Overview of the tax law decisions of the Zurich Tax Appeals Court published in March 2021.
- StRG ZH, 23 February 2021, DB.2019.173 / ST.2019.226: Privileged taxation of a vested benefit denied (this decision is not yet final): the cash payment of a vested benefit was wrongly claimed because no self-employed activity was taken up within one year of the cessation of compulsory insurance cover due to the dissolution of the employment relationship. The alleged incapacity for work that occurred shortly after the commencement of employment cannot prove the legitimacy of the privileged taxation. Rather, the commencement of self-employment must be proven in purely objective terms. Since there was no repayment of the cash payment, it is subject to ordinary taxation in accordance with Art. 36 DBG and § 35 StG. The taxation in the year of payment is not objectionable according to the inflow principle. Rejection of the application for free legal assistance for lack of proof of indigence and hopelessness.
- StRG ZH, 23 February 2021, ST.2020.225: Place of actual administration in the event of distribution of management across a number of locations (this decision is not yet legally binding): The two shareholders and partners of the company generally carried out their business activities directly on site at their customers. Therefore, in principle, the company did not need fixed facilities. The company had moved its registered office to Zug, although it is undisputed that this was not the place of actual management. If, as in the present case, the management is spread over many individual locations, the centre of gravity must be determined among these locations. In contrast to business premises, the place of actual administration does not have to be of absolute quantitative significance. By simply basing its assessment on the residence of one of the two partners instead of determining the centre of gravity of the management, the cantonal tax office breached its duty to investigate. Moreover, the tax office did not investigate whether the conditions for a permanent establishment were met. Remand.
- StRG ZH, 21 December 2020, GR.2020.11: Intra-cantonal loss offsetting for real estate gains tax (this decision is final): The obligated party domiciled outside the canton wrongly claims that, in connection with the gain from the sale of its Zurich property as of 2016, the extra-cantonal loss must be taken into account for real estate gains tax or that the maximum net profit reported there as of 2016 can be taxed. The loss in question turned out to be an intra-cantonal loss. Such losses could not be taken into account until the end of 2018. Moreover, the business justification for the expense underlying the loss has not been shown and it was also booked outside the accounting period. Rejection.
- StRG ZH, 17 December 2020, DB.2020.83 / ST.2020.97: Partial discretionary assessment in the case of anattending physician (this decision is final): The income of an attending physician was estimated in part according to dutiful discretion, as he did not submit sufficient documentation on his self-employment. In particular, the contractual cooperation between him and the clinics as well as a third-party company that took over administrative activities for him was unclear. Since he never commented on the gross fees (he only provided evidence of the net fees paid to him), the amount of his actual income was not sufficiently proven. The Tax Appeal Court considered a direct offsetting of gross income against expenses without disclosure of the individual items to be inadmissible (E. 3e/bb). The ratio of the income generated to the locations in the Canton of Zurich and in the third canton was also not proven. The partial discretionary assessment was accordingly confirmed. Its amount did not prove to be arbitrary. Dismissal.
- StRG ZH, 24 September 2020, DB.2018.33 / ST.2018.43: Underpriced rental to sole shareholder / cost rent as price in line with third party comparisons (this decision is legally binding): An AG rents out the property it built and tailored to the needs of the sole shareholder to him at a price that is not in line with the market. Due to the special nature of the property (luxuriously developed villa with an extraordinarily large main and ancillary usable area with unusually large rooms on a generous plot of land with a beautiful view), there is hardly any rental market. Under these circumstances, the pecuniary benefit accruing to the shareholder is not to be determined on the basis of the market rent (which cannot be reliably estimated), but on the basis of the cost rent.
The decisions of the Zurich Tax Appeals Court are available here .
