of 11 June 2019 E. 2.2.5). The taxpayer's appeal is dismissed.
  • Judgment of 12 July 2019 (2C_581/2019): Tax period 2017, administrative fine (Zurich); administrative fine of CHF 100 for failure to submit a tax return for the 2017 tax period on time; however, the subject of the dispute was exclusively the admissibility of the advance on costs demanded by the lower instance; the application for the cancellation of the administrative fine and the other (non-objective) submissions of the appellant could therefore not be granted; the appeal was dismissed in so far as they were relevant.
  • Judgment of 16 July 2019 (2C_607/2019): Direct federal tax and state and municipal taxes 2012 -2016 (Valais); by decision of 9 May 2019, the President of the Cantonal Tax Appeal Commission of the Canton of Valais declared inadmissible the appeal lodged by the appellants for the tax periods 2012 to 2016 on the grounds that the advance payment of the costs of the proceedings had not been made in due time. By letter of 15 March 2019 to its legal representative, the authority had set a deadline of 23 April 2019 for the taxpayer to pay the advance of CHF 1,000, stating that failure to pay the advance on time would render the appeal inadmissible. This approach does not violate the prohibition of excessive formalism, the principle of proportionality and the right to be heard; the taxpayers' complaint is rejected.

Non-occurrence decisions / inadmissible complaints:

Decisions are listed chronologically by publication date.

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