Decisions of the Swiss Federal Supreme Court (CW 46 - 2018 )

Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week of 12 - 18 November 2018.

Judgment of 30 October 2018 (2C_543/2018): State and communal taxes of the Canton of Zurich 2005-2009 (additional taxes), direct federal taxes 2005-2009 (additional taxes) and 2010-2015 (ordinary taxes), reconsideration of the freezing order; there are two situations in which the amount of the tax must be secured pursuant to Art. 169 para. 1 DBG: On the one hand, the endangered payment of the tax due and, furthermore, the taxpayer's lack of residence in Switzerland (general reason for seizure); on the other hand, the lack of competence of the Confederation, a canton or a municipality to enforce a public-law claim internationally (special reason for seizure) (E. 2). The required speed of the seizure procedure under tax law has an effect on the level of evidence in that the legally relevant facts merely have to be substantiated. If a precautionary measure such as a seizure within the meaning of Art. 169 DBA is challenged before the Federal Supreme Court, the Federal Supreme Court can only examine the violation of constitutional rights (Art. 98 FSCA). As a result, this also leads to a prima facie examination at the level of the Federal Supreme Court (E. 2.2). The lower instance argues that it would be up to the taxpayer to assert his physical residence in Switzerland in detail and to provide evidence of it as far as possible. Participation in social life in Switzerland is claimed but not substantiated, especially since the taxpayer had already participated in various social events in Switzerland when he was still resident in the UK. Overall, the taxpayers were therefore unable to provide credible evidence of the change of residence from the UK to Switzerland. The conclusion reached in the first instance is not objectionable in the prima facie examination conducted by the Federal Supreme Court with regard to the facts that need to be substantiated (E. 4.1). The appeal concerning the reconsideration of freezing orders proves to be unfounded (E 4.3 and 5). Dismissal of the taxpayer's complaint in so far as it is upheld.

Ruling of 30 October 2018 (2C_891/2018): Direct federal tax and state and municipal taxes 2015 (Graubünden); for the 2015 tax period, the taxpayers declared an imputed rental value of CHF 4,564 and effective maintenance costs of CHF 30,425 for their developed property abroad, resulting in a profit cost surplus of CHF 25,861. Any foreign loss, if this is due to a property-related debt interest surplus (excédent d'intêrets passifs; BGE 140 II 141 E. 4 p. 147) or a profit cost surplus arising on a property (excédent de charges; BGE 140 II 157 E. 7.6.2 p. 165), is not to be taken over by Switzerland when determining the taxable income; it is only to be taken into account when determining the tax rate(Art. 6 para. 3 sentence 3 DBG; ruling 2C_404/2017 of 10 May 2017 E. 3.2). Dismissal of the complainant's appeal.

Judgment of 26 October 2018 (2C_250/2018): Direct Federal Tax and Cantonal and Municipal Tax 2004 - 2006 (Neuchâtel); Appeal against the assessment ruling delayed by two years. The assumption by the tax authorities and the lower court that the tax assessment notice has been served is not arbitrary, as the files show sufficient indications that this is the case. Dismissal of the complainants' appeal to the extent that it is upheld.

Judgment of 29 October 2018 (2C_710/2017): Direct federal tax and cantonal and communal tax 2007 - 2009 (Valais); income, in casu loan interest, is realized as soon as an enforceable claim to it exists or as long as payment does not appear uncertain. In the present case, the borrower could not be qualified as an unreliable creditor as there were no signs that he did not want to or could not pay the interest. Approval of the appeal by the cantonal tax administration.

Judgment of 2 November 2018 (2C_355/2017): Value Added Tax (VAT); refund of VAT levied on radio and television licence fees; application by various television and radio receivers for refund of the RTV licence fee for the period between 1.6.2005 and 1.6.2015. According to the Federal Supreme Court decision of 13. April 2015 (BGE 141 II 182), which states that the RTV licence fee is not subject to VAT, the Federal Office of Communications could have requested the refund of the incorrectly declared VAT for the last five years by invoking article 27 paragraph 2 of the VAT Act. DETEC's action must therefore be dismissed insofar as it relates to the period between 2010 and 2015. For these years, the respondents to the complaint can demand reimbursement of the VAT wrongly levied.

