Decisions of the Swiss Federal Administrative CourtCW 37 - 2025)

Overview of the tax rulings of the Swiss Federal Administrative Court published between September 8 - 14, 2025:

Judgment of August 25, 2025 (A-506/2024): VAT; non-business area, input tax correction 2015-2017: In this case, it was disputed whether the payments made to the complainant by SDC were subsidies or whether there was a supply relationship within the meaning of Art. 18 para. 1 VAT Act. The appellant was of the opinion that it had provided services to the SDC in return for payment and argued its position, inter alia, on the basis that it was periodically monitored by the SDC and that an external audit of the program and project work was required annually. The Federal Supreme Court confirmed the lower court and denied the existence of a service relationship, as the appellant had set up and implemented a programme on its own initiative, which was merely co-financed by the SDC - without receiving a specific and individualized service - whereby the periodic controls and the annual external audits were not able to change this qualification. Dismissal of the taxpayer's appeal.
Ruling of September 01, 2025 (A-2136/2025): VAT 2015-2021; forwarding of portfolio management commissions; the taxpayer received portfolio management commissions from banking institutions and fund management companies as part of its asset management mandates. It passed these on to its asset management clients. It was disputed whether the taxpayer was right to treat the forwarding as a reduction in remuneration within the meaning of Art. 41 of the VAT Act in relation to its domestic clients. The taxpayer relied on the practice published by the FTA on the forwarding of retrocessions in accordance with VAT Sector Info 14 Financial Sector, point 5.10.4, which states that portfolio maintenance commissions are also retrocessions and that, according to this practice, the forwarding of retrocessions should be assumed to be a reduction in remuneration in relation to the taxpayer's own customers. In the opinion of the FTA, this practice definition was not applicable to the portfolio maintenance commissions in question. The FAC concludes that under civil law, based on Art. 400 para. 1 CO, there is also an obligation to pass on the portfolio maintenance commissions in question. If the client waives the forwarding, the asset manager receives an additional fee from his client. If, on the other hand, the client does not waive forwarding and the asset manager forwards the portfolio maintenance commission to him, there is no reduction in remuneration in the relationship between the asset manager and his client within the meaning of Art. 41 of the VAT Act. The FTA's determination of practice was also contrary to the law. The FAC denied both the requirements for the protection of legitimate expectations and for equal treatment in the event of injustice. The FAC did not expressly address the preliminary question as to whether its interpretation consequently means that portfolio management commissions paid to asset managers can no longer be qualified as remuneration paid by banking institutions or fund management companies to asset managers, contrary to the FTA's practice. Dismissal of the taxpayer's appeal.
Judgment of August 29, 2025 (A-3215/2023): Customs; performance obligation (agricultural management traffic); Whether someone is to be qualified as a managing person within the meaning of Art. 23 ZV (or Art. 2 para. 1 of the DE Agreement) when using contractors must be determined by means of interpretation. The lower court took the view that because the persons subject to customs duties did not cultivate the land themselves and the foreign land was not cultivated from the farm building mentioned at the beginning, there was no entitlement to duty-free importation of the land products within the framework of agricultural management traffic (LBV). In the present case, the work on the foreign land was transferred to contractors for independent completion to such an extent that it can no longer be considered independent cultivation by the appellants. This is particularly clear with regard to the isolated work that is usually delegated to contractors. Therefore, the lower court was right in not qualifying the appellants as (self-employed) farmers within the meaning of the LBV. Dismissal of the taxpayers' appeal.
Judgment of August 22, 2025 (A-7944/2024): Customs; Import of art and exhibition objects for museums; The question is whether E. should be granted museum status. The E. art collection fulfills the subjective requirements for a duty-free import of works of art and the lower court wrongly denied it museum status. The taxpayer's appeal is upheld in the sense that it is determined that the E. qualifies as a museum within the meaning of Art. 8 para. 2 lit. g ZG.

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