Overview of the tax law decisions of the Zurich Tax Appeals Court published in April 2021.
- StRG ZH, 13 April 2021, GR.2020.17: Deductibility of tax burden on sale of property (this decision is not yet final): The taxable legal entity requested that the tax burden associated with the sale of a property (property gains tax and share of direct federal tax) be deducted as an expense from the taxable property gain. The Tax Appeal Court considered that this only applied to commercial property dealers (if they waived a corresponding deduction for profit tax). An extension to non-real estate dealers under federal law was denied. Dismissal of the appeal.
- StRG ZH, 30 March 2021, DB.2019.139 / ST.2019.184: Taxation of benefits from a family foundation as income (this decision is not yet final): The taxpayers have three children who, in the tax period in dispute, received payments from a family foundation for pocket money, public school costs, camp stays, telephone bills and club fees. Two children were minors at the time and were therefore subject to family taxation with their parents; one came of age during the period in question, but was still in education. The only member of the board of trustees was the children's father, who was liable for tax. The benefits of the foundation were offset as income. The Tax Appeal Court considered that they could not be subsumed under a tax-exempt event pursuant to Art. 24 DBG or § 24 StG ZH. The payments made by the foundation could indeed constitute corresponding private support payments. However, tax exemption only applies if the beneficiary is needy, which was not the case here. Although the eldest child is not subject to family taxation, the payments received were nevertheless attributed to the parents or the father and sole foundation body. The court justified this on the grounds that the establishment of the family foundation was simulated and directly benefited the taxpaying father, as he was thus de facto released from his family law support obligation towards his child of age. Dismissal of appeal and complaint.
- StRG ZH, 16 February 2021, DB.2020.92 / ST.2020.107: Deductibility of asset management costs for securities held as private assets (this decision is final): The taxpayers declared several securities accounts whose total value exceeded CHF 2,000,000. For some of the securities accounts, the actual asset management costs were declared, for others only a flat-rate fee. The cantonal tax office allowed the actual asset management costs to be deducted. If only flat-rate fees were shown, the tax office allowed a flat-rate deduction of 3‰ of the value of the custody account, relying on its directive on the deductibility of costs for the management of securities held as private assets. The Tax Appeals Court supported this approach and held that the calculation method set out in section D.II of the directive, according to which for custody account values in excess of CHF 2,000,000, CHF 6,000 plus half of the flat-rate fee reduced by the amount of CHF 6,000 is deducted as asset management costs, was not applicable in this case. The application of this rule was probably only intended for cases in which only flat-rate fees were reported and could lead to disruptive results if there were several custody accounts for which some actual asset management costs and some flat-rate fees were reported. Dismissal of appeal and complaint.
- StRG ZH, 4 January 2021, DB.2020.78 / ST.2020.88: (Partial) deduction of childcare costs for all-day school / kindergarten (this decision is legally binding): Costs for attending an all-day school or an all-day kindergarten (Swiss International School) are to be divided into expenses for the education of the children (school fees) and pure childcare costs. The latter are deductible, but the education costs are not. In the present case, an hourly rate of Fr. 9/hour for the childcare time proved to be appropriate. The separately paid holiday and off-peak care is also deductible. Appeal and appeal partially upheld.
The decisions of the Zurich Tax Appeals Court are available here .
