Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week of 17 - 23 February 2020.

  • Judgment of 30 January 2020 (2C_79/2019): State and municipal taxes and direct federal tax 2010; Real estate gains tax (Ticino); Monetary value benefits; Determination of the market value of a property for tax purposes; The determination of the market value of a property based on the assumption that a mortgage can be taken out on a property up to 80% of its market value does not correspond to the standard methods for determining the market value provided for by doctrine and case law. Partial acceptance of the taxpayers' complaint.
  • Judgement of 7 February 2020 (2C_28/2020): Interim adjustment of land valuation values (Ticino); The cantons have considerable leeway with regard to land valuations (cf. Art. 14 StHG). Where federal law gives the cantons a degree of freedom of action, the cognition of the Federal Supreme Court is limited to arbitrariness. Therefore, the BGer's power of review is limited to the question whether the contested decision violates fundamental rights. Since the complainant does not complain about their infringement, the taxpayer's complaint is inadmissible.
  • Judgment of 27 January 2020 (2C_973/2019): Administrative fee; the causal fee charged by the Swiss Accreditation Service (SAS) for the renewal of an existing accreditation as a conformity assessment body is in accordance with federal law, even if the legislator has refrained from waiving a general abstract quantity structure for this fee; dismissal of the appeal.
  • Judgement of 28 January 2020 (2C_216/2019): Real estate gains tax 2010 (Bern); The issue was whether a fund with direct real estate holdings that is exempt from income tax and that achieved a taxable real estate gain outside the canton in which the fund management company is domiciled can deduct losses from extra-cantonal real estate transactions from the said real estate gain. According to the Federal Supreme Court, the facts of the case are intercantonal. The deduction of extra-cantonal elimination losses cannot be refused in general, otherwise there is a violation of the prohibition of poor-quality work. It is excluded to offset losses from property sales against the (tax-free) income generated by the fund in the same canton. The Federal Supreme Court concludes that the extra-cantonal losses from real estate transactions must be deducted from the real estate profit, and the contested ruling is therefore contrary to federal law. Approval of the Fund Management's appeal.
  • Judgment of 30 January 2020 (2C_714/2019): Real estate gains tax 2014 (Zurich); In 1996, the complainant entered into an agreement with B. and C. which is referred to as a "trust agreement". The latter took over four condominium shares, whereby they paid a lump sum. The complainant continued to remain registered in the land register and administered the condominium property in trust. A real estate profit tax was not levied at that time. With a publicly notarized purchase agreement of 2014, the complainant sold the condominium shares to B. and C. The Federal Supreme Court confirms that the purchase agreement of 2014 constitutes a property gains tax offence because B. and C. only became entitled to the condominium shares in rem with the purchase agreement of 2014, whereas they were only granted obligatory rights with the trust agreement. Furthermore, deviation from the agreed purchase price confirmed. Dismissal of the appeal.
  • Judgement of 23 January 2020 (2C_57/2018): State and municipal taxes Aargau (2012); In the context of a tax-neutral restructuring, the operational business of the A. Genossenschaft, domiciled in Basel, and thus the permanent establishments were transferred retroactively as of 1 January 2013 to a newly established subsidiary domiciled in Basel; the intellectual property rights of the A. Genossenschaft were not transferred. The parent company was granted holding privilege retroactively as of 1 January 2013. According to the Federal Supreme Court, the Canton of Aargau, based on § 71 (5) StG AG, basically had a right of taxation with regard to the tax-systematic realisation of hidden reserves on intellectual property rights in the event of an existing restructuring (with a change in the articles of association), provided that such hidden reserves can be allocated at all to the Aargau permanent establishments for the 2012 tax period. If this is not the case due to the facts of the case and the tax sharing rules, the tax claim of the Canton of Aargau is not applicable due to the lack of a tax substrate. The case was referred back to the lower court for clarification and additional findings of fact, which then has to repeat the tax assessment on the basis of the additional findings or decide on the matter again. Approval of the taxpayers' complaint.
