Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week from 14 to 20 October 2019.
- Judgement of 11 September 2019 (2C_265/2019): State and municipal taxes 2008 and 2009 (Zurich and Schwyz); intercantonal double taxation; the Federal Supreme Court is bound by the finding of the Administrative Court of Zurich that the complainants had neither objectively nor subjectively developed a sufficiently strong (or predominant) connection to the canton of Schwyz so that a change of residence there could not be assumed. The Canton of Zurich has not forfeited its right of taxation. In order to make use of this option, it is sufficient to initiate the assessment procedure, which is usually carried out by the first outwardly effective, i.e. usually written, act of the tax authority directed towards the assessment. In practice, the delivery of the tax return to the taxpayer is already considered to be the initiation of the assessment and thus to comply with the deadline. It is irrelevant whether the investment activity initially relates only to circumstances that establish economic affiliation (e.g. real estate). Dismisses the appeal in so far as it is directed against the Canton of Zurich Approval of the complaint to the Canton of Schwyz.
- Judgment of 27 September 2019 (2C_343/2019): Direct federal, cantonal and communal taxes 2008 - 2012 (Geneva); the Swiss parent company was unable to demonstrate that the services invoiced by its Seychelles-based subsidiary could stand up to third-party comparison based on the cost-plus method. Dismissal of the appellant's appeal.
- Judgment of 23 September 2009 - 2011 (2C_98/2019): Direct Federal Tax and State and Municipal Tax 2009 - 2011 (Valais); annual increase of the shareholder-active loan (sole proprietor and employees, without written agreement) for low wages was partially reclassified to monetary benefit, taking into account the debt interest deduction. The taxpayers were over-indebted and had to maintain four children, no third party would have granted them a loan of this amount. It is also unusual that a wage that is unusually low for the industry was received while at the same time the shareholder loan (as a significant balance sheet item) was increased. The Federal Supreme Court contradicts the Appeals Commission's view that the main shareholder's ability to repay the loan by means of a salary and/or higher dividend is sufficient. The loans granted by the company have all the characteristics of a payment in kind. The appeal of the tax assessment authority is granted. The decision of the Appeals Commission of 9 November 2017 is revoked; the appeal decision of 20 October 2015 is confirmed.
- Judgment of 27 September 2019 (2C_451/2018 and 2C_452/2018): Federal Direct Tax 2012 (Geneva); withholding tax. In 2012, the Obwalden-based public limited company paid a dividend of CHF 15 million to its shareholder (taxpayer) resident in Geneva. The VSt of approximately CHF 5.2 million was transferred to the FTA. The shareholder has applied to the cantonal tax administration not to have to make any payments on account for cantonal and municipal tax because the alleged tax claim is smaller than the transferred VSt. The cantonal tax administration has accepted this. However, with regard to dBSt, it has sent a provisional invoice of approximately 0.5 million which the taxpayers have not paid. In the assessment of the tax period 2012, which took place at the beginning of 2016, the tax authorities demanded default interest of approximately CHF 40,000 for the claim for direct federal tax. Art. 31 para. 1 VStG provides for the offsetting of cantonal and municipal tax against the withholding tax claim, but does not regulate the repayment of dBSt. According to the Federal Supreme Court, Art. 120 OR (offsetting) is also applicable by analogy in public law. In the case of natural persons, the cantonal tax administration is responsible for the refund of VAT. By issuing the same decree at the beginning of 2016 regarding the refund of withholding tax and direct taxes (canton and Confederation), the tax administration itself declared the offsetting. This means that the claims (taxes or money) and the identity of the creditor and debtor are basically the same. The due date of the offsetting claim (in this case the payment of dBSt) is sufficient. The requirements of Art. 120 OR are fulfilled. Offsetting also has a retroactive effect on accessory receivables (such as interest on arrears). Dismissal of the appeal of the cantonal tax administration.
