Decisions of the Swiss Federal Administrative Court (CW - 2025)

Overview of tax rulings by the Swiss Federal Administrative Court published between December 15 and 21, 2025:

Judgment of December 5, 2025 (A-3283/2024): VAT 2015 to 2019; taxability of services in the financial sector (brokerage); input tax correction method for group taxation. In the present case, VAT group A is the taxable entity. The VAT group consists of four group members (G1 to G4). The first matter in dispute is the classification of compensation paid by Bank E to G1 for the recording and forwarding of customer orders. The customers in question are primarily asset management customers of G2 and also customers of the bank (end customers). G1 provided its services to Bank E on the basis of a contract with the bank on the one hand and a service level agreement with G2 on the other. The Federal Administrative Court does not classify the compensation paid by Bank E as remuneration from the bank to G1, but as indirect and taxable remuneration from the end customers (the contract between G1 and Bank E states that G1 is obliged to disclose and deliver the compensation received to the end customers, insofar as G1 is obliged to do so in accordance with the applicable regulations and contractual provisions). The FTA also assumed that this was remuneration for a taxable service; however, this was based on a service provided to Bank E, which is not exempt from tax as an intermediary due to both a lack of independent intermediary activity and a self-interest. The taxpayer assumed that this was a tax-exempt intermediary service. The second matter in dispute is the input tax correction method for group taxation. The taxpayer declared an input tax correction. However, it failed to do so in connection with internal services. The Federal Administrative Court confirms that in such a case, the FTA must make the input tax correction in accordance with the principles of discretionary assessment. The Federal Administrative Court examines the method chosen by the FTA (turnover key) in detail and confirms that, when examined with the necessary restraint, it appears appropriate in the present case and that the taxpayer has not proven that the input tax correction is manifestly incorrect. Furthermore, the FAC also protects the FTA's approach in its appeal decision with regard to the established partial legal force and the massive reformatio in peius with regard to input tax correction (Art. 83 para. 5 VATA). Dismissal of the taxpayer's appeal.
Judgment of December 2, 2025 (A-5703/2024): VAT 2017 to 2021; taxable object, educational services (Art. 21 para. 2 no. 11 lit. b VAT Act). In the present case, the dispute concerned whether three courses offered by the taxpayer were exempt from tax as educational and training services within the meaning of Art. 21 para. 2 no. 11 letter b VAT Act (according to the taxpayer; contrary opinion of the FTA). According to this provision, not all courses are exempt from tax, but only those of a scientific or educational nature. According to the present ruling, with reference to administrative and court practice, the decisive factor is that courses are primarily (mainly) intended to impart knowledge. In the case of training or teaching services, the decisive factor is whether the activity aims to promote or support someone in a particular field in achieving a predefined learning objective. Such educational services must be distinguished from services that primarily (mainly) serve purposes other than imparting or deepening knowledge, but which may also include certain educational elements, e.g., taxable services that primarily (mainly) serve the purposes of entertainment, amusement, increasing well-being, promoting personality development, or providing advice. In mixed cases, all circumstances of the individual case must be taken into account to determine whether the transfer and deepening of knowledge and the acquisition of skills predominate, or whether the other elements predominate. After a thorough analysis, the Federal Administrative Court concludes that two of the three courses are not exempt from tax because they primarily serve to promote personality (personal development). However, one course primarily serves to impart knowledge and skills (turning participants into successful salespeople who are able to retain their customers in the long term, using personality development methods). Partial approval of the taxpayer's appeal.
Judgment of December 9, 2025 (A-6941/2024): VAT 2017 to 2020; differences in turnover. In the present case, the FTA identified differences between the income reported in the income statement and the turnover declared by the taxpayer that it considered inexplicable. The FTA audited the taxpayer's accounts and calculated the differences. This resulted in an additional tax claim of approximately CHF 100,000. This is protected by the Federal Administrative Court. The taxpayer claimed that some of the income she had recorded was not subject to VAT (i.e., it was either exempt from tax or taxable at a reduced rate). However, after examining the objections and the files, the Federal Administrative Court concluded that the taxpayer had not proven that the accounting records of the services did not correspond to the economic reality. This is because the principle of the authoritativeness of the commercial balance sheet applies in the area of value added tax in the same way as it does to direct taxation. According to this principle, the formally and materially correct annual financial statements under commercial law are also decisive for tax purposes, provided that no tax correction regulations have to be observed. From a procedural point of view, the taxpayer must rely on the annual financial statements prepared by them in accordance with commercial law (subject to VAT correction regulations). Formally correct accounting is also presumed to be materially correct. If the accounting is not formally correct or if there are indications that the accounting records are materially incorrect, the natural presumption no longer applies. In the area of value added tax, however, it is not primarily the accounting perspective that is decisive, but the economic perspective. In this respect, the principle of materiality does not preclude proof that the accounting records do not correspond to the economic reality. In the present case, this proof was not provided. Dismissal of the taxpayer's appeal.

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