Decisions of the Swiss Federal Supreme Court (CW 36 - 2024)

Overview of the tax rulings of the Swiss Federal Supreme Court published between September 2 - 8, 2024:

Judgment of August 12, 2024 (9C_234/2024): State and municipal taxes Bern and direct federal tax from 2017: Tax exemption of non-profit association; The private school was retroactively deprived of its tax exemption due to the 2017/2018 school fee regulations. Due to the amount of the school fees, the circle of beneficiaries is not sufficiently open, which is why the lower court rightly denied the tax exemption on the grounds of charitable status. Dismissal of the taxpayer's appeal.
Judgment of August 7, 2024 (9C_323/2023) - scheduled for publication: Direct federal tax (2015); The judgment focuses on the determination of the place of assessment for direct federal tax by the FTA in accordance with Art. 108 DBG. Subsequent to the contested judgment of March 27, 2023, two leading decisions were issued that are of some importance in the present context, namely judgment 9C_710/2022 of August 17, 2023, BGE 149 II 354 (see our article of September 17, 2023) and judgment 9C_496/2023 of February 29, 2024 (see our article of April 14, 2024). Compared to the two cases, the facts of the present case show legally relevant differences, namely that neither the Canton of Zug nor the Canton of Zurich issued a tax sovereignty ruling based on Art. 105 DBG or Art. 127 para. 3 BV. The question now arises as to whether the nullity consequence is also correct in the present factual context, although the two cantons did not decide on the main issue (with a tax sovereignty ruling), but on the preliminary issue of tax sovereignty (in the context of the assessment ruling). As an interim result, it should be noted that this does not lead to different legal consequences. Even if a taxable person is thus assessed by a canton without jurisdiction and the statutory tax is paid there, the taxable person receives an exempt benefit. If it later transpires that the canton receiving the tax was not responsible, it is up to the canton to appeal to the FTA ex officio. The funds already held by the FTA can be subject to a simple transfer at FTA level. In summary, this means that: (i) the Canton of Zurich has the mandatory right to assess the taxpayer with regard to the direct federal tax for the 2015 tax period, (ii) the assessment order of the Canton of Zug dated 10 January 2017, in which the latter is to pay the direct federal tax for the 2015 tax period, (iii) the Canton of Zug has the mandatory right to assess the taxpayer with regard to the 2015 tax period. (iii) the taxpayer has made exempting payments with regard to the federal share, (iv) the cantonal share itself cannot be made exempting payments to the incompetent canton, but that this share must be forwarded ex officio to the competent canton. Dismissal of the appeal by the Zug tax administration.
Judgment of August 12, 2024 (9C_583/2023): State and municipal taxes and direct federal tax 2010-2015 (Geneva); tax evasion; The taxpayer traded in precious stones in the form of a sole proprietorship. During a VAT inspection, the FTA found that a positive change in stock had not been recorded in the income statement and that private boat costs had been booked. For the voluntary disclosure submitted after the income tax inspection, impunity was denied and a fine was imposed. It was disputed before the Federal Supreme Court whether the administrative court of first instance of the Canton of Geneva had rightly revoked the fine imposed for evasion without substitution (the second instance had confirmed the fine). The Federal Supreme Court clarified that the appointment of a trustee does not release the taxpayer from liability under criminal tax law and that if the taxpayer did not ensure that the tax return submitted was correct, it must be assumed that he acted with intent. Furthermore, the question of the necessity of separating private and professional expenses did not require any special accounting knowledge. Dismissal of the taxpayer's appeal.
Judgment of August 12, 2024 (9E_1/2023) - for publication: Lump-sum tax credit; action brought by the Canton of Schwyz against the Swiss Confederation; In substantive terms, the Federal Supreme Court had to clarify the question of how burdens arising from the lump-sum tax credit under Art. 20 of the Ordinance on the Lump-Sum Tax Credit are to be distributed between the canton and the Confederation if the municipalities concerned have different levels of relief for dividends from qualified participations. The Federal Supreme Court rejected both the distribution in proportion to the effective taxes claimed by the tax administration of the Canton of Schwyz and the one-third solution demanded by the FTA. Rather, the distribution of burdens should be carried out in such a way that the shares of the three municipalities (of one third each) are adjusted in proportion to the partial taxation rate of the canton (and the municipality) to that of the federal government and the shares modified in this way are then extrapolated to 100% or 1. Partial approval of the appeal by the Canton of Schwyz.
Judgments of August 12, 2024(9C_262/2024; 9C_263/2024; 9C_264/2024): Direct federal tax 2020; in dispute was the existence of income from self-employment qua commercial real estate trading. An overall assessment of the circumstances leads to the assumption of self-employment. With regard to the assessment of the taxable profit, the value of the demolished building that existed before the condominium units were constructed and sold is not to be included. Rejection of the taxpayers' appeals.
Judgment of August 12, 2024 (9C_548/2023): State and municipal taxes Zurich 2018: tax residence; A lives in the canton of Schwyz. He sold his apartment in X Canton of Zurich in 2017 and bought another one in Z Canton of Zurich (transfer July 2018). Based on an independent examination of the facts supporting the respective residences, the lower court established unlimited tax liability in the canton of Zurich. In doing so, the lower court committed a violation of the law, as the natural presumption in favor of retaining the previous place of residence applies in this case. The evidence is not sufficient to rebut the natural presumption of continued tax residence in the canton of Schwyz; there is no unlimited tax liability in the canton of Zurich for the 2018 tax period. Appeal of the taxpayer upheld.