Overview of the tax rulings of the Swiss Federal Supreme Court published between January 29 and February 4, 2024:
- Judgment of December 18, 2023 (9C_732/2022) - intended for publication: Direkte Bundessteuer und Staatssteuer (Solothurn) 2018; the dispute was whether the premiums for daily sickness benefit insurance fall under the general insurance deduction or are to be considered profit costs, the latter because their payment is not voluntary due to the CLA applicable in the hospitality industry and declared as generally binding; according to the Federal Supreme Court, the criterion of the (lack of) voluntariness of the premium payments is central; since the daily sickness benefit insurance was mandatory pursuant to the CLA, the premiums are not covered by Art. 33 para. 1 lit. g DBG. As the daily sickness allowance insurance was mandatory under the CLA, the premiums are not voluntarily paid insurance premiums under Art. 33 para. 1 lit. g DBG, but rather profit costs; specifically, the premiums fall under "other professional expenses", for which flat rates apply, whereby proof of higher costs is possible; the taxpayer did not provide proof that the flat rate for professional expenses had already been exhausted with other deductions; dismissal of the taxpayer's appeal.
- Judgment of January 4, 2024 (9C_271/2023): State and municipal taxes (Solothurn) from 2021; an independent public-law institution of a Solothurn municipality was granted tax exemption with regard to certain activities in the area of electricity and gas supply, as the institution fulfilled sovereign tasks prescribed by cantonal or federal law in this respect (tax exemption was denied for the other areas of activity); the establishment contested the constitutionality of the new Solothurn provision on the tax exemption of public-law establishments, which the lower court rejected on the grounds that the fundamental rights of public-law establishments can only be affected in exceptional cases; according to the Federal Supreme Court, the establishment is not subject to the constitutionality of the new Solothurn provision on the tax exemption of public-law establishments. According to the Federal Supreme Court, in those areas in which it acts like a private market participant, the institution must also be treated as such, which means that its fundamental rights must be observed; partial upholding of the institution's appeal and referral back to the lower court.
- Judgment of January 5, 2024 (9C_391/2023) - for publication: Direkte Bundessteuer und Staats- und Gemeindesteuern (Bern) 2018; The dispute was whether or not the amount for the share of the renovation fund (paid by the seller) should be deductible as property costs in accordance with Art. 32 para. 2 DBG. In the judgment 2C_652/2015, 2C_653/2015 of August 25, 2016, the Federal Supreme Court ruled that, from the perspective of the individual condominium owner, the payment of an advance or contribution to the renewal fund constitutes a definitive expenditure. However, it is doubtful, at least from a civil law perspective, whether it can be assumed that the condominium owner has made a definitive expenditure. In contrast to the taxpayers in proceedings 2C_652/2015, 2C_653/2015, the complainant in the present case is not asking to be allowed to deduct the maintenance costs if the renewal fund makes the relevant expenditure. Rather, as the buyer of a condominium unit, he wants to be able to deduct from his taxable income the amount that he paid to the seller for the share of the renewal fund. Contrary to the complainant's statements, however, such a payment cannot be equated with maintenance costs from the outset. It is the consideration paid by the buyer to the seller for the sale of movable assets in the form of the share in the renewal fund. Dismissal of the appeal by taxpayer A.
- Judgmentof January 22, 2024 (9C_632/2023): Direct federal tax 2019 (Zurich); In 2019, the taxpayer owned eight properties in sole ownership and two further properties together with another person in joint ownership as part of a simple partnership. The taxpayer acquired the properties below market value and without using any significant equity capital by means of mortgages, with only the hidden reserves on the properties serving as collateral for the bank. It was disputed and had to be examined whether the sale of a property was part of the taxpayer's self-employed activity (real estate dealer) or whether it was a simple management of private assets. In the present case, the Federal Supreme Court came to the conclusion that the acquisition of targeted properties using specialist knowledge (taxpayer has been active in the real estate sector for years as a master painter and co-partner) and below the market value with borrowed capital in order to subsequently generate profitable income - by renting or selling - was rightly qualified by the lower court as a planned, systematic and profit-seeking procedure and thus as self-employment. Dismissal of the taxpayer's appeal.
- Judgment of January 8, 2024 (9C_207/2023): Withholding tax; In January 2011, B. Ltd. (Marshall Islands) sold its participation in D. SA to its subsidiary A. SA (taxpayer) for CHF 50,000. In April 2011, A. SA sold the same participation to C. Sagl for CHF 730,878. The purchase price claim was initially booked to A. SA, but from January 1, 2012 to B. Ltd. and ultimately paid to the latter. The FTA subsequently demanded withholding tax from A. SA in the amount of CHF 680,878 due to a concealed profit distribution, but this was overturned by the Federal Administrative Court. The Federal Administrative Court argued that in this case a global view had to be taken of the sale to A. SA at a lower price shortly beforehand and that a hidden profit distribution was therefore to be assumed. However, the Federal Administrative Court did not sufficiently examine whether the link between the transactions was actually documented. If so, the existence of tax avoidance would then have to be examined. The FTA's appeal was upheld and the case was referred back to the lower court for further clarification of the facts.
Decisions are listed chronologically by publication date.