Decisions of the Swiss Federal Supreme Court (CW 52 - 2022)

Overview of tax law decisions of the Swiss Federal Supreme Court published between December 26 - 31, 2022:

Judgment of 6 May 2022 (2C_977/2020) - intended for publication: Staats- und Gemeindesteuern (Thurgau), Quellensteuer, 2017; The taxpayer definitively moved away from Switzerland (to Austria) as of mid-2017 and concluded his (unlimited) tax liability in Switzerland as of June 30, 2017. On September 19, 2017, the taxpayer started a temporary gainful activity in the Canton of Thurgau, which ended on December 27, 2017, and thus became temporarily subject to limited tax liability in Switzerland. For this work activity, the taxpayer is indisputably taxed in the ordinary procedure (not at source). What was disputed and to be examined was the rate determination relevant for a limited tax liability during the year on the basis of national law (Art. 40 DBG) as well as the Agreement on the Free Movement of Persons. According to the Federal Supreme Court, the income in the Canton of Thurgau within the meaning of Art. 40 para. 3 DBG is to be extrapolated to twelve months - but does not relate to periods in which the taxpayer was not subject to Swiss tax jurisdiction. According to the Federal Supreme Court, the situation of the non-resident taxpayer is not comparable to that of a resident person until the commencement of the cross-border activity and a differentiation is permissible under the freedom of movement law in this respect. Accordingly, the taxpayer is not entitled to an ordinary assessment for the period between the departure as of the end of June 2017 and the commencement of gainful employment on September 19, 2017 and, accordingly, is not entitled to have this period taken into account for the determination of the tax rate. According to the Federal Supreme Court, the extrapolation of the tax rate pursuant to Art. 40 para. 3 DBG also does not constitute discrimination under the law on freedom of movement. Dismissal of the taxpayer's appeal.
Judgments of 08 December 2022(2C_973/2021; 2C_975/2021; 2C_977/2021; 2C_981/2021; 2C_982/2021; 2C_983/2021; 2C_986/2021; 2C_989/2021): Administrative assistance DTA CH-FR; The facts are the same as in the judgment BGer 2C_772/2021 of 08 November 2022, which is intended for publication (see our article of 04 December 2022). However, since the entry decision in the judgments dealt with here had already been issued, the present case was examined substantively. The dispute is whether the FTA may notify the beneficial owner of a bank account of the final ruling by publication in the Federal Gazette if it does not know that the company which is the account holder has appointed a representative in Switzerland. The complainants raise the question whether the FTA cannot be expected to contact the representative in advance to find out whether he also represents the beneficial owner of the account. This question has already been dealt with in judgment 2C_772/2021 of November 8. The present request for administrative assistance was the subject of the landmark judgment BGE 146 II 150 of 26 July 2019 (see our articles of 27 July 2019 and 08 December 2019). Art. 14 para. 3 - 5 StAhiG provides for a special type of notification for data subjects residing abroad. In the present case, the FTA did not know the names of the persons concerned by the request for administrative assistance, since they were identified in the request not by name and address, but by account numbers. The information on the residence of the person entitled to appeal is either contained in the administrative assistance request or in the documentation that the information holder sends to the FTA. In either case, the AIAG does not impose any obligation on the FTA to verify or investigate this information, in particular to determine whether the persons associated with a residence abroad do not include some who now reside in Switzerland. Also, if a person entitled to appeal has appointed a representative who can accept service in Switzerland, the AIAG does not require the FTA to contact that representative to ask if he or she does not represent other persons entitled to appeal in the same proceeding. For persons who are associated with a domicile in France and have not indicated an address for service in Switzerland, direct service is in principle possible pursuant to Art. 17(3) MAC, but only for tax periods beginning on or after January 1, 2018. The publication of the final ruling in the Federal Gazette was therefore proper. Furthermore, it should be noted that the beneficial owner of a bank account who does not file an appeal against a final ruling duly served on her has the effect that the final ruling becomes legally binding. Thus, she cannot file an appeal against the same ruling that is later issued to the holder of the bank account. The fact that the FTA did not serve the final rulings on everyone at the same time is not objectionable. There is no procedural rule prescribing a specific order. Dismissal of the appeal of taxpayers A., B. and D. the legal successor of C.
Judgment of December 12, 2022 (2C_403/2022); Value added tax, tax periods 2012 to 2016; It is disputed whether or not the ten vehicles owned by the taxpayer were privately "at the disposal" of the managing director and his father in the relevant tax periods 2012 to 2015 and 2016. The Federal Supreme Court holds that the managing director of the taxpayer is a collector who owns a part of his vehicle collection privately, which is undisputed, and has purchased vehicles in the stock corporation controlled by him. In summary, there would therefore be a "making available" of the ten vehicles to the managing director in the sense of a VAT-relevant service relationship between the taxpayer and the managing director (Art. 18 para. 1 VAT Act in conjunction with Art. 3 subpara. c VAT Act). The value added tax on the service of "making available" the vehicles is therefore assessed according to the third party price pursuant to Art. 24 para. 2 VAT Act. The Federal Supreme Court comes to the conclusion that the relevant rental fee at the third party price has been properly calculated by the FTA by means of the published "full cost calculation". The appeal of the FTA is upheld. The judgment A-4191/2020, A-4193/2020 of April 6, 2022 is accordingly annulled and the two objection decisions of the FTA of June 19, 2020 are confirmed.
