Decisions of the Swiss Federal Administrative CourtCW 28 - 2025)

Overview of the tax rulings of the Swiss Federal Administrative Court published between July 7 - 13, 2025:

Judgment of June 27, 2025 (A-577/2025): Freezing order; on January 16, 2025, the FOCA issued a freezing order against A. in application of Art. 76, 81 and 90 ZG, Art. 208-210 ZV and Art. 50 MWSTG for anticipated import duties, default interest and a fine in the total amount of around CHF 33,000. For the freezing order, the FOCA seized cash that had previously been confiscated in the course of a house search or at Zurich Airport under administrative criminal law. The FOCA relied in particular on a spontaneous administrative assistance report from the Italian customs authorities, which informed the FOCA that A. had declared various high-priced goods (in particular handbags and clothing from well-known manufacturers) for export from Italy, while at the same time applying for a refund of Italian VAT. Investigations in the FOCA database to check corresponding import declarations in Switzerland were unsuccessful. In the appeal proceedings, A. complained, among other things, that the Appeals Chamber of the Federal Criminal Court had issued a final decision on September 24, 2024 that the confiscation and seizure of the funds - insofar as relevant in the present case - should be revoked and instructed the FOCA to refund these funds. The FAC rejected this objection. The issuance of the freezing order was based on a different legal basis, which was not covered by the decision of the Federal Criminal Court. The FAC also considered A.'s other complaints (in particular regarding the violation of the right to be heard and the lack of a threat to payment) to be unfounded. Dismissal of the taxpayer's appeal.‍
Judgment of June 10, 2025 (A-3868/2023): Default interest 2012 - 2019 (withholding tax); The taxable company X. contested the default interest charged by the FTA on withholding tax paid in arrears (around CHF 71.5 million) for hidden profit distributions to its US group parent company in the years 2012-2019. It requested the application of the reporting procedure pursuant to Art. 20 para. 2 VStG, at least for the portion exceeding the basic tax rate of 15 %. The FAC dismissed the appeal: Art. 20 para. 2 VStG was to be understood as a mere delegation norm; the direct participation of at least 10 % provided for in Art. 4 VO DBA CH-USA was in conformity with the law and the constitution and was not fulfilled in the specific case. The calculation of interest from January 30 of the following year was also not contested. Dismissal of the taxpayer's appeal.
Judgment of July 2, 2025 (A-5377/2023): Issue tax, restructuring; it was disputed whether the contribution made by the parent company (a bank) to the subsidiary in the context of the partial takeover of a group company by means of an asset transfer is exempt from tax from an economic point of view as a step in a multi-part restructuring. Regulatory approval for the entry of the asset transfer in the commercial register depended on the prior provision of the acquiring company with the required common equity tier 1 capital. Irrespective of the close connection between the two transactions, according to the SNB, they are to be assessed independently of each other under stamp duty law. Thus, it cannot be the purpose of the stamp duty exemption that different conditions for the existence of a tax-neutral restructuring apply depending on the sector. The transfer of assets within the group is a purely tax-related institution that is not dependent on the existence of other conditions that lie outside the actual restructuring process. The fact that the subsidy in dispute was necessary solely due to financial market law provisions must remain irrelevant. This must apply even if - as in the present case - the entry of the asset transfer in the commercial register and thus the completion of the restructuring was only possible after industry-specific provisions or conditions had been fulfilled. From an economic point of view, the grant could therefore not be regarded as part of a tax-exempt restructuring process consisting of a transfer of assets and a grant. Dismissal of the taxpayer's appeal.

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