Decisions of the Swiss Federal Supreme Court (CW 43 - 2021)

Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week of 25 - 31 October 2021:

Rulings of 5 October 2021(2C_27/2021 and 2C_29/2021): VAT 2010-2014; The remuneration between closely related persons must correspond to the third-party price pursuant to Art. 24 para. 2 VAT Act. In the present case, the hotel was leased by the taxpayer and its sister company to a closely related person (subsidiary of one sister company), which justifies a deviation from the actual remuneration based on the cited legal basis. In principle, the principles of discretionary assessment apply analogously to the determination of the rent; in this context, there is full cognition in the review of the choice of an appropriate valuation method; however, the Federal Supreme Court imposes a certain restraint on itself. The actual estimate based on the selected valuation method is then only subject to an arbitrariness review. The taxpayer is unable to demonstrate arbitrariness in the present case. Dismissal of the taxpayer's appeal.
Judgment of 27 September 2021 (2C_489/2021): Thurgau state and municipal taxes and 2019 direct federal tax: in the present case, the application for free legal assistance was rightly dismissed because the neediness was not shown. Dismissal of the taxpayer's appeal.
Ruling of 5 October 2021 (2C_891/2020): VAT; the input tax deductions in connection with the sale of treasury shares were in dispute. The FTA took the position that the sale of treasury shares generated turnover that was exempt from VAT and that there was therefore no entitlement to an input tax deduction. The lower court was of the opinion that this was not a supply of services in the VAT sense, but rather a contribution to a company, and thus there was no remuneration. The sale of own shares had the same economic effect as a capital increase. The Federal Supreme Court took the same position as the lower court and stated that it is not evident why the funds that accrue to a company limited by shares for the sale of its own shares should not be a contribution to a company pursuant to Art. 18 para. 2 lit. e VAT Act, irrespective of the economic content of this transaction. It is not a tax-exempt service. Consequently, neither an input tax correction under Art. 29 para. 1 VAT Act nor an input tax reduction under Art. 33 para. 2 VAT Act can be considered. Dismissal of the FTA's appeal.
Judgement of 05 October 2021 (2C_1016/2019): State and municipal taxes 2015 (Geneva); A., Swiss citizen, resident in France, has limited tax liability due to 6 properties in the canton of Geneva and filed a tax return. Art. 60 StG GE provides that for taxpayers domiciled in Switzerland, the total amount of property tax, including cantonal and communal surcharges, may not exceed 60 per cent of the taxable net income. It was of the opinion that this provision violated the FMPA and also Articles 8 and 9 of the Federal Constitution. The Federal Supreme Court held that the situation was not the same for taxpayers with limited tax liability on the one hand and taxpayers with unlimited tax liability on the other. The fact that A. cannot invoke the provision of Art. 60 of the Federal Tax Act does not violate either the FMPA or Art. 8 and 9 of the Federal Constitution. Dismissal of the taxpayer's appeal.

Non-occurrence / administrative assistance: