Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week of 3 - 9 February 2020.

  • Judgment of 16 January 2020 (2C_681/2018; 2C_692/2018): Direct federal, cantonal and communal taxes 2011 (Geneva); the taxpayer held 45% of B SA and founded C SA. He transferred 50% of C SA to his former partner/child mother in exchange for a loan at nominal value. At the same time, they concluded an asset management agreement which entrusted the taxpayer with the management of the C-shares. He then sold a block of shares in C SA of 8.1% in three further transactions. The taxpayer then transferred his B shares to C SA at a price higher than their nominal value. The controversial question was whether a transposition was present. The 50% threshold required for the transposition in the acquiring company was not (no longer) given in this case, and it had to be examined whether tax avoidance or simulation was involved. This was denied by the Federal Supreme Court because, according to the binding findings of the lower court, the subjective element could not be proven - the taxpayer had always claimed that he was concerned with the financial security of his family.
  • Judgment of 17 January 2020 (2C_929/2019, 2C_930/2019): Direct federal, state and local taxes 2013 and 2014 (Basel-Landschaft); The complainant was a shareholder (45% stake) and Chairman of the Board of Directors of C AG with sole signing authority and at the same time owner of sole proprietorship A, which is not entered in the Commercial Register. For years, C AG had been the sole client of the sole proprietorship. The tax administration concluded that the complainant was employed by C AG and did not carry out any self-employed activities. According to the Federal Supreme Court, after a comprehensive overall assessment of circumstantial evidence, the lower court rightly qualified the complainant's activity as Managing Partner of C AG as an employed activity within the meaning of Article 17.1 of the DBG. Rejection of the taxpayer's complaint.
  • Judgement of 23 January 2020 (2C_1043/2019): Direct federal tax and state and municipal taxes 2015-2016 (Ticino); Definitive assessment ruling; Failure to lodge an appeal within the time limit; The Federal Supreme Court confirmed the decision of the last cantonal instance: The appeal against the definitive assessment rulings 2015 and 2016 had been lodged after expiry of the statutory time limits for lodging an appeal and was therefore inadmissible. Rejection of the taxpayers' complaint.
  • Judgment of 24 January 2020 (2C_467/2019): Confirmation of the case law according to which profits from the sale of agricultural and forestry land are only attributed to taxable income up to the amount of the investment costs, whereby according to the Federal Law on Rural Land Law (BGBB) it must be assessed whether a plot of land is to be regarded as "agricultural and forestry land". Dismissal of the appellants' appeal.
  • Judgment of 13 January 2020 (2C_749/2019): In the case of a shell company, the loss carryforward is excluded. In the present case, the previous instance cannot be accused of arbitrariness if it finds that there is a shell company in a company whose shares were sold by a majority, whose assets consisted of liquid funds and which was no longer active. Dismissal of the appellant's appeal.
  • Judgment of 22 January 2020 (2C_793/2019): Real estate gains tax - deferral or exemption. Geneva legislation (Art. 81(3)(c) LCP-GE) provides for a tax exemption (exonération) in the event of a change of ownership by inheritance. On the other hand, Article 12(3)(a) of the StHG merely provides for a tax deferral in such a case. The cantonal provision is contrary to harmonisation and the StHG is directly applicable since 1 January 2001. In the present case, the property was acquired in 1971; in 1997, its owner died and left no legal heirs but only a legatee; the legatee (complainant) was only entered in the land register as owner in 2006. In 2017, the complainant agreed to the cancellation of an easement for a fee. The question arises as to when the complainant became the owner in order to determine which of the following two solutions applies: (1) transfer of ownership in 1997; cantonal law applicable, capital gain from 1997 onwards taxable at 10% with a decisive period of ownership of 19 years; (2) transfer of ownership in 2006 upon entry in the land register; StHG applicable; inheritance is deemed to be tax deferral; decisive period of ownership of 45 years (1971-2017) does not lead to taxation pursuant to Art. 84 para. 1 lit. g LCP-SF. According to Art. 656 of the Swiss Civil Code, the acquisition of real estate requires registration in the land register. In the case of inheritance, however, the purchaser acquires ownership even before registration, but cannot dispose of the property in the land register until registration has taken place. Thus, the transfer of ownership already took place with the death of the testator in 1997, which is why (exclusively) cantonal law and therefore solution 1 applies. Dismissal of the appellant's appeal.
  • Judgment of January 16, 2020; 2C_518/2019: French company with branch office in Zurich, namely active in arbitrage business (reverse cash and carry). The branch office had requested the refund of withholding tax for 2008 and 2009 based on the VStG. This was denied by the FTA in 2011 and by the Federal Supreme Court in November 2015 by a large majority, as the shares were not attributable to the branch. At the beginning of 2016, the head office applied for a partial refund of the withholding tax based on the DTA-FR. It was disputed whether the claim had already been forfeited. The relevant time limit is three years (however, the derivation under the DTA-FR is different from that in BGer 2C_249/2018). The refund claims filed in 2011 under the DTA are not relevant in the present case, as they concerned a different context. At that time, the company would have been free to file the refund applications at the same time (and with mutual reference) or to file another application after the decision of the FTA in 2011 (possibly with a request for suspension). It would also have been conceivable to restore the deadline within the meaning of Art. 24 para. 1 VwVG after the Federal Supreme Court ruling in 2015. Since the Company has also missed this (30-day) deadline, there is no need for a more detailed examination of this aspect; the Company's appeal is dismissed.
  • Judgment of 10 January 2020 (2C_1/2019): Cantonal and municipal taxes and direct federal taxes in 2014 and 2015 (Fribourg); the automatic increase of the imputed rental value by 10% stands up to a constitutional review in the present case; dismissal of the taxpayers' appeal.
  • Judgment of 23 January 2020 (2C_11/2020): Direct Federal Tax and State and Municipal Taxes of the Canton of Lucerne (2014): The property in dispute was encumbered with a profit claim in favour of the co-heirs at the time of sale. As a result, the lower court did not allow the claim of the co-heirs totaling Fr. 86,738.40 as an expense (business assets) or as a deduction (personal assets). This is unobjectionable under federal law. Whoever sells an object of the business assets and must compensate co-heirs or other third parties with the countervalue, makes a tax-neutral private withdrawal from the business assets to the corresponding extent, with the help of which he subsequently makes an equally tax-neutral debt repayment in the private assets. Dismissal of the complainants' appeal.

Non-occurrence decisions / inadmissible complaints:

Decisions are listed chronologically by publication date.

Tax topics covered in this post:
Income Tax
Profit Tax
Property Gains Tax
Value Added Tax (VAT)