Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week of 22 - 28 November 2021.

  • Judgment of 10 November 2021 (2C_402/2021): VAT 2011-2015; Place of supply of services; The issue in dispute and to be examined was whether the advisory services provided by the law firm to its clients, which were offshore companies, were taxable services abroad. In VAT Industry Info No. 14, the FTA states that the tax treatment of services provided to (foreign) offshore companies ultimately depends on the domicile of the holders of the majority of the participation rights in such companies (usually the beneficial owners). According to Art. 68 para. 2 VAT Act, holders of professional secrecy are obliged to produce books or records, but may cover the name and address, but not the domicile or registered office of the clients or replace them with codes. This is what A. AG did, however. Thus, the Federal Administrative Court rightly confirmed the taxable services provided in Switzerland, as there was no evidence that the recipients of the services were domiciled abroad. Dismissal of the taxpayer's appeal.
  • Ruling of 25 October 2021 (2C_179/2021): State and communal taxes, direct federal tax 2011 (Fribourg); Limitation of assessment; The right of the competent canton to assess the direct federal tax is subject to a limitation period of five years after the end of the relevant tax period (Art. 120 para. 1 DBG; relative statute of limitations); If the tax authorities cannot prove that the ruling was issued (due to lack of dispatch by registered mail), there is not only a formal defect such as an incorrect instruction on the right of appeal, but it did not take place at all. In such a case, the nullity (as opposed to the mere contestability) of the order must be assumed as an exception. The latter is legally non-existent and consequently cannot have any effect. There are no other legally sufficient acts to interrupt the statute of limitations. The taxpayer's appeal is upheld.
  • Judgment of 27 October 2021 (2C_788/2021): Staats- und Gemeindesteuern 2017 (Aargau); Fristwiederherstellung; the lower court correctly ruled that the taxpayer could not assert any qualified grounds for restoring a time limit in the present case. Furthermore, Art. 1 of the Ordinance of 20 March 2020 on the Standstill of Time Limits in Civil and Administrative Proceedings for the Maintenance of Justice in Connection with the Coronavirus (COVID-19; RO 2020 849) proves not to be applicable to the relevant time limit. Dismissal of the taxpayer's appeal.
  • Judgment of 2 November 2021 (2C_738/2018) - intended for publication: Residence permit, chancery fee; approval of the appeal of the person liable for the tax.
  • Judgement of 12 November 2021 (2C_1035/2020): Direct federal tax, cantonal and communal tax 2014-2015 (Geneva); A. is the owner of a property in Winterthur, which he rented out to D. AG, which he indirectly held to 48%. In addition, A. was a member of the board of directors of D. AG. For years, he waived the agreed and accrued rent in arrears. The other (indirect) majority shareholder of D. AG had made his financing of D. AG dependent on D. AG not having to pay rent. It was disputed whether the payment of the rent had to be considered uncertain, which in light of the case law on income realisation would have the consequence that the income (rent) would not be realised. The over-indebtedness of D. AG would not have led to such uncertainty in the present case, as it was always provided with liquidity by its group companies. However, A. had to deal with a recalcitrant debtor due to the majority situation and the attitude of the majority shareholder regarding the payment of rent. Accordingly, the payment of the rent was considered uncertain. The income was therefore not realised. The treatment of the debt waiver at the level of the company is therefore irrelevant, contrary to the lower court. Dismissal of the taxpayer's appeal and referral back to the lower court.

Non-occurrence / Revision:

Decisions are listed chronologically by publication date.

Tax topics covered in this post:
Value Added Tax (VAT)
Income Tax
Other Taxes