Overview of tax law decisions of the Swiss Federal Administrative Court published between September 18 - 24, 2023:

  • Ruling of 29 August 2023 (A-5638/2022): VAT Q2/2018 to Q4/2021; The taxpayer provides validation or verification activities in blockchain networks (Polkadot and Kusama) by means of software and hardware. From a legal point of view, there is consensus that services that are provided exclusively to the blockchain network as such cannot be considered services in the sense of value added tax due to the lack of an assignable service recipient. It was therefore disputed and to be examined whether the validation or verification activities of the taxpayers are to be qualified as a single service and who is deemed to be the service recipient of these activities. The FAC came to the conclusion that there were two independent services. One was the taxable transaction processing (= service), for which the taxpayer collected a transaction fee (= remuneration) from domestic consignors. And once the non-taxable "remaining" validation and verification activities to the blockchain network (= insufficiently identifiable recipient and therefore not a service in the VAT sense), for which the taxpayer received block rewards (= non-remuneration). According to the FAC, the fact that the block rewards do not constitute a taxable consideration applies to Polkadot as of July 20, 2020 and to Kusama as of December 4, 2019. As of these dates, the protocol company no longer had sole power of disposal over the network protocol. Whether the Protocol Company had power of disposal over the network protocol prior to these dates and the "remaining" validation and verification activities are therefore to be regarded as taxable services provided to the Protocol Company and the block rewards as remuneration, or whether decentralized blockchain networks also existed prior to this, must be clarified by the FTA in the context of the rejection. Approval of the taxpayer's complaint and referral back to the FTA for a precise calculation and further clarification.
  • Judgment of 13 September 2023 (A-4754/2023): Rescheduling of procedural costs and party compensation; The dispute revolves around the question of whether the costs and compensation consequences in the previous Federal Administrative Court proceedings should be changed, since during the Federal Administrative Court proceedings the VAT claim for the 2012 tax period became time-barred. Since the absolute statute of limitations for the 2012 tax claim did not occur until after the Federal Administrative Court issued its ruling, the regulation of the consequences of costs and compensation is to be upheld.

Administrative assistance (incl. updates/re-publications):

Decisions are listed chronologically by publication date.