Decisions of the Swiss Federal Administrative CourtCW 40- 2025)

Overview of the tax rulings of the Swiss Federal Administrative Court published between September 29 - October 05, 2025:

Judgment of September 18, 2024 (A-1450/2025): Value added tax; reduction of input tax deduction Art. 33 VAT Act in connection with subsidies; In this case, the Federal Administrative Court qualified subsidies from the Swiss Federal Office of Energy (SFOE), which were paid from the grid surcharge fund and based on a subsidy agreement, as a subsidy within the meaning of Art. 18 para. 2 lit. a VAT Act. This was contrary to the opinion of the appellant, which had also subsumed the contributions under the definition of cost compensation payments (Art. 18 para. 2 lit. g MWSTG), which according to the appellant would have to take precedence over the subsidy as a lex specialis rule. The Federal Administrative Court clarified that a simultaneous subsumption under several elements of non-remuneration is excluded and confirmed the reduction of the input tax deduction made by the FTA (Art. 33 para. 2 MWSTG). Dismissal of the appellant's appeal.
Judgment of September 23, 2025 (A-5105/2022): Issue tax; application for remission; the taxpayer is part of the C. Group and its purpose is to operate a bank. The US authorities had imposed fines on the C. Group for violation of sanction regulations, which were also transferred to the liable party according to an internal group key and led to a loss in the corresponding financial year. FINMA initiated proceedings against the levy payer and demanded, among other things, an increase in equity to cover the fines transferred to the levy payer. In order to meet FINMA's requirements, the shareholder made a contribution to the levy payer. This exceeded the reported losses in order to comply with the regulatory requirements. It was disputed whether the amount of the subsidy exceeding the exemption amount of CHF 10 million qualified for a waiver of the issue tax. The FAC came to the conclusion that, in its sanctioned business, the liable party had recklessly taken risks that significantly exceeded the limits of what is permissible in the banking business. The fact that the levy payer complied with the regulatory capital requirements at the time of its activities as well as the capitalization pursuant to circular no. 6 on hidden equity is not decisive in this case; the requirements for the waiver were therefore not met. Dismissal of the appeal.
Judgment of September 17, 2025 (A-1151/2024): Value added tax 2014 to 2018; services to closely related persons; At issue in this case is whether the FTA correctly determined the additional tax claim for the provision of vehicles to employees and for private shares of travel and customer expenses. The FAC upholds the appeal to the extent of the additional tax claim relating to the 2014 tax period because the absolute limitation period for assessment has already expired. It then comes to the conclusion that, in relation to the objection decision, it has been proven that three further vehicles are pool vehicles used for business purposes. The appeal is also upheld in this respect. With regard to the remaining seven vehicles still in dispute, the appeal was dismissed. In this respect, the FTA had rightly concluded that the vehicles were used for private purposes and calculated the third-party fee in accordance with the published practice definition using the full cost method. The FAC then considers the FTA's estimate of the private share of travel and customer expenses to be contrary to its duties. On the one hand, foreign expenses were wrongly included. In the case of these, the place of performance is almost without exception abroad. They were therefore not relevant for domestic tax purposes. On the other hand, "domestic customer expenses" were wrongly not taken into account. The FAC remits the case to the FTA for a new dutiful assessment. Partial upholding of the taxpayer's appeal.

Updates (incl. administrative assistance):