- Judgment of 20 September 2019 (2C_78/2019): Direct federal, cantonal and communal taxes 2008 - 2012 (Geneva); fine for attempted tax evasion in relation to the non-declaration of a dividend; the taxpayer's submissions regarding the fulfilment of the subjective elements of the facts and the amount of the fine did not get caught; dismissal of the taxpayer's appeal.
- Judgment of 27 September 2019 (2C_245/2019): Direct Federal Tax and State and Municipal Taxes 2003 - 2010 and 2012 - 2013 (Geneva); The complainants allege infringement of Article 6(1) ECHR (right to a fair trial) and Article 29(2) BV (right to be heard) in the context of an appeal procedure. According to the Federal Supreme Court, the guarantees enshrined in Art. 6 ECHR do not apply in appeal proceedings. The complainants were not able to present an arbitrary assessment of evidence by the lower court and the right to be heard was not violated. The complainants also submit as grounds for appeal what they could have asserted in the ordinary proceedings if they had exercised reasonable care. Under these circumstances, the revision is excluded. Rejection of the taxpayers' complaint.
- Judgement of 2 October 2019 (2C_179/2019): Direct federal tax and state and municipal tax 2014 (Valais); professional expenses deduction of an air traffic controller Art. 26 DBG and Art. 22 StG VS. The taxpayer cannot provide proof of the additional dinner deductions due to the lack of proof of shift schedules. The appellant relies on the well-known nature of the irregularity of his working hours, which cannot be accepted. In order to be known, information must be accessible to everyone, such as information in the commercial register that is accessible on the Internet (BGE 143 IV 380 1.1.1), which is not the case here (contractual relationship with employer). Furthermore, the travel costs of the private vehicle were disputed. In the present case, the theoretical time saving is more than one hour, which may justify the use of a private vehicle. In view of the daily distance of 230 km and the bumper-to-bumper traffic on this route, the daily journey to the place of work is considered unsuitable and the associated transport costs are not considered necessary. In this respect, the decision of the lower court is confirmed. Therefore, only the weekly travel costs by public transport and a fictitious rent for the weekly stay in Geneva are deductible. Rejection of the taxpayer's complaint.
- Judgment of 20 September 2019 (2C_869/2018): Direct federal tax and state and municipal taxes 2005-2006 (Nidwalden); supplementary taxes; in connection with a golf project, the complainants were rightly subject to supplementary taxation of advance payments for the project as income from self-employment and a loan claim in assets; dismissal of the taxpayers' complaint.
- Judgment of 27 September 2019 (2C_598/2018): Real estate gains tax; determination of the market value of a property subject to usufruct tax which was contributed as a contribution in kind, whereby the usufruct had been cancelled in the meantime when the tax return was submitted. For the determination of the proceeds, the circumstances at the time of the transfer of the real estate and not those at the time of filing the real estate profit tax return are decisive. The argument of the tax authority that the right of usufruct had already been "no longer in the foreground" at the time of the transfer of the property at the beginning of 2013 does not catch on. There are no indications that the usufructuary would have been willing to waive its right in rem vis-à-vis the AG at the time of the transfer. The findings of the lower court in this regard are therefore not manifestly incorrect. Nor is it objectionable that the lower court reduced the value of the land after realisation according to a private expert opinion in order to take account of the usufruct burden. Dismissal of the tax authority's complaint.
- Judgment of 16 September 2019 (2C_193/2018): Direct federal tax and state and municipal taxes 2012 and 2013 (Berne); withholding tax. In the present case, the task of StV BE in connection with the rejection goes beyond a mere mathematical implementation of the order. For example, the StV BE is required to obtain work reports and determine the days of physical presence in Switzerland. This requires not only an assessment of the evidence already submitted, but also an assessment of the new evidence to be edited. The application at first instance of Art. 74 (3) in conjunction In this context, Article 61(1) of the Tax Appeal Commission of the BE, according to which the decision of the Tax Appeal Commission does not close the procedure either in whole or in part and therefore there is no partial or final decision that can be challenged, does not appear to be manifestly untenable or arbitrary. Dismissal of the appellant's appeal.
Decisions are listed chronologically by publication date.
