Decisions of the Swiss Federal Administrative Court (CW 17 - 2018 )

Overview of the tax law decisions of the Swiss Federal Administrative Court published in the week of 23 - 29 April 2018.

Judgment of 27 June 2017 (A-2800/2016): Value Added Tax (VAT); input tax deduction in relation to the purchase of a work of art; the appeal against this decision was upheld and reversed by the Federal Supreme Court in its ruling of 4 April 2018 (2C_730/2017) (see our article of 22 April 2018)

Judgment of 18 April 2018 (A-1328/2018): VAT; application for reinstatement of time limits; appeal against the ruling of the Federal Administrative Court A-69/2018 of 19 February 2018; the appeal will not be granted.

Judgment of 18 April 2018 (A-1329/2018): VAT; application for reinstatement of time limits; appeal against the ruling of the Federal Administrative Court A-70/2018 of 19 February 2018; the appeal will not be granted.

Judgment of 18 April 2018 (A-1330/2018): VAT; application for reinstatement of time limits; appeal against the ruling of the Federal Administrative Court A-71/2018 of 19 February 2018; the appeal will not be granted.

Judgment of 18 April 2018 (A-592/2016): Withholding tax 2005 - 2008 (collection). It is permissible to question respondents or witnesses (to the extent permitted at all) in the procedure of levying and/or claiming withholding tax without the taxpayer being able to participate, provided that the questioning can only achieve its purpose in this way. The latter is particularly the case where the presence of the taxpayer and his ability to ask supplementary questions would significantly impede the investigation of the facts and where the interest in the ongoing investigation outweighs the taxpayer's interest in exercising his right to participate (E. 4.2.4.2); distribution of the burden of proof and obligation to cooperate in the case of pecuniary benefits (E. 5.6); the FTA was entitled to legitimately assume that a large part of two loans granted by related parties to the company had been repaid on the same day (for the most part). The reporting of a loan liability on the balance sheet date of this tax period therefore represents a payment in kind (E. 11 ff.). Loan interest recorded in subsequent years also qualifies as payment in kind (E. 14). A deposit order without the request of a third-party deposit commission also qualifies as a payment in kind (E. 15). Partial approval of the taxpayer's complaint (only regarding the assessment of the third-party deposit commission) and referral to the lower court for the determination of a third-party deposit commission in conformity with the third-party settlement. Note: In the present proceedings, the SNB had already previously expressed its views in a partial and interim ruling (dated 22 June 2017), in particular on the question of the statute of limitations of any withholding tax claim and on the relationship between tax collection/request for payment and administrative criminal proceedings in withholding tax law (see our contribution of 9 July 2017).

Judgment of 18 April 2018 (A-550/2016): Withholding tax 2005-2008 (levied); parallel proceedings to the above BVG A-592/2016; offsetting of a payment in kind for lack of a demand by a third-party deposit commission (E. 9) and of interest which was not (or only a fictitious loan debt was) based on (E. 11). The amount of interest to be offset must be calculated separately for each year (E. 12). Partial approval of the taxpayers' appeal (only regarding the assessment of the third-party deposit commission and the calculation of the interest to be offset) and rejection of the appeal to the lower court for the determination of a third-party deposit commission and the interest to be offset in conformity with the third-party settlement. In addition, reference can be made to the above comments on BVGer A-592/2016. Note: In the present proceedings, the SNB had already previously expressed its views in a partial and interim ruling (dated 22 June 2017), in particular on the question of the statute of limitations of any withholding tax claim and on the relationship between tax collection/request for payment and administrative criminal proceedings in withholding tax law (see our contribution of 9 July 2017).

Decisions of the Federal Administrative Court in the area of administrative assistance:

Judgment of 19 June 2017 (A-3361/2016): Administrative assistance DTA Switzerland - USA; the Federal Supreme Court did not uphold the appeal against this decision in its ruling of 7 July 2017 (2C_596/2017) and in its ruling of 29 March 2018 (2C_598/2017) (cf. our contribution of 23 July 2017 and our contribution of 22 April 2018).

Judgment of 9 April 2018 (A-2523/2015): Administrative assistance (DTA Switzerland - Spain); dismissal of the appeal.

Judgment of 6 July 2018 (A-1674/2016): Administrative assistance (DTA Switzerland - Netherlands); admissibility of group requests based on the DTA Switzerland - Netherlands; dismissal of the appeal; the Federal Supreme Court confirmed the decision in its ruling of 9 April 2018 (2C_646/2017) (cf. our contribution of 29 May 2018).