Decisions of the Swiss Federal Court (CW 9 - 2019 )

Overview of the tax law decisions of the Swiss Federal Supreme Court published in the week from 25 February to 3 March 2019.

Judgment of 6 February 2019 (2C_300/2018): Direct Federal Tax and State and Municipal Taxes 2014 (Solothurn); the appeal is upheld and the ruling of the Tax Court of the Canton of Solothurn is overturned and the appeal decision of the Tax Office of the Canton of Solothurn is confirmed.

Judgment of 30 January 2019 (2C_549/2018): State and municipal taxes 2010 and 2011 (Zurich); tax sovereignty; the appeal is dismissed to the extent that it is admissible.

Judgment of 31 January 2019 (2C_373/2018): Cantonal tax (Ticino); intercantonal double taxation; the appeal is dismissed.

Judgment of 7 February 2019 (2C_539/2017): Staats- und Gemeindesteuern 2009 (Zurich); the appeal dismissed in so far as it is admissible.

Judgment of 11 February 2019 (2C_263/2018): Staats- und Gemeindesteuern 2006 (St. Gallen); Nachsteuer; the Cantonal Tax Office of St. Gallen has wrongly conducted an after-tax procedure and the appeal lodged is therefore well-founded; the appeal is upheld

Judgment of 15 February 2019 (2C_736/2018): Direct federal tax and state and municipal taxes 2011 and 2012 (Basel-Stadt); supplementary taxes; complainant A. is the sole shareholder and, at the same time, the managing director of a limited liability company with individual signing authority; at company level, following an examination of the accounts, the BS tax administration offset amounts due to incompletely recorded turnover (from the restaurant business and income from subletting); these are legally binding; subsequently, the BS tax administration carried out the same offsetting in principle at taxpayer level; the Federal Supreme Court confirms the case law according to which there is no offsetting mechanism in two-dimensional situations (consisting of the limited liability company and the shareholder) (E. 2.2.1); instead, the corporation must have made a payment in kind to the shareholder, which must be proven by the tax authority (E. 2.2.2); in contrast to the usual rules on the burden of proof, however, a shareholder who is also an organ of the company must dispute in detail the existence and amount of a payment in kind alleged by the assessment authority or in the case of a customary set-off (which does not fall under the special circumstances of Article 130.2 of the DDA), adduce evidence to the contrary; the complainant A. did not comply with a detailed challenge in his submissions; dismissal of the complaint.

Judgment of 1 February 2019 (2C_627/2017): State and municipal tax 2009 and 2010 (Zurich and Obwalden); intercantonal double taxation; the appeal against the ruling of the lower instance proves to be unfounded and must be dismissed if it is to be upheld. On the other hand, the complaint against the already legally binding assessment of the Canton of Obwalden for the 2009 and 2010 tax periods is to be upheld, as it is in breach of Article 127(3) of the BV. The place of actual administration of the Appellant in the relevant tax periods 2009 and 2010 was Zurich. "The complainant's managerial and other employees carried out at least the vast majority of their activities in Zurich, from where the day-to-day business was conducted and where the actual management of the company was therefore located. The activities in [the canton of Obwalden] (general meetings, meetings of the board of directors, certain administrative activities), which the complainant claims and partially proves or at least does not dispute, do not achieve a comparable significance. If the civil law domicile [in the canton of Obwalden] was opposed to a place of actual administration in Zurich, the lower instance rightly assigned the main tax domicile to the canton of Zurich and in any case under this title did not need to leave any tax factors to the canton of Obwalden. (E. 3.3.) The appeal against the Canton of Zurich is dismissed. The appeal against the Canton of Obwalden is upheld and the Canton of Obwalden is ordered to revoke the assessment of the complainant's cantonal and communal direct taxes for the 2009 and 2010 tax periods and to refund the taxes already received.

Judgment of 6 February 2019 (2C_585/2017): Value added tax (service relationship). "If neither the transmission of information to the researchers nor their subsequent activities can be attributed to the Confederation, there is no room for assuming an internal economic link between the payments made by the Confederation under the Performance Mandate 2014 - 2016 and the activities of the Association. Therefore, there is no VAT relationship in the present case. The payments which the Federal Government has made to the Association under the 2014 - 2016 performance mandate from 1 January 2017 to 31 December 2017 do not fall within the scope of VAT as non-remuneration within the meaning of Art. 18(2) VAT Act. The association is therefore not required to pay VAT in respect of these payments". (E. 5.4.) The appeal proves to be unfounded and is dismissed.

Non-occurrence decisions / inadmissible complaints:

Judgment of 1 February 2019 (2D_54/2018): State tax 2016 (Solothurn); the appeal will not be upheld.

Judgment of 7 February 2019 (2C_105/2019): Additional taxes; direct federal tax and state and municipal taxes 2011 (Zurich); the appeal will not be upheld.

Judgment of 7 February 2019 (2C_124/2019): Direct federal tax and cantonal and municipal taxes 2014 and 2015 (Obwalden); the appeal will not be upheld.

Judgment of 11 February 2019 (2C_2/2019): State and municipal taxes (Berne); official assessment as of tax period 2017; the appeal will not be considered.