Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week from 12 to 18 August 2019.
- Judgment of 20 June 2019 (2C_737/2018), official publication provided: Direct Federal Tax and Cantonal and Municipal Taxes 2010 (Geneva); re-establishment of the time limit for appeal; according to Federal Supreme Court case law, the re-establishment of the time limit for appeal can only be granted if the taxpayer and his possible representative were prevented from acting within the time limit through no fault of their own (judgments 2C_407/2012 of 23 November 2012, E. 3.2; 2C_699/2012 of 22 October 2012, E. 3.2) Prevention through no fault of one's own means not only objective impossibility, but also subjective impossibility, i.e. a prevention which must not have been foreseeable and must be such that compliance with the deadline would have required the taking of measures which would not have been reasonable for a conscientious businessman (E. 4.1). In the present case, after examining the evidence at its disposal, in particular the statement of the taxpayer's doctor, the lower court decided that the complainant was prevented from conducting his affairs between May and July 2016 through no fault of his own due to an injury to his mental health. However, the absence of a written power of attorney is not decisive if on the first page of the taxpayer's tax return for the 2010 tax period the trustee is expressly mentioned as the taxpayer's representative (E. 5.2). Since at the beginning of the complainant's prevention at the beginning of May 2016 the objection decision pursuant to Article 140 DBG had not yet been notified and the taxpayer was therefore still represented by his trustee, there is no indication that the trustee would not have been in a position to protect the rights of his client and, if necessary, to file an appeal against the objection decision of 20 May 2016 with the Administrative Court within the statutory period. The complainant must therefore accept the blame for the inaction of his representative, who does not provide evidence that the Trustee would have been prevented from acting even if he had not been at fault (E. 5.3); dismissal of the taxpayer's complaint.
- Judgment of 18. July 2019 (2C_114/2018): Direct federal tax and state and municipal tax 2007 to 2016 (Zug); clarification of Swiss and cantonal assessment responsibilities; the taxpayer denied his tax liability in the cantons of Lucerne and Zug, owned real estate in the canton of Grisons, but considered himself to have unlimited tax liability abroad alone; With a declaratory decision, the Federal Tax Administration (FTA) considered that the Canton of Zug was responsible for the assessment of the direct federal tax vis-à-vis the taxpayer; the taxpayer lodged an appeal against the objection decision of the Tax Administration of the Canton of Zug regarding the determination of the unlimited tax liability in the Canton of Zug. "In the contested judgment, the Administrative Court carefully listed all the various indications that speak against a residence in Dubai and for the continued existence of a residence in Switzerland or in the canton and city of Zug" (E. 3.2.) "No other result can justify what the appellant puts forward against the contested judgment. (E. 4.) The interpretation of Art. 3 and Art. 8 para. 2 DBG at the lower court has proven to be in conformity with federal law. The appeal is dismissed.
- Judgment of 22 July 2019 (2C_560/2019): Fire brigade costs (St. Gallen, municipality of Rapperswil-Jona); clean-up work following tree felling; in contrast to cases of damage caused by natural forces, safety and remedial measures are subject to a fee due to legal regulations (Art. 46bis, para. 2 FSG/SG); the costs are to be passed on to the polluter (Art. 46ter, para. 1 FSG/SG); the lower court arbitrarily considered that the costs incurred are to be passed on to the landowners by decree. The appeal is dismissed.
- Judgment of 22 July 2019 (2C_1053/2018): Administrative assistance DTA Switzerland - Sweden (SE). "The complainant (Federal Tax Administration, FTA) is of the opinion that the information [requested by way of administrative assistance] can only be refused for lack of probable relevance within the meaning of Art. 27 DTA CH-SE if a connection between the requested information and the investigation conducted in the requesting state appears unlikely. Conversely, the probable relevance was to be affirmed if, at the time of the submission of the request for administrative assistance, there was a reasonable possibility that the requested information would be relevant". (E. 3.1.) "The Federal Supreme Court recently dealt with the legal question in two rulings as to whether the information regarding taxation by expenditure is to be classified as likely to be significant if, in particular, residence in the requesting state is at least presumed. In its ruling 2C_625/2018 of 1 February 2019 (intended for publication), it answered this question in the affirmative in the context of administrative assistance in tax matters vis-à-vis France. However, it derived the prospective relevance from Art. 4 para. 6 lit. b DTA CH-FR, according to which an individual who is taxed in a state only on a flat-rate basis assessed on the rental value of the residence or residences is not a resident of that state [...]. The DTA CH-SE does not contain a corresponding provision. However, in its further ruling 2C_764/2018 of 7 June 2019, the Federal Supreme Court affirmed the prospective relevance also in the case that there is no provision comparable to Art. 4 para. 6 lit. b DTA CH-FR, provided that the foreign tax authority seeks, inter alia, to clarify the tax residency and raises the question on which basis the person concerned is taxed in Switzerland [...]. In the present case, the STA [Swedish Tax Agency] is also requesting information on the basis on which the respondent [...] is taxed, and in detail. Against this background, the information that the respondent [...] was taxed in Switzerland on the basis of expenses also proves to be likely to be significant within the meaning of Article 27, para. 1 DTA CH-SE. In any case, the connection with the facts presented by the STA is given and it is primarily up to the STA to assess how useful the information of taxation at cost in Switzerland is for clarifying tax residency in Sweden." (E. 3.5.) The appeal of the FTA is upheld and the judgment of the Federal Administrative Court A-625/2018 and A-3455/2018 of 12 November 2018 is partially set aside and amended in line with the Federal Supreme Court's considerations.
- Judgment of 23 July 2019 (2C_206/2018): direct federal tax and state and municipal tax 2006 (Schwyz); tax exemption. "In order for a legal person to be exempt from tax liability due to the pursuit of public purposes, the following general requirements must be met cumulatively: (a) the use of funds must be exclusively directed to the public purpose or the welfare of third parties, (b) the funds dedicated to the purpose must be irrevocably committed to tax-exempt purposes, and (c) the specified purpose according to the articles of association must actually be realized. A tax exemption on account of the pursuit of public purposes is in principle excluded if a legal person primarily pursues profit-making purposes, even if these also serve public purposes." (E. 3.2.) "According to the binding findings of the lower court, in 2006, the year at issue here, the complainant made a profit of almost six hundred thousand francs on the electricity division, while it made a loss on the water division, and it distributed a dividend of CHF 300,000 to the municipality. The distributed dividend therefore comes as a result of the profit from the electricity division. It is true that this dividend benefits the municipality and thus also serves a public purpose. However, the law expressly requires that the profit is dedicated exclusively to these purposes, i.e. to the relevant public or charitable purposes from which a tax exemption is derived, in the present case therefore to the supply of electricity. The complainant does not claim that the amount of the dividend distributed to the municipality is used for the purposes of the public electricity supply, and the lower instance did not establish this either. Thus, the profit is not exclusively and irrevocably dedicated to the public purpose of electricity supply. A tax exemption is therefore ruled out." (E. 4.4). The appeal proves to be unfounded and is dismissed.
Decisions are listed chronologically by publication date.
