Decisions of the Swiss Federal Court (CW 9 - 2018 )

Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week of 26 February - 4 March 2018.

Judgment of 6 February 2018 (2C_685/2017): Inheritance tax (Aargau); the taxpayer lived with her brother in the two-family house of her deceased parents until his death. Inheritance and gift tax is calculated in accordance with § 147 para. 1 StG/AG on the basis of the taxable amount of the estate and on the degree of kinship of the taxpayer to the person making a will, gift or donation. With regard to the degree of kinship, three classes apply pursuant to § 147 para. 2 StG/AG, whereby persons who have lived with the donor in a shared apartment (same residence) for at least five years are assigned to class 1 (lit. a), siblings and grandparents to class 2 (lit. b) and all other taxable persons to class 3 (lit. c). By excluding a shared flat when using two fully equipped flats - against the background that in this situation, life can at any time be completely restricted to one's own flat - the lower instance was able to arbitrarily deny that the complainant and her deceased brother shared a common household. Furthermore, there is also no violation of the principle of equality of rights, since the existence of a single shared home is based on a factually justified criterion for tax privileges. The taxpayers' complaint must be dismissed in this respect. On the other hand, the court fee charged by the Administrative Court for the proceedings before the Special Administrative Court proves to be arbitrary in view of the fact that the case is at most moderately difficult and rather less complex, which is why the appeal was upheld on this point. Partial acceptance of the taxpayers' complaint.

Judgment of 6 February 2018 (2C_87/2018): Withholding tax; confirmation of the Federal Court's practice requiring a spontaneous initial report or at least a spontaneous subsequent report of income subject to withholding tax; in the present case, the tax administration of the Canton of Berne enquired about the dividend in the course of processing the tax return, which is why the requirements of Art. 23 VStG were not met; dismissal of the appeal.

Judgment of 9 February 2018 (2C_82/2018): State and municipal taxes and direct federal tax 2014 (Zurich); an assessment ruling that has been issued in full or at least in part on the basis of dutiful discretion can only be challenged on the grounds that the assessment is manifestly incorrect, whereby proof of incorrectness must be provided comprehensively. If the discretionary assessment is merely contested in a largely general manner, this is not sufficient to provide proof of incorrectness. This is particularly the case after the lower court recognized that it is impossible to pay for the maintenance of two adults living in the Canton of Zurich with a net income of only a good CHF 16,000. Dismissal of the taxpayer's appeal.

Judgment of 8 February 2018 (2C_903/2017): Determination of tax domicile for state and municipal taxes 2012 (Berne); the complainant as a single person with exactly one year's peacebuilding assignment in Southern Sudan remains subject to unlimited tax liability during his assignment in Switzerland; dismissal of the complaint

Judgment of 14 February 2018 (2C_120/2018): Direct federal tax and state and municipal taxes 2010 to 2014 (Fribourg); rejection of deadline for filing an appeal because the taxpayer was no longer on sick leave before expiry of the appeal deadline; dismissal of the appeal.

Judgment of 13 February 2018 (2C_694/2017): Real estate gains tax (Zurich); if an entry lacks a valid signature or has been submitted by a third party without power of attorney, the taxpayer is given the opportunity to rectify the deficiency in accordance with Art. 2 of the StG/ZH Regulation. If the complainant's legal representative explicitly announces in the objection that he will submit the missing power of attorney, the tax authority no longer needs to point out the deficiency. A decision not to enter into force after almost five months of waiting does not therefore infringe Article 29.1 of the Federal Constitution or Article 2 of the StG/ZH Regulation.

Judgment of 19 February 2018 (2C_104/2018): Withholding tax; forfeiture of the right to a refund of withholding tax for an individual (Art. 23 VStG) due to missing declaration in the tax return. Dismissal of the appellant's appeal.