Decisions of the Swiss Federal Administrative Court (CW 37 - 2022)

Overview of tax law decisions of the Swiss Federal Administrative Court published between September 12 - 18, 2022:

Judgment of 24 August 2022 (A-4282/2021): Value added tax (2016-2019); Discretionary assessment; The FAC examined the discretionary assessment of a lawyer (taxpayer) working as a sideline and invoicing according to the balance tax rate method as well as according to collected remunerations in three steps. First, it was examined whether the discretionary assessment was lawful (prerequisites). In the present case, the violations of the formal accounting rules were so serious that the material correctness of the accounting results was questioned and the FTA even had to make a discretionary assessment. In a second step, the FAC asked whether the FTA had made the discretionary assessment in accordance with its duty. Since the FTA, among other things, did not take into account the taxpayer's steadily increased dependent gainful employment up to a full-time workload, the procedure did not appear to be appropriate in the present case. The FAC remanded the case to the FTA for recalculation. If the FTA's estimate had not been found to be in breach of duty, the taxpayer would have had to prove the obvious incorrectness of the estimate in a third step. Partial approval of the taxpayer's appeal with regard to the remittance to the FTA. For the rest, dismissal of the appeal.
Judgment of 31 August 2022 (A-1909/2021): Value added tax; non-entrepreneurial area; input tax correction (2012-2016); In dispute and to be examined is an input tax correction and whether the revenues generated from a musical are to be qualified as entrepreneurial activity. The Federal Administrative Court states that when distinguishing between an entrepreneurial and a non-entrepreneurial area of a business entity, it is irrelevant how the areas are financed. All that matters is whether the activities carried out in the different areas are intended to generate sustainable income from self-employment. It was undisputed and could be inferred from the purpose of the complainant that it was an association with non-material objectives. Its main activity is therefore also dedicated to this purpose, whereby the performance of the musical is essential with regard to the achievement of this purpose. The Federal Administrative Court concludes that the actual motivation for organizing the musicals is not the generation of income, but the pursuit of idealistic purposes. Dismissal of the taxpayer's appeal.
Judgment of 29 August 2022 (A-5145/2021): Customs - Tariff classification; In the present case, the tariff classification of the pieces of meat of the Spanish Black Pig with the designation "Secreto Ibérico" imported from Spain was disputed and to be examined. Specifically in dispute was the classification under Swiss subheading 91 ("carrés and cuts thereof", customs duty Fr. 2,304.-- / 100 kg gross) or 99 ("other", customs duty Fr. 396.-- / 100 kg gross). Since the additional evidence gathering is likely to be costly and very technical, the appeal of the duty payer was approved with referral back to the lower instance.
Judgment of 23 August 2022 (A-3809/2021): Customs; freezing order; According to the interpretation, the term customs claim in connection with freezing orders is to be interpreted broadly and includes customs duties and interest according to non-customs law decrees of the Confederation, fines as well as fees, procedural and other costs. Since the complainant was in default of payment of the legally enforceable part of the customs claims in dispute and did not settle them (see Federal Supreme Court ruling of November 12, 2021 (6B_938/2020, 6B_942/2020) as well as our article of December 19, 2021), there is a threat to the customs claim. Dismissal of the appeal of the duty payer.
Judgment of 23 August 2022 (A-3817/2021): Customs; freezing order; Due to the lack of joint and several liability of fines and the related rulings and writing fees, no freezing can be arranged with third parties. Partial approval of the complaint of the taxpayers.

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