Overview of the tax law decisions of the Zurich Tax Appeals Court published in December 2021 and January 2022.
- StRG ZH, 10 January 2022, DB.2021.113 / ST.2021.156: Deferral of real estate gains tax (this decision is not yet legally binding): Fluctuation reserves on listed securities pursuant to Art. 960b para. 2 CO do not represent a risk of loss as at the balance sheet date and are therefore not business-related. Since the legislator has omitted to explicitly anchor the tax law admissibility of fluctuation reserves in law, the principle of authoritativeness must be restricted by the usual correction regulations. Moreover, the fact that the taxpayer can determine the amount of the fluctuation reserves himself impairs the reliable, uniform and objectified assessment of the economic capacity (E. 2b/cc).
- StRG ZH, 16 December 2021, DB.2021.2 / ST.2021.2: Claim for refund of withholding tax (this decision is not yet final): The taxpayer complained that she had received neither the assessment nor the assessment. The spouses separated shortly before the orders were sent, with the taxpayer reporting this to the residents' service of the previous municipality of residence exactly one day before the orders were sent. The assessment and assessment addressed to both spouses was subsequently delivered only to the taxpayer due to a forwarding order by the taxpayer and was not contested by him. Spouses who are actually living separately are only entitled to separate mailing of the assessment as soon as they have notified the competent authority of their separation (E. 6c). However, taxpayers cannot assume that the competent residents' registration office will forward a notice of departure to the competent tax authority on the same day. The fact that no separate dispatch was made was therefore in principle lawful (E. 8). However, the Tax Appeals Court affirmed the existence of a reason for restoring the deadline. However, there was no timely request to restore the time limit (E. 8e). Furthermore, the court considered that in the present constellation it would lead to a serious violation of the right to be heard and to disadvantages for the taxpayer. The taxpayer was not to blame for this, as she remained at her previous place of residence and was not subject to any obligation to register. This leads to the nullity of the assessment and evaluation due to improper opening (E. 9). Remittal to the lower court. The costs of the proceedings are to be borne by the court.
- StRG ZH, 14 December 2021, DB.2021.92 / ST.2021.124: Distinction between self-employment and hobby (this decision is not yet legally binding): The profit motive or suitability of the horse boarding and breeding business established by the taxpayer and his daughters in 2016 cannot yet be assessed in application of the Federal Supreme Court practice for the disputed tax period 2018, i.e. for the second business year after the start of operations. The fact that a loss was also made in the two subsequent periods does not change this. Due to the nature of the business (luxury segment) and the difficult market conditions or those made more difficult by the ongoing Covid 19 pandemic, the start-up phase is likely to be prolonged or a longer loss phase must be accepted, during which no reliable overall picture can yet be drawn (E. 3b/ee). Based on these considerations and the overall circumstances, in particular taking into account the investments made (purchase of real estate) and the (personnel) expenses incurred, the Tax Appeals Court affirmed the commercial character of the taxpayer's secondary activity in the tax period to be assessed here and qualified the loss borne proportionately by her as deductible (entire E. 3). In an anticipated assessment of the evidence, the request by the parties for an expert opinion on the actual capacity of the horse boarding facility, taking into account the aspect of animal-friendly horse keeping, was waived (E. 1b). Appeal and appeal upheld.
- StRG ZH, 30 November 2021, GR.2021.15: Economic demolition property(this decision is legally binding): In the case of the disputed change of ownership, the municipal tax authority wrongly assumed that the taxpayers had sold an economic demolition property, which was why only the land value 20 years ago was to be taken into account in the investment costs and a tax deferral due to replacement acquisition was not possible from the outset. The taxpayers sold a property with an intact and even over-renovated single-family house. The fact that the purchaser, as a neighbour with a larger landholding and corresponding privileged building possibilities, had no interest in the building did not change anything. Only the seller's point of view is decisive for the question of whether a demolition object exists. Consequently, the building costs, including value-enhancing expenses, must be taken into account in the investment costs and the question of tax deferral must also be examined, with the result that the matter must be referred back to the lower court.
The decisions of the Zurich Tax Appeals Court are available here .
