Overview of the tax law decisions of the Swiss Federal Supreme Court published during the week of 8 - 14 February 2021.

  • Judgment of 17 December 2020 (2C_974/2019): Direct Federal Tax and State and Municipal Taxes (Vaud and Fribourg); at issue is whether the Vaud Cantonal Court was correct in confirming that the amount of options exercised by the taxpayer was included in taxable income in 2005 - 2007. These options were already taxed by the Canton of Fribourg at the time of grant in 2001 - 2003 due to an agreement with the taxpayers. The law applicable in the years 2005 - 2007 is applicable. These options were granted on a personal basis, are non-tradable, non-transferable and subject to a vesting period. In case of termination of employment, the employee had a period of 3 months to exercise them, failing which they were forfeited. The options in dispute can therefore be qualified as a mere expectancy at the time of grant, which precludes taxation at that time. The present constellation may lead to a possible double taxation in the intercantonal relationship. In the present case, however, there is no conflict of tax sovereignty and the tax period is not identical. It is therefore not a priori a case of prohibited intercantonal taxation. In BGE 83 I 184, the Federal Supreme Court held that a lack of identity of the tax period is irrelevant in a case where each canton has chosen a different date of income realization. Since there was some uncertainty under the old law as to the time of realization of income from employee stock options, it is justified to consider this constellation as a case of prohibited intercantonal double taxation. In the case of direct federal tax, the canton of Vaud has to credit for 2005 - 2007 the taxes already paid in respect of the options as of 2001 - 2003. In the case of state and communal tax, Fribourg must refund the taxes paid in respect of the options as of 2001 - 2003.
  • Judgment of 19 January 2021 (2C_486/2020): Direct federal tax and state and municipal taxes 2012 (Geneva); the subject matter of the dispute is the method of calculating the imputed rental value of a property located abroad. A flat-rate calculation method for properties located in countries where there is no imputed rental value taxation is not contrary to federal law. This does not exclude the possibility of applying a flat-rate calculation method even if the country has a taxation of the imputed rental value. In Spain, a tax is levied on the imputed rental value, which is why the lower court should have examined whether this imputed rental value, calculated according to Spanish criteria, is in conformity with the law. Dismissal of the taxpayer's appeal and referral back to the lower court.

Decisions not to enter, etc.:

Decisions are listed chronologically by publication date.

Tax topics covered in this post:
Income Tax