Overview of the tax law decisions of the Zurich Tax Appeals Court published in November 2021.
- StRG ZH, 8 October 2021, ES.2021.4: Waiver of usufruct qualifies as gift (this decision is not yet final): The usufructuary's waiver of the usufructqualifies as a gift to the encumbered owner (in the amount of the residual value of the entitlement). The concept of a gift under civil law differs from that under tax law (E. 2). The latter does not require acceptance of the gift (E. 4b).
- StRG ZH, 5 October 2021, GR.2021.20: Deferral of real estate gains tax in the event of dissolution of a community of prefer ential heirs (this decision is not yet final): A community of preferential heirs exists, regardless of the designation chosen in the contract as a mixed gift, if a property has been transferred to the descendants as the sole legal heirs in their entirety. If this community of preferential heirs is dissolved by one of the heirs transferring his share to the co-heirs, the deferral of the real estate gains tax is to be granted (E. 4a). If, on the other hand, co-ownership of the real estate had been established with a (mixed) gift from the father, the subsequent dissolution of the same would not entitle to tax deferral (E. 4b).
- StRG ZH, 19 August 2021, VS.2021.1: Claim for refund of withholding tax (this decision is final): Application for refund of withholding tax. In the course of audits of the books of a joint-stock company, the cantonal tax office established monetary benefits to the sole owner and her partner over a period of several years. The shareholder failed to declare the pecuniary benefits. With regard to the forfeiture of the refund claim, a distinction must be made between the pecuniary benefits paid to the sole proprietor and those paid to her partner (E. 2c). If the sole proprietor fails to declare pecuniary benefits, the mere fact that pecuniary benefits had already been determined earlier does not allow intent to be inferred if the earlier and current pecuniary benefits are not thematically related (E. 2d). With regard to the pecuniary benefits to the sole proprietor's partner, the Federal Tax Administration applied the triangular theory for the purposes of withholding tax and demanded that the tax be passed on to the sole proprietor. The cantonal tax office, on the other hand, applied the direct beneficiary theory for income tax purposes, which is why the pecuniary benefits were not subject to income tax for the sole proprietor. If the sole proprietor relies on the fact that the cantonal tax office applies the direct beneficiary theory as in the previous periods, she cannot be denied the refund claim because she did not declare the pecuniary benefits in her tax return (E. 2e/cc). However, the claim for refund remains with the sole proprietor, since the withholding tax was passed on to her on the instructions of the Federal Tax Administration (E. 2e/dd).
- StRG ZH, 15 July 2021, GR.2019.13: Jurisdiction for tax ruling on real estate business (appeal pending before the administrative court): The obligated party transferred its real estate portfolio to a legal entity. Prior to this, he had the cantonal tax office confirm via a tax ruling that the conditions for a tax-neutral restructuring existed and that a real estate business existed. An identical tax ruling was submitted to the municipal tax office. The latter was rejected (E. 1a). After the obligor had transferred the real estate portfolio, the municipal tax office refused to defer the real estate gains tax pursuant to § 216 para. 3 lit. d StG on the grounds that there was no business. The tax ruling confirmed by the cantonal tax office does not bind the communal tax office when assessing the real estate gains tax, even if this was addressed in the confirmed ruling (E. 1c). In the present case, the existence of a business was denied, as the real estate management was mainly outsourced to an external, professional third-party provider (E. 2d). The appeal was dismissed.
- StRG ZH, 13 July 2021, DB.2021.52 / ST.2021.69: Retrofitting a solar system as a deductible energy-saving measure (this decision is final): The cantonal tax office did not qualify the retrofitting of a solar system with a battery storage system as an energy-saving measure, as an electricity storage system did not lead to energy savings (E. 3a). With reference to a decision of the Administrative Court of the Canton of Aargau (cf. E. 4a), the Zurich Appeals Court held that an energy storage system that is adapted to self-consumption contributes indirectly to a more rational storage of electrical energy (E. 4b). Thus, the corresponding costs qualify as property maintenance (E. 4c). The appeal was upheld. The appeal was partially upheld (whereby a requested child deduction was denied).
- StRG ZH, 1 June 2021, GR.2020.44: Omitted exclusion of value-enhancing expenses cannot be made up for in property gains tax (this decision is final): If the taxpayer has declared all building expenses as maintenance for income tax purposes and has been assessed accordingly, he cannot claim for property gains tax purposes that a portion should correctly have been qualified as value-enhancing. This applies even if a negative income resulted in a tax period (E. 3).
The decisions of the Zurich Tax Appeals Court are available here .