Judgment of 29 October 2018 (2C_695/2017): Administrative assistance (DTA Switzerland - Germany); administrative assistance (DTA Switzerland - Germany); the Federal Supreme Court had to clarify the legal question as to whether a request for administrative assistance which does not contain any information on the account holder - in particular neither name nor address - apart from the account number, meets the requirements under the agreement for the identification of the person concerned. The answer to this question does not arise from BGE 143 II 136 E. 5.3.2. In addition, the Federal Supreme Court will be asked for the first time whether Switzerland, as the requested state, must respond to a bundle of individual requests in which the requesting state identifies the persons concerned by administrative assistance only by means of an account number. It is clear from the request for administrative assistance that the Federal Central Tax Office of the Federal Republic of Germany (BZSt) intends to use the requested information primarily in criminal tax proceedings and has no further knowledge other than the account number and the amount of the assets invested. In addition, the fundamental question of the existence of a "fishing expedition" and whether such a "bundled" request for administrative assistance is a group request or an individual request arises (E. 1.3.1). The Federal Supreme Court concludes that the FCA list request to be assessed in this case is not a group request, but an individual request in which identification is not by name, but by account number. There is no group request if a certain number of persons are identified on the basis of account numbers, especially since these persons can be identified individually by the respective account number. The fact that an account number may be assigned to more than one person does not change this. In contrast to a defined pattern of behaviour, an account number is a more strongly identifying feature (E. 4.4 f.). However, this individual request should be regarded as part of a list request, which focuses on a number of persons, of whom only a few details - here essentially the account numbers - are known (E. 4.5). The requirement for identification by the requesting State is thus fulfilled and the request contains all the information required under the Convention (E. 4.5.2). If an individual request without indication of name (as here) is made in the context of a list enquiry or is to be regarded as part of a list enquiry, the difference to a group request appears to be minor. For the sake of consistency, the criteria developed by the Federal Supreme Court in connection with group requests should therefore be used to clarify the question of inadmissible searches for evidence. Contrary to the opinion of the FTA, case law requires evidence of facts indicating unlawful conduct by group members (E. 5.2). The BZSt has provided this proof and an inadmissible search for evidence must be denied (E. 5.3.1). The taxpayer's complaint is dismissed.

Judgment of 6 November 2018 (2C_924/2018): Direct Federal Tax and Cantonal and Municipal Tax 2012 - 2014 (Geneva); the previous instance correctly applied the applicable law, in particular Art. 113 (3) and 133 (3) DBG and the relevant case law on this matter. It duly found that the complainant had not demonstrated that it had not been in a position to submit the tax returns for the tax periods 2012 to 2014 in due time or to appoint a substitute for this purpose. It follows that the lower instance decided, without infringing federal law, that the deadline for submission could not be restored (E. 5.1). The previous instance also correctly interpreted Article 147(1) DBA and Article 147(2) DBA, according to which an appeal is excluded if the taxpayer invokes reasons which he could have already invoked in the ordinary procedure if he had exercised all reasonable care (E. 6.1). In its ruling 2A.248/2003 of 8 August 2003 on Art. 133 and 140 DBG, the Federal Supreme Court recalls that the DBG comprehensively regulates the calculation of time limits, so that a deviating cantonal regulation is inadmissible. Art. 41 (3) of the Geneva Tax Act of 4 October 2001 has the same content as Art. 133 (3) DBG, so that the same considerations leading to the rejection of the appeal in the area of direct federal tax also apply to cantonal and municipal taxes (E. 8.1). The appeal is dismissed to the extent that it is admissible.

Non-occurrence decisions / inadmissible complaints: