Decisions of the Swiss Federal Administrative Court (CW16 - 2022)

Overview of the tax law decisions of the Swiss Federal Administrative Court published between 18 - 24 April 2022:

Judgments of 6 April 2022(A-1704/2021 and A-1726/2021): Subsequent collection of import duties; the complainant GmbH ordered products (foodstuffs) originating from Italy from a (Swiss) sole proprietorship. The owner of the company imported the goods from Italy into Switzerland without making the appropriate declaration. The FAC concluded that the limited liability company had in this respect induced him to supply her with goods that it knew or had to assume were abroad and had to be imported for the purpose of fulfilling the order. It is therefore to be included in the concept of principal, which is to be interpreted broadly, i.e. the person on whose account the goods are imported. It therefore falls within the direct scope of application of Art. 70 para. 2 ZG and is directly liable for the import duties. Dismissal of the appeal.
Ruling of 12 April 2022 (A-4878/2020): VAT; discretionary assessment (2014-2015): In the present proceedings, it is undisputed that the complainant received an annual rent from the sole shareholder for the rental of the property (gross yield 3.02%). As the FTA does not consider this rent to be in line with the third party price, it has made a discretionary assessment. It should be noted at the outset that the argument put forward by the FTA, according to which it would no longer be possible to cover all the costs incurred and the return expectations of an investor if depreciation were no longer based on a period of 50 years but on a period of 20 years in accordance with the current value of immovable property pursuant to Art. 31 (3) VAT Act, is not convincing. The basis for the FTA's estimated assessment of whether the disputed rent corresponds to the market price was exclusively the average gross yield achieved on a single alleged comparable property. Neither the inspection report, nor the ruling, nor the objection decision of the lower court indicate to what extent the complainant's property at the time of the rental is comparable with the comparable property used by the lower court in terms of floor space, condition of the building structure, furnishings, and target tenants in such a way that the gross yield of 6% achieved on it can be used as a basis for the market price; the taxpayer's appeal is dismissed and the matter is referred back to the FTA.
Judgment of 6 April 2022 (A-4191/2020, A-4193/2020): VAT (1st quarter 2012 to 4th quarter 2016); The dispute in the present case was whether vehicles of the complainant were made available to the shareholder and managing director as well as related persons and then their VAT treatment, i.e. whether the FTA was entitled and obliged to approximate the corresponding remuneration. The Federal Administrative Court concludes that various vehicles were made available to the managing director. However, the Federal Administrative Court also points out that it is not evident for all vehicles that they were made available to the managing director, the father of the managing director or other persons. The Federal Administrative Court then concludes that the estimate of the taxable consideration for the vehicles in question, where there was a taxable service, does not appear to be appropriate. Appeal upheld.
Judgment of 10 March 2022 (A-4347/2019): Refund of withholding tax; representative liquidation; A. SA (appellant) had acquired all shares in SI. SA (open reserves of around CHF 500,000) from a foreign shareholder at a price of around CHF 7.3 million. The most significant asset of SI. SA was a property with a book value of around CHF 5.1 million. On the same day, A. SA sold the SI. SA to the C. Foundation at a price of CHF 18.2 million. SA thus realised a profit under commercial law of around CHF 12.6 million. SA decided to distribute a dividend of around CHF 10 million. The FTA refused the notification procedure and subsequently the refund of withholding tax on the grounds of tax avoidance (representative liquidation). Based on the overall circumstances, the Federal Administrative Court also affirmed the existence of tax avoidance. In particular, A. SA's argument that it had originally wanted to hold the property, but had wanted to take advantage of the exceptionally good opportunity to sell it, did not hold water according to the Federal Administrative Court. The Federal Administrative Court then also refused to refund 15% of the withholding tax, arguing that the previous shareholder could have invoked a DTA, pointing out that case law had already completely rejected the possibility of a refund in other cases of tax avoidance. Furthermore, the former shareholder's DTA entitlement had not been established in any case. Dismissal of the appeal.

Decisions in the area of administrative assistance (incl. updates due to referral to the Federal Supreme Court):

Dismissal (incl. updates due to referral to the Federal Supreme Court):

Decisions are listed chronologically by publication date.