Overview of tax law decisions of the Swiss Federal Supreme Court published between February 20 - 26, 2023:

  • Judgment of January 16, 2023 (2C_737/2022): State and municipal taxes 2016 (Basel-Stadt); determination of the property tax value for a single-family house occupied by the taxpayers themselves; according to the Federal Supreme Court, there is no unequal legal treatment of third-party and owner-occupied residential property; admissibility of the valuation according to the real value method; dismissal of the taxpayers' appeal.
  • Judgment of January 20, 2023 (9C_614/2022): Real estate gains tax (Zurich); It is disputed whether the substitute acquisition fact exists, which allows to defer the taxation of the real estate gain from the sale of the property. According to the statements of the lower court, the legal requirements for the assertion of the replacement acquisition, namely the reasonable period of time and the permanent self-use as a result of moving away and leasing to third parties for an indefinite period of time, have not been met. In principle, owner-occupation excludes third-party occupancy through rental. Exceptionally, however, a short interim third-party use does not overturn the criterion of self-use. For the criterion of permanent owner-occupation to be met, the residence must be located in the sold property at the end of the ownership period. Exceptionally, however, the two residences may also be briefly interrupted by a third residence, e.g. as a result of construction or conversion of the replacement property. However, in the case of a third-party rental of a residential property for more than two years (from March 2017 until the sale in May 2019) prior to the sale, the Federal Supreme Court ruled that the requirement of permanent owner-occupancy is no longer met. Dismissal of the taxpayer's appeal.
  • Judgment of January 31, 2023 (9C_628/2022): Real estate gains tax 2013 (Zurich); The taxpayer AG (real estate trader) moved its registered office from the canton ZH to the canton VD in 2012. In 2013, it sold condominium units of a project realized in the city of Zurich. In the real estate gains tax return, the taxpayer deducted loss carryforwards (from the years 2007-2012) from the proceeds, in addition to the acquisition price and the value-enhancing expenses. The Commission for Real Estate Taxes of the City of Zurich refused to deduct the loss carryforwards. The application of Sec. 224a StG/ZH in the present case would have had the consequence that the loss carry-forward would have had to be offset against the real estate gains. However, this provision only came into force on January 1, 2019 and is therefore not yet relevant for the disposals made in 2013. If the Canton of Zurich or a Zurich municipality levying real property gains tax does not offset a loss carryforward from a previous period incurred in the Canton of Zurich against the real property gains and the canton of domicile does not offset the loss carryforward either, the taxpayer has to pay more tax across both cantons than if the Canton of Zurich had chosen the dualistic system. If, on the other hand, the domiciliary canton were to allow the loss carryforward to be deducted, it would take over a loss that would actually have to be borne by the canton ZH. These intercantonal effects of the (old-law) Zurich system justify obliging the Canton of Zurich or the Commission for Real Estate Taxes of the City of Zurich, respectively, to offset the loss carried forward against the real estate gains on the basis of Art. 127 para. 2 and 3 of the Federal Constitution. Dismissal of the City of Zurich.
  • Judgment of 30 January 2023 (2C_109/2022): Administrative assistance DTA CH-KR; The complainant FTA raises the legal question whether a domicile code deposited by the information holder prior to the requested period constitutes a sufficient connecting factor to the requesting state and to what extent this can be verified in the context of international administrative assistance in tax matters and refuted by evidence of another domicile in the requested period. The lower court relies on a letter from the information owner dated February 10, 2021, which confirms that the respondent did not have a domicile in South Korea during the requested period (tax years 2011 - 2019). The request for assistance from the requesting authority is a list request. The FTA takes the position that the lower court, by denying the requested information probable relevance based on an internal bank registered domicile address in Indonesia, implicitly undertakes an examination of the respondent's tax residence at the international level. According to the case law of the Federal Supreme Court, the determination of the domicile of the person concerned in an international context is a material question that is not to be clarified by the authorities of the requested State within the scope of the administrative assistance proceedings, but falls within the competence of the authorities of the requesting State. Moreover, the lower court also acknowledges that the respondent had a point of reference to South Korea. It states that the respondent had previously lived and worked in South Korea. Against this background, a connection between the requested information and the investigation appears sufficiently probable. By considering the letter of February 10, 2021 (which, moreover, was not issued by an official body) as relevant for the decision and therefore considering the connection to South Korea as unlikely, the lower instance is inadmissibly prejudging the tax residence in the international context. Approval of the appeal of the FTA.

Decisions on non-admission and write-offs:

Decisions are listed chronologically by publication date.