Decisions of the Swiss Federal Administrative Court (CW 43–2026)

Overview of the tax law decisions of the Swiss Federal Administrative Court published between October 19 and October 25, 2026:

Judgment of October 6, 2026 (A-2573/2026): Value-Added Tax 2016–2020; Tax on Receipts under the Net Tax Rate Method; Statute of Limitations for Assessment. Taxpayer A acted as an agent for soccer players, placing them with soccer clubs. Other partners based abroad were also involved in these agency arrangements. During the audit, the FTA determined that A had concluded the agency agreements with the soccer clubs in her own name and had issued invoices for the commissions in her own name. In the accounting records, the commissions were recorded as revenue. Based on side agreements between her and the partners, A largely passed on the commissions she received to them. The FTA classified A as an indirect agent within the meaning of Art. 20(3) of the Value-Added Tax Act (MWSTG). It levied the acquisition tax on the commissions that were passed on (in accordance with Art. 91 of the Value-Added Tax Ordinance (MWSTV)). A argued that, given the industry-specific circumstances, she had acted as a direct agent (Art. 20(2) of the VAT Act). The economic approach takes precedence over the civil law method of transaction processing. According to the Federal Administrative Court, the decisive factor in determining whether A acted as a direct or indirect agent is how she presented herself to the soccer clubs. A had not submitted any evidence that the circumstances, as reflected in the agency agreements with and the invoices to the soccer clubs, did not correspond to economic reality. The side agreement and the partners’ invoice to A (internal relationship) are not relevant. The Federal Administrative Court also rejected the objection that the collection of withholding tax from taxpayers who settle their taxes using the net tax rate method lacks a legal basis. Finally, the Federal Administrative Court also rejected the objection that the relative statute of limitations for assessing the tax claim for the 2016 tax period had already expired. This is because the written notice of the audit interrupts the relative statute of limitations for all tax periods not yet time-barred, regardless of whether they are mentioned in the notice. Dismissal of the taxpayers’ appeal. (edited)
Judgment of October 8, 2026 (A-2637/2026): Value-Added Tax 2016–2020; Educational services, rental of real estate; The issue in dispute was whether more than 500 courses offered by a course provider (including crafts, cooking, cosmetology, writing, languages, music, dance, business, and photography) qualified as tax-exempt educational services and whether the exclusive rental of spa facilities fell under the tax exemption for real estate rentals. The Federal Administrative Court held that even the deepening or refreshing of knowledge already acquired could constitute an educational service, which is why the exclusion criteria “everyday skills” and “refresher courses” used by the Federal Tax Administration (FTA) did not, on their own, preclude the tax exemption. In mixed cases, the decisive factor is whether the transfer of knowledge takes precedence over other objectives such as leisure activities, personal development, or counseling—which the taxpayer must demonstrate based on the course program. On this basis, the Federal Administrative Court (FAC) confirmed that courses in the fields of crafts, cooking, cosmetology, dance, as well as leadership and personal development, are taxable; however, it specifically classified language courses, refresher courses, conversation courses, placement tests, photography, gardening, and finance courses, as well as a course on starting a business, as exempt from tax. It ruled that the rental of the spa constituted a taxable comprehensive service, the essential characteristic of which lay in the exclusive wellness experience and not in the provision of the premises. The taxpayer’s appeal was partially upheld, and the case was remanded to the Federal Tax Administration (ESTV) for reconsideration.
Judgment of September 25, 2026 (A-1991/2026): Value-Added Tax; Recusal; During a VAT audit concerning the input tax deduction on the purchase of a business jet, the taxpayer requested that the responsible team leader at the Federal Tax Administration (FTA) recuse herself because, in an email, she had left the recipient of the delivery unspecified, stated that proof of business use had not yet been provided, and withheld payment of the input tax credit. The Federal Department of Finance (FDF) rejected the request. The Federal Administrative Court held that what was decisive was not whether the team leader was correct on the merits of the case, but solely whether her conduct objectively gave rise to the appearance of bias. The email was consistently factual in tone, disclosed the status of the proceedings, and did not reveal any definitive opinion; furthermore, any potentially disputable legal interpretation should have been raised in the appeal proceedings against the decision and did not constitute grounds for recusal. Although the FDF had slightly violated the taxpayer’s right to a fair hearing by failing to serve the taxpayer with the FTA’s statements, this defect had been remedied in the appeal proceedings. The taxpayer’s appeal was dismissed.
Judgment of October 15, 2026 (A-1238/2026): Withholding tax for 2017 and 2018; benefit in kind; A non-operating limited liability company (GmbH) rented its single-family home to its managing director at an annual rent of CHF 24,000 instead of the market rental value of CHF 48,900 as determined by the cantonal appraisal; it also paid his private bill from the public prosecutor’s office in the amount of CHF 12,200 and recorded an unreasonably low personal share of the utility costs. The Federal Tax Administration (ESTV) demanded withholding tax on benefits in kind totaling approximately CHF 37,000 (2017) and CHF 24,000 (2018). The GmbH argued that the managing director was neither a shareholder nor a related party, since the shares of the parent company were held by his son. The Federal Administrative Court held that the question could be left open, as the father-son relationship constituted a related-party relationship in any case. The property appraisal was deemed authoritative as a third-party valuation; the alleged construction defect was unsubstantiated; and the loan agreement submitted retroactively did not alter the original accounting treatment of the fine as an expense. The appeal was dismissed to the extent it was admissible.

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