Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week of 20 - 26 January 2020.

  • Judgment of 16 December 2019 (2C_327/2018): Ordinance on the state contribution to the costs of real estate in the area of non-profit retirement and nursing homes of public interest (Vaud); abstract review of the law; sufficient legal basis, no arbitrariness and no violation of economic freedom; dismissal of the appeal.
  • Judgment of 20 December 2019 (2C_415/2019): Tax domicile 2009 and 2010 (Lucerne); It is not objectionable that the lower court assumed that the circumstances of the tax years 2004 to 2008 would still have existed as at 31 December 2009 and 31 December 2010. In this initial situation, the complainant, as a person liable to pay the tax, should have provided counterevidence and shown that her tax residence was elsewhere. Thus, it could have shown that the centre of life had already been wrongly determined in the previous periods; on the other hand, it could have shown that the circumstances had changed in the relevant period. The complainant was unable to achieve both of these objectives with her largely appellate complaints of facts; dismissal of the taxpayers' complaint.
  • Judgment of 20 December 2019 (2C_416/2019): Tax domicile for 2009 and 2010 (Canton of Lucerne); In the present case, the files showed various indications that the complainant's tax domicile was in the Canton of Lucerne despite his residence in the United Arab Emirates under reporting law. It is not objectionable under federal law if the lower court, given the density of evidence presented, assumed that the complainant's actual centre of life was in the canton of Lucerne. Rejection of the taxpayer's complaint.
  • Judgment of 18 December 2019 (2C_139/2019): Direct federal tax and state and municipal taxes 2015 (Zurich); After his divorce, the taxpayer had to make maintenance contributions to his minor children under the parental care of his ex-wife. After the death of the ex-wife, the KESB appointed a guardian for the children placed with a foster family. From then on, the taxpayer paid the maintenance contributions for his children to the KESB. The maintenance contributions paid by the complainant are tax deductible for him. It would be contrary to the principle of equality of laws if the deductibility of maintenance payments were made conditional on the existence of parental custody. The maintenance contributions paid by the complainant would have to be recorded for tax purposes for the children. Since the minor children are not under parental care, they should be assessed independently. Approval of the taxpayer's complaint.
  • Judgment of 18 December 2019 (2C_691/2019): VAT, tax periods 2010-2013; following a VAT inspection at Restaurant B., the FTA determined a back tax demand at its dutiful discretion In particular, the FTA stated that the accounting department did not meet the legal requirements and used corresponding empirical figures (gross profit margin of 73%). The Federal Supreme Court is bound by the discretionary assessment if it is based on a correct and complete determination of the facts of the case and on an appropriate weighing of the relevant circumstances. It examines such estimates only with caution for obvious errors and mistakes, and it is for the taxpayer to prove that the estimate is incorrect; in the present case, it cannot be inferred from the appellant's allegations that the estimate made is manifestly incorrect; rejection of the taxpayer's complaint.
  • Judgement of 10 January 2020 (2C_632/2019): Direct federal tax and state and municipal taxes 2013 (Geneva); Unlike in the intercantonal relationship, Art. 9 para. 1 DBG cannot establish joint taxation of spouses in the international relationship. If the other spouse lives abroad, the spouse who is resident in Switzerland is subject to unlimited tax liability for all his or her income and assets. This is also the case if the spouse resident in Switzerland is the sole beneficial owner of the income and assets declared in the tax return; dismissal of the taxpayers' complaint.
  • Judgment of 10 January 2020 (2C_730/2019): Property transfer taxes (Geneva): It cannot be considered arbitrary to limit the concept of the right of repurchase within the meaning of cantonal law to cases where the same building is repurchased from the original seller; dismissal of the taxpayers' appeal.
  • Judgment of 16. December 2019 (2C_151/2017, 2C_152/2017, 2C_178/2017 and 2C_179/2017): Direct Federal Tax and State and Municipal Taxes 2011 (Zurich); In the event of a retroactive change of responsibility for the assessment of direct federal tax (place of actual administration (ZH) does not correspond to the canton of domicile (BS)), the taxpayer may rely for the past tax period on the tax assessment (deductibility of royalty payments to a subsidiary) agreed in a ruling with the (retroactively incompetent) tax authority of the canton of domicile, provided that all conditions for the protection of legitimate expectations are met; Profits which the taxpayer derives from the operation of aircraft in international traffic, from directly related activities and from ancillary activities are, according to Art. 52 (1) and (3) DBG not to be limited to foreign permanent establishments. They remain subject to direct federal tax and may not be transferred abroad even at cantonal level. It remains to be seen whether there would be an exception to this rule if the taxpayer suffered double taxation in relation to individual permanent establishment states; an air carrier cannot rely on the frequency method developed for inter-cantonal shipping and railway companies for the international capital allocation, as there is no local and economic relationship with the permanent establishment for the majority of the flight time. The taxpayers' aircraft are to be allocated to the place of actual management in Switzerland for the purposes of capital tax assessment; rejection of the proceedings concerning the direct federal tax 2011 for assessment in accordance with the considerations; confirmation of the decision of the Tax Appeal Court of the Canton of Zurich concerning the state and municipal taxes 2011.
  • Judgment of 8 January 2020 (2C_1082/2019): State and municipal taxes 2016 (Aargau ): According to Art. 9(1) StHG, general deductions can be deducted "from total taxable income". The periodicity principle applies. The tax period is the calendar year. Taxable income is calculated "on the basis of income in the tax period". A negative income from a pension fund purchase in the previous period is therefore not deductible in the following period. Dismissal of the appeal.
  • Judgment of 6 January 2020 (2C_900/2018): Real estate gains tax canton Zurich 2011, tax deferral due to replacement. A long-term property held as fixed assets by a mixed real estate company automatically changes to current assets as soon as it is put up for sale. Thus, the requirement of operationally necessary fixed assets for the tax-neutral replacement is not fulfilled. The appeal is dismissed.

Non-occurrence decisions / inadmissible complaints:

Decisions are listed chronologically by publication date.

Tax topics covered in this post:
Income Tax
Value Added Tax (VAT)
Profit Tax
Property Transfer Tax
Property Gains Tax