Judgment of November 17 (2C_282/2022): State and municipal taxes and direct federal tax 2016-2017 (Nidwalden); The dispute is whether the formation of "provisions for tree maintenance" made by the complainant in its 2016 and 2017 annual financial statements and recognized in the income statement is justified in business terms. Following an objection, the lower court considered the formation of provisions amounting to 5% of the complainant's annual turnover to be justified in business terms. The complainant criticized the fact that the general terms and conditions of business could not simply be used as a basis, but that the actual circumstances should be taken into account. The granting of the lump-sum provisions neglects the fact that the teak plantations were not located in Switzerland. The risk of total loss as well as the risk due to possible unsaleability of the trees is considerably higher than would be assumed under Swiss conditions. However, the costs incurred during the rotation period in connection with the management of the tree plantations are typically period-related costs and the fact that the complainant takes over the management of the trees in the contracts concluded with the investors in return for a 15% share in the net sales proceeds does not change anything. As justification for the granting of the lump-sum provision, the tax administration, the lower court and also the complainants rather refer, on the one hand, to the risk of the complainant resulting from the obligation assumed by it vis-à-vis the investors according to its General Terms and Conditions and, on the other hand, the risk of a total loss is thereby also borne. The granting of a lump-sum guarantee provision for the fact that failures are always to be expected to a not insignificant extent when trees are planted is in order. That the tax administration has estimated this at 1% of the annual turnover is not to be criticized. The situation is different with the lump-sum provision for unsaleability after expiration of the contract. No provision recognized for tax purposes can be formed for a risk that lies so far in the future. Dismissal of the taxpayer's appeal.
Judgment of 15 December 2022 (2C_122/2022): Direct federal tax, cantonal and communal taxes 2008-2017; voluntary disclosure; back taxes and interest on back taxes (Geneva); In dispute was namely the interpretation of the criterion of the first time in the case of a voluntary disclosure without penalty. The waiver of criminal prosecution according to Art. 175 para. 3 DBG leads to the fact that the taxpayer who makes a first voluntary disclosure is not found guilty. Consequently, the acceptance of a first voluntary disclosure already made in the sense does not depend on the tax authority declaring the taxpayer guilty and thereby waiving a penalty. It is sufficient that the tax authority, without initiating criminal proceedings, issues a ruling of non-punishment on the basis of Art. 175, para. 3 DBG, so that a subsequent self-disclosure is subject only to mitigation of the penalty, but not to exemption from penalty. It should be noted that the absence of a penalty exemption order, in particular for the reason that after examination of the voluntary disclosure it is determined that no taxes have been evaded or that the statute of limitations has occurred, leads to a later voluntary disclosure being considered as a first-time voluntary disclosure. Against this background, the lower court correctly assumed that this was already the taxpayer's second voluntary disclosure. The post-tax procedure is then not equivalent to a new complete examination of the assessment, but refers only to points for which the tax authority has new information. The new arguments that the taxpayer may raise in order to reduce the tax burden in the post-tax procedure are limited: The taxpayer may not use the post-tax proceedings to freely revert to the entire assessment; subject to manifest error, the taxpayer may only request that the assessment be reopened in its favor on the points that are currently the subject of the post-tax. The deduction of the debt for the after-taxes from the first voluntary declaration is not one of them, nor does it constitute a manifest error: When the after-tax rulings were issued at that time, neither the taxpayers nor the Geneva tax authorities knew that the refusal to deduct debts from after-tax bills was contrary to federal law. This lack of knowledge does not constitute a manifest error, since the correction was made by a ruling of the Federal Court (independent of the case). The calculation of the interest on arrears as well as its temporal allocation with regard to deductibility are then also not objectionable. Dismissal of the taxpayer's appeal.
Judgment of December 13, 2022 (2C_733/2022): Post-tax and fine proceedings 2007-2015 Geneva as well as direct federal tax; all complaints (arbitrary determination of the facts, violation of the right to an independent court as well as the violation of federal law, etc.) were dismissed insofar as they were addressed at all; dismissal of the taxpayer's appeal.
Judgment of 15 December 2022 (2C_846/2022): VAT 2012-2015; Input tax deduction, tax avoidance; The invoicing and related company had insufficient equity and went bankrupt relatively quickly, had no fixed assets or labor force that could have covered more extensive tasks than those of the taxpayer. Moreover, the deducted input tax was not effectively transferred to the FTA by the invoicing company, which meant a tax saving. Thus, the input tax deduction was rightly denied. Dismissal of the taxpayer's appeal.
Judgment of December 7, 2022 (2C_633/2022): Direct federal tax (Vaud); free litigation; dismissal of the taxpayer's appeal.
Judgment of December 7, 2022 (2C_690/2022): Direct Federal Tax (Vaud); The taxpayer's appeal against the lower court's decision not to accept the appeal due to non-payment of the advance on costs is clearly unfounded.