Overview of tax law decisions of the Swiss Federal Supreme Court published between January 23 - 29, 2023:

  • Judgment of December 7, 2022 (2C_396/2022): Direct Federal Tax 2011 and Cantonal and Municipal Taxes 2011-2012 (Geneva); Case D was not mentioned in the documents submitted to the tax authority in the 2011 and 2012 tax returns. Prior to the 2011 tax return and in each case for five consecutive years, the Taxpayer had disclosed to the Tax Administration the existence of a provision in the amount of CHF 3,000,000 in the notes to the financial statements, which was supported in 2005 by documents relating to the C litigation. Under these circumstances, and despite the claim of the appellant, the tax administration could not have recognized, merely by deleting the reference in the to the year 2004, that provision C had been reversed and that the provision shown in the balance sheet concerned a different case. After-tax proceedings may not serve to make up for avoidable omissions, which is why the lower court was correct in confirming that provision D was not allowed to be taken into account in the disputed assessments. Dismissal of the taxpayer's appeal.
  • Judgement ofDecember 08, 2022 (2C_48/2022, 2C_66/2022, 2C_68/2022): Direct Federal Tax and Cantonal and Municipal Taxes 2010-2015 (Geneva); The dispute revolves around the question of whether the loan granted by the company G. AG was rightly not recognized as a business liability and consequently the interest on this loan was not allowed as a business expense. The taxpayers are self-employed in the real estate sector. The lower court denied the deductibility on the grounds of tax avoidance. In the present case, G. AG is an offshore company owned by the father and the aunt of the complainants. This company granted a loan to repay the loan terminated by H. Ltd. which they had taken out in the course of their self-employment. The loan from G. Ltd. is identical to the loan from H. Ltd. However, the loan concluded with G. Ltd. does not provide for any collateral. This unusual loan was only possible because the lending company belonged to the father and the aunt. A third party would never have been willing to grant such a loan. In this context, the question arises why no gifts were made in favor of the three daughters or nieces. In contrast to a gift, a loan can be deducted from taxable assets and the interest from taxable income. The aim was therefore to save taxes and with a loan of over CHF 21 million and annual interest of 5% on this amount, there is a considerable tax saving. The conditions for tax avoidance are met. Dismissal of the taxpayer's appeal.
  • Judgment of December 13, 2022 (2C_917/2021): Direct Federal Tax and State and Municipal Taxes 2019 (Fribourg); The respondent declared a loss from an independent sideline activity (running a riding stable) in addition to income from a dependent main activity and from a sideline activity as an employee. The Federal Supreme Court does not allow the loss deduction, because in the absence of an intention to make a profit, it is to be assumed that this is a hobby. The appeal of the tax administration is upheld and the objection decision is confirmed. Furthermore, referral back to the lower court for reassignment of the costs of the cantonal proceedings.
  • Judgment of December 15, 2022 (2C_234/2022): State and municipal taxes Basel-Stadt and direct federal tax 2014: The couple is not able to show how a deduction from taxable income for two vehicles is justified on business grounds. Dismissal of the taxpayers' appeal.
  • Judgment of December 23, 2022 (2C_768/2022): Direct federal tax and state and municipal taxes 2019 (Graubünden); A community of heirs objected to the separate assessment of the decedent and her spouse residing in Germany for the tax periods 2013-2018. The community of heirs considered the separate assessment to be a violation of an essential procedural principle under Art. 147 para. 1 lit. b DBG and thus a ground for appeal. The Federal Supreme Court denied a ground for appeal. Although the tax administration had misapplied the law, there was no violation of an essential procedural principle. The Federal Supreme Court also denied the existence of serious deficiencies and thus the nullity of the assessment rulings. Dismissal of the appeal of the community of heirs.

Decisions on non-admission and write-offs:

Decisions are listed chronologically by publication date.