Decisions of the Swiss Federal Court (CW 7 - 2018 )

Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week of 12 - 18 February 2018.

Judgment of January 23, 2018 (2C_973/2017, 2C_974/2017): Direkte Bundessteuer und Staats- und Gemeindesteuern 2004 - 2010 (Thurgau ); Nachsteuern. Nachdem die kantonale Steuerverwaltung gegenüber dem Steuerpflichtigen ein Nachsteuerverfahren eingeleitet und diesen aufgefordert hatte, bislang nicht deklarierte Umsätze zu bezeichnen bzw. nur unvollständig deklarierte Umsätze abschliessend zu ergänzen, blieb der Steuerpflichtige untätig, worauf die Steuerverwaltung gestützt auf Erhebungen der ESTV, Hauptabteilung Mehrwertsteuer, zur Veranlagung nach pflichtgemässem Ermessen schritt. Die steuerpflichtige Person kann eine Veranlagungsverfügung, die aufgrund pflichtgemässen Ermessens ergangen ist, einzig mit der Begründung anfechten, die Veranlagung sei offensichtlich unrichtig. Dieser Nachweis ist umfassend anzutreten. Der Beschwerdeführer vermag vorliegend nicht, den Unrichtigkeitsnachweis zu erbringen. Die Vorbingen des Beschwerdeführers sind knapp gehalten, teils rein appellatorischer Art sowie ohne Grundlage und beschränken sich insbesondere darauf, auf angebliche Kostenfaktoren und -strukturen hinzuweisen, ohne jede nachvollziehbare Begründung zu liefern. Abweisung der Beschwerden des Steuerpflichtigen.

Judgment of 26 January 2018 (2C_230/2017): State and municipal tax 2013 (Basel-Landschaft). The offsetting of business losses against the real estate gain is fundamentally alien to the nature of the real estate gains tax as a tax on objects, but cantonal law may provide for such offsetting (as was the case in § 79 para. 3 StG/BL). In the present case, the taxpayer has made such a loss offset. Due to the use of a significantly higher replacement value (market value of 20 years ago) as investment costs for the determination of the real estate profit for the real estate profit tax, the real estate profit before loss offset was lower than the operating loss determined for the profit tax (after deduction of the real estate profit). Accordingly, an imputed loss remained even after deduction of the operating loss for the real estate gains tax. According to the Federal Supreme Court, however, this loss may not be taken into account in the profit tax of subsequent years, i.e. it may be transferred back to the sphere of the profit tax (E. 2 . 4.1.): "Pursuant to Art. 24 para. 1 StHG, the entire net profit is subject to the profit tax. This provision thus takes as its basis the result of the income statement under commercial law (with corrections under tax law). The real estate profit determined according to these rules of commercial law is also to be applied in the case of the re-transfer claimed here. However, on the basis of the principle of relevance, the remaining balance does not constitute a loss, or a [...] merely 'artificial' loss, which is not to be allowed for set-off." The appeal of the tax administration of the Canton of Basel-Landschaft is upheld.

Judgment of 31 January 2018 (2C_544/2017): deductibility of retraining costs under the law in force until 31 December 2015 (Neuchâtel). Debt rescheduling costs are deductible if the taxpayer has to undergo retraining due to external circumstances, such as the closure of a business, the extinction of a particular profession, illness or accident. This condition is not met if the taxpayer was dependent and the medical report states that he could exercise his current profession on an independent basis. The taxpayers' complaint is dismissed.

Judgment of 1 February 2018 (2C_543/2017): VAT (value added tax), conditions of the appeal under Art. 83 para. 4 VAT Act not met in the present case because the decision of the FTA was not reliably substantiated. The BVG was therefore right not to act on the complaint.

Judgment of 1 February 2018 (2C_942/2017): State and municipal taxes 2013 (St. Gallen). The disputed issues in this case were purchase and sales commissions that could not be deducted and expenses in connection with conversion work carried out by a company abroad as well as expenses for consulting, architecture and conversion. In the case of expense items booked to the income statement, it is up to the taxpayer to prove that the taxable entity is commercially justified. In addition, the latter has increased requirements for evidence and information in international relationships; this is particularly true if the contracting party is domiciled in a country whose law, according to experience, favours the creation of fictitious seats of legal persons. The lower court correctly presented and applied the legal situation and practice. In casu, the high requirements for proof of payments abroad were not met and the expenses relating to the conversion work were not legally documented. The claimed expenses for consultation, architecture and conversion were also not substantiated and, moreover, were clearly disproportionate to the expenses for the conversion work. In federal court proceedings, criticism of the assessment of evidence must be presented in a qualified form with regard to the complaint and the reasoning. The present complaint did not meet those requirements. The taxpayer's complaint is dismissed in so far as it can be upheld.

Judgment of 1 February 2018 (2C_486/2017): Property tax; intercommunal financial equalisation (Vaud); The fact that the intercommunal financial equalisation takes into account the property tax levied by the communes on a theoretical basis of 100 is not arbitrary. If a municipality specifically receives CHF 100,000 in property tax based on a rate of 0.5 per mille, the inter-municipal financial equalisation system assumes CHF 200,000 in property tax revenue (at the theoretical rate of 1 per mille) for the calculation of the economic capacity of this municipality. This approach is not arbitrary, in particular because the assessment basis, which varies from municipality to municipality, is reflected in the calculation. The appeal of the commune of Jouxtens-Mézery is dismissed.