Decisions of the Swiss Federal Court (CW 7 - 2020 )

Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week of 10 - 16 February 2020.

Judgment of 20. December 2019 (2C_1073/2018, 2C_1089/2018): Direct federal tax, cantonal and municipal taxes 2003-2010 (Geneva); tax evasion; statute of limitations for the tax period 2003 affirmed; The taxpayer was not (partially) sufficiently remunerated for his investment advisory activities in favour of a subsidiary in Guernsey; examination of compliance with the arm's length principle in fund management and confirmation of the offsetting; partial approval of the tax administration's complaint and partial rejection of the complaint to the lower court or the tax authorities; and Tax administration.
Judgement of 21 January 2020 (2C_898/2019): State and municipal taxes and direct federal taxes 2010 (Valais); The Federal Supreme Court confirms the offsetting of a monetary payment to the shareholder (i.c. son) based on a simulated loan from the company to a person close to the shareholder (i.c. father). According to the Federal Supreme Court's case law, the triangular theory also applies in this case. The case must be distinguished from the case in which a company body close to the shareholder, abusing his position, pays various additional benefits (family leave, leasing of a private car, etc.) in addition to his salary. In such a case, in derogation from the triangular theory, the service is to be taxed directly by the company organ.
Judgement of 23 January 2020 (2C_530/2019): Value Added Tax (VAT) 2001-2015; discretionary assessment; the BGer confirms the decision of the BVGer A-3821/2017 (cf. our contribution of 12 May 2019): the discretionary assessment of the FTA and the calculation of turnover were correct. The FTA's assessment refers to the average turnover of the restaurants or bistros in the district and is therefore neither arbitrary nor abusive. Moreover, the complainant had not been able to sufficiently prove that the assessment of the tax authority had been manifestly wrong. Rejection of the taxpayer's complaint.
Judgement of 23 January 2020 (2C_266/2019): VAT 2009-2013; Appeal against the judgement of the Federal Administrative Court of 11 February 2019 (A-2106/2017 and A-2084/2017, see our contribution of 28 February 2019); Despite the declaration of subordination abroad, the German GmbH did not make any collective customs declarations in its own name, but individual customs clearances were made, which is why import tax was paid by the service recipients. The invoices of the German GmbH regularly show Swiss VAT openly (without reference to the declaration of subordination). It is not in line with the purpose of the ordinances to apply them in such a way that the delivery to Switzerland of a service provider domiciled abroad is more heavily burdened than is provided for by law (domestic tax and import tax without the right to deduct input tax). In the present case, there is no threat to the tax substrate, since the import tax has been collected and input tax deduction is excluded for private individuals; application of the principle of 'invoiced VAT equal to owed VAT' would result in higher tax revenues than those provided for by law; acceptance of the taxpayers' complaint.
Judgment of 28 January 2020 (2C_793/2017): State and municipal taxes and direct federal taxes 2009 (Bern); A AG kept its accounts up to and including the financial year 2002 in accordance with the calendar year. At the request of the financing bank, it subsequently intervened once for a long period (1 January 2003 to and including 31 May 2004). Subsequently, it also made a one-off short year deposit (1 June 2004 up to and including 31 December 2004). A assumed that it had submitted a total of seven financial statements from 1 January 2003 to 1 January 2009, whereas the tax administration assumed that eight financial statements were available. The scope of Art. 79 (especially para. 3) in connection with Art. 67 para. 1 DBG. According to the Federal Court, A AG submitted a single set of accounts for the period from 1 January 2003 to 31 May 2004 in accordance with federal law. Also for the purposes of loss offsetting, the financial statements are for the period 1 January 2003 to 31 May 2004, followed by the financial statements for the remaining period (1 June to and including 31 December 2004). Dismissal of the tax administration's appeal.
Judgment of 23 January 2020 (2C_137/2019): Direct federal, cantonal and communal taxes 2014 (Geneva); imputed rental value of a foreign company. The formula for calculating the imputed rental value takes into account a flat-rate deduction for property maintenance costs; the taxpayer has not proved higher actual costs, so the questions of law arising from the present tax dispute can be left open; dismissal of the taxpayer's complaint