Decisions of the Swiss Federal Administrative Court (CW 4 - 2023)

Overview of tax law decisions of the Swiss Federal Administrative Court published between January 24 - 29, 2023:

Judgment of 11 January 2023 (A-4943/2020): Direct federal tax 2015, place of assessment: The ruling deals with the question of where the tax residence of a married couple is located. For a long time, the couple resided in a municipality in Zurich and the husband operated his practice in this municipality. In September 2015, the couple registered in a municipality in Graubünden, where they have owned an apartment since 1996. On December 1, 2015, a lump-sum benefit from the taxpayer's occupational pension plan in the amount of approximately CHF 2.5 million became due. The determination of the residence for tax purposes is a tax-creating fact and the tax authority bears the burden of proof. Although in the present case the couple had renovated certain parts of the apartment and there were other indications suggesting a residence in Graubünden, the fact that the couple worked and lived in Zurich for a large part of their time and were socially involved in the region for many years was of greater importance. Overall, considerable economic and social integration can be assumed. With such strong roots, a transfer of the center of life cannot be assumed lightly.
Judgment of 27 December 2022 (A-722/2022): VAT; tax period 2019 (input tax deduction); In the present ruling, it was disputed to what extent the complainant should be granted the input tax deduction for the purchase tax declared by it in the tax period 2019. The Federal Administrative Court holds that the apportionment of the purchase of the consulting services pro rata temporis made by the lower court on the basis of the performance period mentioned in the invoice is not objectionable. There were no valid indications in favor of the complainant. The complainant was not able to provide the relevant evidence for a tax-reducing fact, which was incumbent upon it. The complainant is also unable to prevail with the two contingent applications. With the first contingent application, the complainant requests that full tax relief be granted on the benefits received. The first contingent application is rejected because, contrary to the opinion of the complainant, this type of consulting services cannot be capitalized - no intangible value was created by the consulting services. Finally, the complainant requests with the second contingent claim that the services received to the extent of the contingency fee constitute an intermediary service exempt from tax. As a result, no reference tax is owed thereon. In this regard, the Federal Administrative Court states that, in accordance with the case law of the Federal Supreme Court, no tax-exempt brokerage service exists in the present case. The appeal is dismissed.
Judgment of June 2, 2022 (A-1754/2021): Household levy pursuant to RTVA; appeal dismissed; decision confirmed by BGer (see our article of January 22, 2023).

Updates/Republication:

Judgment of 20 December 2022 (A-4111/2021): Subsequent demand of import duties; Due to the entire circumstances and the non-existence of the Rhine Shipping Certificate (RZU), it is not to be assumed in the present case that the ship was imported duty-free; the subsequent demand of import duties was lawful. Dismissal of the appeal.
Judgment of 22 November 2022 (A-1876/2021): Customs; subsequent claim for customs duties and import tax; The complainant is to be included in the wide circle of customs debtors, namely as a (legal) person who helped to arrange the import of the goods (principal). If the goods are already in Switzerland at the time of the order, the general willingness of the person concerned to take delivery of these goods means that the importation of the goods is partly caused by him. The complainant therefore belongs to the group of customs debtors and is jointly and severally liable. The Federal Administrative Court states that it was established that no duties were levied on the 1,329.45 kg of foodstuffs received, which means that the complainant accepted imported goods that had not been cleared through customs. The fact that the complainant claims not to have known about the fact that the goods were not duty paid is irrelevant. The appeal is dismissed. New appeal before the BGer.
Judgment of 22 November 2022 (A-1875/2021): Customs duties and VAT (subsequent claim of import duties); In the period from 2016 to 2017, a sole proprietorship imported cheese and butchery meat products from Italy into Switzerland without customs declaration and without import tax. Complainant A Sàrl ordered the Italian specialties directly from the sole proprietorship and settled their invoices without customs duty and import tax. What was in dispute was A Sàrl's duty to pay duty. If the goods are already in Switzerland at the time of the order, the general willingness of the person concerned to take delivery of the goods implies that they are imported by him. This broad regulation on the duty of payment is in the public interest to guarantee the collectability of the customs duties owed. Recourse among joint and several debtors is governed by civil law. By accepting imported and non-duty-paid goods, the complainant has gained an unlawful advantage based on an objective violation of administrative legislation. Dismissal of the complaint of the duty payer. New appeal before the Federal Supreme Court.
Judgment of 22 November 2022 (A-1872/2021): Customs duties and VAT (subsequent claim of import duties): The complainant A AG ordered duty unpaid goods from Italy via F Sàrl from a Swiss sole proprietorship, whereupon the FCA ordered the payment of customs duty and VAT including interest on arrears. The complainant is liable to customs duty as the principal who arranged for the import of the goods. Even if the goods are already in Switzerland at the time of the order, the general willingness of the person in question to take delivery of these goods means that they are also imported by him. Dismissal of the complaint of the person liable to pay the duty. New appeal before the Federal Supreme Court.
Judgment of 21 November 2022 (A-5088/2020): VAT 2005 - 2009, input tax deduction, aircraft; The VAT group (A-D) was not able to prove the business justification of disputed flights of the owner E, who had no management function or employment relationship, which is why the input tax was rightly reduced. Furthermore, the sale (in 2009) of an aircraft (purchased in 2006) is a case of withdrawal, as it was used for a purpose unrelated to the company or transferred to the private assets of owner E as early as 2007: The revocable trust, which was founded by the owner E himself and not his sole proprietorship B, acted as seller. From the fact that upon the death of the settlor the revocable trust becomes an irrevocable trust, it is clear that only natural persons can establish a revocable trust. Thus, the sale is not attributable to the complainant, which is why the complainant is not entitled to contribution tax relief. Dismissal of the taxpayer's appeal. New appeal before the Federal Supreme Court.
Judgment of 8 September 2022 (A-2357/2021): Customs; restoration of a seized work of art; dismissal of the appeal insofar as it is to be accepted; proceedings before the Federal Supreme Court dismissed.
Judgment of 8 September 2022 (A-880/2022): Customs; restoration of a seized work of art; dismissal of the appeal insofar as it is to be upheld;
Proceedings before BGer written off.
Judgment of September 7, 2022 (A-2497/2021): Customs; release of a work of art seized as a customs pledge; dismissal of the appeal insofar as it is to be admitted; proceedings before the Federal Supreme Court dismissed.
Write-off decision of December 6, 2022 (A-648/2020): Withholding tax; benefits in kind; due to the discontinuation of bankruptcy proceedings, the appeal is written off as having become irrelevant; newly appealed to the Federal Supreme Court.