  • Judgment of 24 January 2020 (2C_717/2018): Direct federal tax, state and municipal taxes of the Canton of St. Gallen 2010-2012. hidden profit distribution The right of use of a flat granted free of charge is added to the complainant's claim as a hidden profit distribution. Beneficiaries are the sole authorised signatory delegate of the complainant's board of directors or a company in which the latter exercises the same function. The imputed rent was calculated correctly on the basis of the subsequent lease. The need to renovate the apartment and the subsequent refurbishment was not sufficiently substantiated to justify a deviation in the rent. Furthermore, the cash payment for property maintenance, which was paid to a subsidiary of a company in which the complainant holds a 10.43% stake, was rightly classified as a hidden profit distribution. An indication is deemed to be that the service is outside the company's purpose and that there is no indication of activities in this area and that the recipient of the cash benefit has not reported any expenses for personnel or external work. Dismissal of the taxpayers' complaint, if it is upheld.
  • Judgment of 29 January 2020 (2C_348/2019) / Judgment of 29 January 2020 (2C_350/2019): Tobacco tax; cannabis flowers; affected was the customs treatment of (legal) cannabis with a THC content of less than 1%; the Federal Supreme Court had to determine by interpretation whether the TStG and the TStV comply with the legality principle in tax law with regard to cannabis flowers, since cannabis flowers are not mentioned in either the TStG or the TStV. It was questionable whether they should be subsumed under the term "substitute products". It was undisputed that the cannabis flowers were advertised and offered by the complainant as tea or food (at least not as a product for smoking). From the consumer's point of view, the cannabis flowers offered by the appellant are therefore precisely not a substitute for conventional tobacco products, but satisfy other needs. Cannabis flowers, even if smoked among other things, are a product with special characteristics which are not in a substitution relationship with tobacco products. Consequently, there is no legal basis in the TStG and the TStV to make cannabis flowers subject to tobacco tax. The appeal is therefore well founded and upheld. ‍
  • Judgment of 29 January 2020 (2C_402/2019): Tobacco tax; the CBD product in question, regardless of its tobacco content, does not have the same presentation or characteristics as fine-cut tobacco; in earlier judgments on water pipe tobacco, the Federal Supreme Court has already held that because it does not have the same presentation or characteristics as fine-cut tobacco, it cannot be taxed as such and has established a lack of legal basis. The cannabis flowers of the brand [...] with a low THC content of less than 1% are indisputably offered for smoking in a pipe or other smoking devices or for vaporization by means of a vaporizer [contrary to the preceding decisions 2C_348/2019 and 2C_350/2019] and are therefore taxable under the tax tariff for smoking tobacco other than fine-cut tobacco pursuant to Art. 10 (1) lit. c and Annex IV TStG. The appeal is found to be well founded and upheld. ‍
  • Judgment of 29 January 2020 (2C_45/2019) / Judgment of 29 January 2020 (2C_46/2019): Real estate transfer tax (Grisons); It is not untenable to regard the transfer of real estate from the joint actual power of disposal of all shareholders of a real estate company to the sole actual power of disposal of a single shareholder as an economic change of ownership; It is justifiable for practical reasons alone to reduce the real estate transfer tax for changes of ownership within partnerships; dismissal of the appeal. ‍
  • Judgment of 29 January 2020 (2C_9/2019): Real estate transfer tax (Grisons); Art. 8 GKStG/GR was applied arbitrarily by the lower court, since from an economic point of view there was no transfer of actual control of the real estate and this can also be to the benefit of the taxpayer; approval of the taxpayer's complaint ‍
  • Judgment of 4 February 2020 (2C_761/2019): Substitution levy for car parks and playgrounds; In the present case, the levies are based on two municipal ordinances issued by the municipal council of the city of Fribourg (executive body); These do not comply with the principle of legality or the necessary delegation requirements; Approval of the complaint lodged by the person liable to pay the levy ‍
  • Judgement of 4 February 2020 (2C_772/2019): Direct federal tax, cantonal and municipal taxes 2004 (Geneva), joint and several liability of the Board of Directors (see also our contribution of 11 March 2019); the tax claim in dispute is statute-barred at the time of the judgement; approval of the appeal of the obligor, insofar as it can be upheld. ‍
  • Judgment of 7 February 2020 (2C_5/2020): Withholding tax; infringement of the right to be heard; Both the withholding tax authority and the last cantonal instance fully established the facts of the case and thereby did not infringe their duty to investigate, their duty to state reasons and the right to be heard by the complainant. Rejection of the taxpayer's complaint.

Non-occurrence decisions / inadmissible complaints:

Decisions are listed chronologically by publication date.

Tax topics covered in this post:
Income Tax
Profit Tax
Value Added Tax (VAT)
Custom Duties
Property Gains Tax
Other Taxes
Property Transfer Tax