Decisions of the Swiss Federal Administrative Court (CW 12 - 2023 )

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

Judgment of 28 February 2023 (A-4703/2020): Import duties; post-clearance recovery; The Swiss importer is a customs debtor and liable for import duties (jointly and severally) and liable for post-clearance recovery if the exporter exported the goods in violation of customs regulations. Joint and several liability only ceases if the Swiss importer can prove that the customs declarations corresponded to the type and quantity of the imported goods and that the customs regulations were complied with. By accepting imported goods that had not been cleared through customs, the Swiss importer gained an unlawful advantage based on an objective violation of administrative legislation, since the duties were not included in the purchase price of the goods. The appeal is referred back to the lower court for assessment with regard to the applicable customs duties and is thus partially upheld, otherwise dismissed.
Judgment of 28 February 2023 (A-4700/2020): Import duties; post-clearance recovery; The Swiss importer is a customs debtor and liable for import duties (jointly and severally) and liable for post-clearance recovery if the exporter exported the goods in violation of customs regulations. Joint and several liability only ceases if the Swiss importer can prove that the customs declarations corresponded to the type and quantity of the imported goods and that the customs regulations were complied with. By accepting imported goods that had not been cleared through customs, the Swiss importer gained an unlawful advantage based on an objective violation of administrative legislation, since the duties were not included in the purchase price of the goods. The appeal is referred back to the lower court for assessment with regard to the applicable customs duties and is thus partially upheld, otherwise dismissed.
Rulings of 14 March 2023(A-2316/2021, A-2315/2021, A-2321/2021, A-2320/2021, A-2310/2021): Value Added Tax, Discretionary Assessments; In the present rulings, the Federal Administrative Court had to examine whether the lower instance determined the relevant tax claims according to dutiful discretion. In a first step, the Federal Administrative Court examines whether the lower instance has rightly determined the disputed tax claims for the respective tax periods on the basis of a discretionary assessment. This is the case, among other things, if violations of the formal accounting rules are to be qualified as so serious that they call into question the material correctness of the accounting results. The court concludes that precisely these conditions were met in the cases at hand and further examines whether the lower court dutifully made the respective discretionary assessments. In this regard, the Federal Administrative Court points out that no concrete calculation method is specified. The complainant could not show on the basis of its subsequently submitted documents, such as a provisional balance sheet and income statement, that the estimates made were obviously wrong. A discretionary assessment is then made regardless of the causes, which is why the illness of the Board of Directors cannot change anything. Referring to the illness of the board of directors, the Federal Administrative Court points out that the room for maneuver for granting generous grace periods is very limited due to the shortened (absolute) limitation period under the new VAT law. In the present cases, according to the Federal Administrative Court, nothing is submitted that could qualify the discretionary assessments of the lower instance as obviously incorrect. The appeals are dismissed.
Judgment of February 7, 2023 (A-2823/2020): Withholding tax on monetary benefits; The legal qualification of the benefits received by the managing director as a monetary benefit relevant under withholding tax law, in particular in the form of a hidden distribution of profits, is disputed. In essence, the complainant claims that the benefits paid were in fact compensation to the managing director for his services in setting up the company. The Federal Administrative Court points out that if the amounts paid out had been compensation - however qualified under civil law - for the commitment of the managing director, this should have been shown accordingly in the complainant's accounts. Only in one point, when an amount of Fr. 435.27 is recognized as a business-related expense, the complainant prevails. Compared to the total amount in dispute of Fr. 37,126.95, this amounts to only 0.4 %. Consequently, the appeal is partially upheld, although the costs of the proceedings are not reduced, as the complainant is mostly unsuccessful; newly appealed to the Federal Supreme Court.
Judgment of January 31, 2023 (A-947/2022): Withholding tax (levying); In the present case, a global view of services and considerations in connection with a sale of an investment (viewed in isolation at a lower price) is applied. Viewed as a whole, the existence of a hidden profit distribution is to be denied. Appeal upheld; new appeal before the Federal Supreme Court.
‍Judgement ofJanuary 30, 2023 (A-5867/2020); temporary admission procedure for works of art and antiques; subsequent levying of VAT; the complainant was unable to prove that the conditions for temporary admission of the works of art and antiques were met, especially since the items in question were for the most part transferred to the complainant's private property after being stored in the duty-free warehouse. Dismissal of the appeal; new appeal before the Federal Supreme Court.
Judgment of 19 January 2023 (A-4666/2020): Import duties; post-clearance recovery; the complainant was rightly recorded as jointly and severally liable for the reduced import duties. However, for the products at issue here, which originate from free zones but do not meet the requirements for duty exemption, and whose importation takes place at a time when Switzerland is fully supplied with fresh vegetables, the reduced out-of-quota duty rates are to be applied. Partial dismissal of the appeal and referral back to the lower court; new appeal before the Federal Supreme Court.