Decisions of the Swiss Federal Administrative Court (CW )

Overview of the tax law decisions of the Swiss Federal Administrative Court published between July 20 and 26, 2026:

Judgment of July 8, 2026 (A-4538/2025): VAT 2017–2020; Reclassification of air transportation services as aircraft management services. B AG (the appellant) had entered into an Aircraft Operating Agreement and an Aircraft Lease Agreement with the aircraft owner, C Ltd., regarding Aircraft 1. The sole shareholder of C Ltd. was the D Foundation, based in Liechtenstein. The D Foundation was controlled by the beneficiary E. From 2017 to 2019, the aircraft was chartered to the D Foundation for slightly more than 20% of its flight hours. Under this charter arrangement, the aircraft was used by the beneficiary E or persons closely associated with her. With regard to the remaining flight hours, the appellant provided charter services and passenger transportation services for consideration to independent third parties. Furthermore, the appellant was not a closely related party of E. The appellant treated the services invoiced to the D Foundation as tax-exempt passenger transportation services. The FTA, however, reclassified these as taxable aircraft management services in accordance with the practice it published on September 29, 2025, in the VAT Industry Information on Air Transport, Section 13.6. The Federal Administrative Court (BVGer) considers this established practice to be unlawful. It can only be concluded from BGE 149 II 53 that, in the case of private use of an aircraft exceeding 20%, the right to deduct input tax at the level of the aircraft-owning company must be restricted to the extent of the private use; but not that the services provided by or received by an air carrier may be disregarded or reclassified for VAT purposes. Furthermore, even if the reclassification as aircraft management services were lawful, the FTA—based on a comprehensive assessment—would have had to deduct from the tax base the amount that the appellant paid to the aircraft-owning company pursuant to the lease agreement (98%). The FTA also reclassified services related to Aircraft 2, involving other counterparties, as aircraft management services in the complainant’s case. In this regard, the Federal Administrative Court concludes that the FTA did not sufficiently establish the legally relevant facts and remands the case to the FTA for a full clarification of the facts. The taxpayer’s appeal is granted.
Judgment of May 27, 2026 (A-3874/2025): Change in practice regarding agricultural trade (LBV); the dispute concerned the change in practice announced by the Federal Office for Food Safety, Veterinary Affairs, and Food Safety (BAZG) on May 14, 2024, effective January 1, 2028, regarding customs exemptions under the LBV. The affected operator of an agricultural business requested a declaratory ruling on this matter and invoked the principle of protection of legitimate expectations. The Federal Administrative Court (BVGer) confirmed that the change in practice was lawful, as it corrected a practice that had previously been contrary to international law and the transition period until the end of 2027 was deemed sufficient. The appeal was dismissed; the decision is being appealed to the Federal Supreme Court (BGer).
Judgment of May 27, 2026 (A-3786/2025): Change in practice regarding agricultural trade (LBV); The dispute concerned the change in practice announced by the Federal Office for Agriculture (BAZG) on May 14, 2024, effective January 1, 2028, regarding customs exemptions under the LBV. The affected agricultural operator requested a declaratory ruling on the matter and invoked the principle of protection of legitimate expectations. The Federal Administrative Court (BVGer) confirmed that the change in practice was lawful, as it corrected a practice that had previously been contrary to international law and the transition period until the end of 2027 was deemed sufficient. The appeal was dismissed; the decision was appealed to the Federal Supreme Court (BGer).

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