Decisions of the Swiss Federal Court (CW 49 - 2020 )

Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week from 30 November 2020 - 6 December 2020.

Judgment of 16 November 2020 (2C_703/2019): Administrative assistance DBA (CH-IN). In an application dated 22 June 2016, the Indian tax administration submitted four requests for administrative assistance to the FTA, as several undeclared bank accounts were suspected, including one in Switzerland at Bank X. The Indian authorities wanted information on all accounts in the period from 1 April 1999 to 31 March 2016. The dispute is whether the lower instance was right to decide that no administrative assistance should be granted with regard to information relating to the period from 1 April 2015 to 31 March 2016. The principle of subsidiarity is not complied with if a request for administrative assistance was submitted before the deadline for submitting the tax return for this period. The question of compliance with the principle of subsidiarity is closely linked to the principle of trust. However, this does not prevent the FTA from asking the requesting state to provide clarification if Switzerland has serious doubts about compliance with the principle of subsidiarity. The deadline for the tax declaration in India had not yet expired for this period. The FTA was therefore obliged to ask the requesting authority for clarification, which did not happen. The Federal Administrative Court rightly deleted the information for the period in question. Rejection of the FTA's appeal.
Judgement of 18 May 2020 (2C_1028/2019): Direct Federal Tax and State and Municipal Taxes 2015 (Lucerne); Offsetting of profits due to underpriced services to the shareholder of a joint stock company; When a profitable medical practice is sold by the sole shareholder and employee (physician), the original goodwill (e.g. patient base) normally follows the company sold and is not attributable to the selling physician - even if it is a so-called personal goodwill; if the physician transfers the patient base to another company for which he is newly active, without compensating the sold AG for the abandonment of the patient base accordingly, a hidden profit distribution (by means of a withdrawal of the goodwill) to the selling sole shareholder is offset; in addition, the physician has violated his duty of loyalty as a member of the board of directors towards the sold AG by depriving it of its entire economic basis; dismissal of the complaint of the taxable AG.
Judgement of 7 August 2020 (2C_299/2019): Direct federal tax and state and municipal taxes 2007-2012 (Valais): Commercial property trading; The X brothers acquired an undeveloped plot of land by means of an advance inheritance. During construction, three apartments were sold, two apartments are occupied by them and four apartments were rented. The tax authorities qualified the sale and rental as income from self-employment and levied real estate gains tax on the basis of the transfer from private to business assets. Due to long-term planning and external financing, the taxpayer's complaint regarding the sale proved to be unfounded. With regard to the letting, the decision on the supplementary factual determination is rejected.
Judgement of 10 November 2020 (2C_847/2020): Direct federal tax and state and municipal taxes 2017 (Zurich); Restoration of time limits for discretionary assessments; The prompt proof of a non-culpable prevention of compliance with the time limit (by means of a medical certificate) could not be provided; dismissal of the taxpayer's complaint.
Judgment of 10 November 2020 (2C_877/2020): State and municipal taxes 2014 - 2018 (Grisons); withholding tax and tax fines; free litigation and deadline recovery: the company had not submitted any withholding tax statements for ten half-yearly accounting periods and was fined; the legal entity was unable to prove that its only asset was in dispute and that the beneficial owner(s) were also penniless; the taxpayer's appeal was dismissed‍

Judgement of 4 November 2020 (2C_523/2020): State and municipal taxes and direct federal tax 2005-2008 (Grisons); the taxpayer is unable to prove that the freezing order issued by the tax authority despite the shares deposited as a pledge would be constitutionally untenable due to the move abroad; dismissal of the taxpayer's appeal

Judgment of 09 November 2020 (2C_547/2020): Administrative assistance DBA (CH-RU). The Russian tax administration had requested various information from the FTA on Russian company B. in connection with royalty payments to an account held by A. It is disputed whether the information on F. and G. is likely to be significant for the taxation of B. F. is listed in the address of the bank statements of the bank relationship of interest of A. and G. is the authorized signatory of the account in question. There is therefore a reasonable possibility that this information is likely to be material. Blackening the names of F. and G. is out of the question. Furthermore, the question arises whether F. and G. must be informed by the FTA about the administrative assistance procedure. Since third parties are protected by the (personal) principle of speciality, the mere fact that they are mentioned in the documents intended for transmission does not lead to their obvious right to appeal and thus to an obligation to notify on the part of the FTA. However, the FTA must draw the attention of the Russian authorities to the principle of speciality. Approval of the FTA's appeal.
Judgment of 10 November 2020 (2C_410/2020): Causal charges (hospital charges); the question was whether disputes relating to hospital charges fell within the scope of Art. 6(b) of the Directive. 1 ECHR; According to the relevant cantonal law, the present case concerns a causal charge in the form of a user charge; The unpredictability of the amount of the claim does not prevent it from being qualified as a user charge; The existence of a public law claim (user charge) precludes the opening of the scope of application of Art. 6 No. 1 ECHR; Tax obligations are - subject to tax criminal law - in principle excluded from the scope of application of Art. 6 ECHR; This primarily affects tax obligations in the sense of tax law; The present public-law claim is comparable with a civil-law claim for treatment in a hospital organised under private law, there is therefore an obligation under civil law i.S.v. Art. 6 No. 1 EMRK; The party liable to pay the levy has a right to a public and oral hearing; Approval of the complaint of the party liable to pay the levy

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