Decisions of the Swiss Federal Administrative Court (CW 30 - 2022)

Overview of tax law decisions of the Swiss Federal Administrative Court published between July 25 - 31, 2022:

Judgment of 6 July 2022 (A-4408/2021): Order to pay additional customs duties, value added tax and default interest; In the present case, the complainant had admitted in principle that he had commissioned other persons to bring meat across the border into Switzerland without paying import duties in return. With regard to the amount of the duty to be paid by the complainant, however, the complainant accuses the lower court of having insufficiently clarified the facts of the case. Since it was clear that meat had been imported on behalf of the complainant without payment of the import duties, but no precise information was available on the quantity of imported meat and its price, the lower instance was allowed and obliged to make an estimate. The Federal Administrative Court concludes that the basic way in which the lower instance estimated the underlying values was lawful and that the duty of investigation was not violated. However, as far as the actual calculation of the lower instance is concerned, it is obviously wrong, which is why the proceedings are referred back to the lower instance for recalculation.
Judgment of 31 May 2022 (A-4078/2021): VAT (tax periods 2012-2016); rental of real estate, accommodation service, service to closely related persons; X. Sàrl (complainant) provided a chalet to Z. Ltd. based in the UK against payment and with open display of VAT. The FTA assessed the supply relationship between X. Sàrl and Z. Ltd. as an exempt but opted-in rental pursuant to Art. 21 para. 2 item 21 VAT Act and not as an accommodation service. Moreover, the chalet was repeatedly made available to the former managing director of X. Sàrl. With regard to the estimation of the third party price, the complainant has provided the necessary evidence that the estimation of the third party price of the summer and autumn weeks was wrong because it assumed the presence of staff. In this respect, the matter must be referred back to the lower court for a new, dutiful estimate of the third-party price for the summer and fall weeks. Partial approval of the complaint of X. Sàrl; newly appealed to the Federal Supreme Court.
Judgment of 8 July 2021 (A-1438/2020): Post-claim ruling (domestic transport with duty unpaid coach; cabotage); Coaches registered abroad were used for unlawful domestic transport. No customs declaration was made, although the buses were subject to general customs duty at the latest at the time the domestic transport was carried out. The objective facts of the customs violation have been fulfilled. Accordingly, the obligation to pay customs duties and import value-added tax pursuant to Art. 12 (1) VStrR is given. Dismissal of the appeal; the Federal Supreme Court did not hear an appeal against this.
Judgment of 19 February 2020 (A-601/2019 and A-606/2019): VAT; tax avoidance (2009 to 2015); (foreign) art holding structure similar to "aircraft cases", which generated revenues exclusively from the rental of its artworks to the beneficial owner. The respective rented artworks were inserted in the relocation procedure. The main issues in dispute were (i) whether the company was engaged in an entrepreneurial activity, which was affirmed, and (ii) whether there was tax avoidance. The FAC answered in the affirmative, acknowledging that there may have been reasons outside of tax law for having the art collection held by a company. However, this was not relevant. "Decisive for VAT concerns [with respect to the objective criterion of tax avoidance] is only whether there were other than tax-saving reasons for filing for VAT. This is to be negated here. In the present factual situation, it must be assumed that the registration with the VAT was made solely with the intention of benefiting from the right to deduct input tax. Beyond that, no business or economic reasons for the complainant's registration with the VAT are apparent." Finally, the FAC also denied the protection of legitimate expectations from an earlier tax audit, in which only an undercharged rent was offset; decision partially confirmed by BGer.
Judgment of October 5, 2021 (A-4642/2020): Withholding tax, pecuniary benefit; A pecuniary benefit within the meaning of the withholding tax may also exist if translated salary payments or compensation are paid to related parties. Translated fees paid to the beneficial owner of the company as well as to a director of a group company resident abroad qualify as a benefit in kind if their appropriateness is not proven; dismissal of the appeal; decision confirmed by the Federal Supreme Court.

Decisions in the area of administrative assistance (incl. republications / updates regarding further appeal):