In its ruling 9C_690/2022 of July 17, 2024, a five-judge panel of the Swiss Federal Supreme Court ruled on the binding effect of the "safe harbour" interest rates published annually by the Swiss Federal Tax Administration ("SFTA"). According to the Supreme Court, the tax authorities are not bound by the published interest rates if interest rates agreed between associated companies are below or above the published minimum or maximum rates. In this case, according to the Federal Supreme Court, the tax authorities must instead determine the "actual" arm's length interest rate.
The appellant company (A. AG), a subsidiary of a corporation incorporated based on federal law (B. AG), is subject to limited tax liability in the Canton of Zurich on the basis of permanent establishments. [1] In 2013, A. AG entered into a credit facility agreement with its parent company with a maximum credit limit of CHF 1 billion. On the basis of this agreement, the two companies agreed on a fixed term loan (61 months) of CHF 500 million at an interest rate of 2.5% per annum. For the difference between the credit limit and the fixed loan, a current account was agreed at an interest rate of 3% per annum.
The Cantonal Tax Administration of Zurich ("TA ZH") took the view that the agreed interest rates were not at arm's length, in particular because the existing government guarantee of the parent company had not been taken into account when determining the disputed interest rates. The TA ZH subsequently claimed deemed dividends for the 2014 and 2015 tax periods. The deemed dividends were initially calculated on the basis of an interest rate of 1% per annum, which was determined at the discretion of TA ZH. A. AG's objection to this was partially upheld by the tax administration and the at arm's length interest rate was set at 1.08%. The TA ZH calculated the rate of 1.08% on the basis of the average interest rate for the refinancing of B. AG with bonds of 0.83% and added a margin of 0.25%. This approach was confirmed by the Tax Appeal Court of the Canton of Zurich in its decision of March 10, 2002.
The Administrative Court of the Canton of Zurich partially upheld the appeal against the ruling of the Tax Appeals Court and referred the case back to the lower court for recalculation and a new ruling in line with the considerations. In essence, the Administrative Court was of the opinion that the interest rates published annually by the SFTA should be adhered to and that these rates define the arm’s length range of applicable interest rates. A correction of a not at arm’s length interest rate was therefore only possible to the amount of the published minimum or maximum interest rates. The TA ZH appealed against this ruling to the Federal Supreme Court, which rejected the position of the Administrative Court and upheld the opinion of the TA ZH.
On the merits of the case, the Federal Supreme Court addressed the objection raised by TA ZH that the interest rate circulars published by the SFTA are not applicable to state and cantonal income taxes and are only binding for the purposes of federal income tax and withholding tax. In this respect, the Federal Court recalled that the income tax rules are harmonised between the federal and cantonal levels, which means that the SFTA interest rates are also applicable to federal and cantonal income taxes.[2]
With regard to the nature of the SFTA circulars on permissible interest rates, the Federal Supreme Court first stated that they serve to simplify the application of the arm's length principle. The simplification lies in the fact that the published interest rates, as "safe harbour rules", justify the assumption that there is no deemed dividend if the taxpayer complies with these rules. [3] Conversely, or if the taxpayer deviates from the published rates, there is a rebuttable presumption of a deemed dividend. In this case, it is up to the taxpayer to prove that the interest payments are in fact at arms' length. In addition, the Federal Supreme Court stated that the interest rate circulars of the SFTA should only be deviated from if the applicable legal provisions are not convincingly specified. [4]
With regard to the case at hand, the Federal Supreme Court stated that the binding effect of the interest rate circulars only exists as long as the taxpayer itself adheres to the interest rates defined therein. If the taxpayer deviates from these rates, there is no reason why the tax authority should continue to be bound by the safe harbour rules and not be allowed to determine the actual arm's length interest rate. [5] In these cases, there is neither a violation of the protection of legitimate expectations nor of the principle of equal treatment, especially since the taxpayer itself has deviated from the SFTA interest rates. Finally, the deviation from these interest rates would also undermine the purpose of the safe harbour rules, i.e. administrative simplification, as the tax authorities would have to check in these cases whether the interest rate claimed was in line with the arm's length principle. [6] Against this background, the Federal Court did not see any violation of the law in the TA ZH's determination of what it considered to be the arm's length interest rate, which deviated from the FTA interest rates.
However, with regard to the actual determination of the arm's length interest rate by the TA ZH, the Federal Supreme Court found that the Administrative Court of the Canton of Zurich had not addressed the issue of the legitimacy of taking into account a "margin" of 0.25% based on the interest rate circulars of the SFTA. In this respect, the Federal Supreme Court referred the matter back to the lower court for reconsideration.
The above-mentioned decision of the Federal Court raises several questions, both in terms of its reasoning and its possible consequences for practice, which will be addressed in the following.
To the extent that the Federal Court has denied a violation of the principle of equal treatment, one can agree with the court as long as it will be ensured that the tax authorities consistently apply the arm's length interest rate in all cases where a taxpayer deviates from the SFTA interest rates. In other words, the tax authorities should not be able to rely on the SFTA rates on a case-by-case basis as this would lead to unequal treatment of taxpayers who deviate from the SFTA rates. Similarly, the individual application of the effectively higher administrative costs by the tax authorities when assessing the participation exemption would also violate the principle of equal treatment – to the extent that this was actually intended by the legislator .[7] – gegen den Grundsatz der Gleichbehandlung.[8]
The Federal Court's argument that the purpose of the interest rate circulars in terms of administrative simplification can no longer be achieved if the taxpayer deviates from the maximum permissible interest rates is not entirely convincing, if at all. According to the case law of the Federal Supreme Court, the tax authorities can no longer limit themselves (while maintaining the principle of equal treatment) to examining the transfer pricing studies submitted as evidence of the arm's length principle, but must now - if they are of the opinion that the arm's length principle has not been verified - determine the effective market interest rate. It is true that the taxpayers' (attempted) proof of arm's length interest rates, as opposed to the SFTA interest rates, involves additional work for the tax authorities. However, this in itself only partially limits the purpose of administrative simplification. This purpose is only completely thwarted by the TA ZH's position, now confirmed by the Federal Court, that it is the tax authority's task to determine the specific market interest rate to be applied (and not merely a range of arm’s length interest rates). If it is indeed (only) a matter of administrative simplification, there is no obvious reason why the SFTA interest rates could no longer be used as a basis (for simplification reasons) if the arm's length interest rate cannot be proven. Instead, the tax authorities will have to determine the arm's length rate in accordance with best practice.
With regard to the requirements for the tax authorities to provide evidence of what they consider to be the arm's length interest rate, it seems reasonable to apply the same requirements for the evidence of the arm's length principle or the transfer pricing study as those defined in the SFTA applicable to taxpayers. The transfer pricing study to be carried out by the tax administration would therefore have to include the following elements, whereby the taxpayer's duty of cooperation could be invoked for the first two points[9]:
In terms of applicable transfer pricing methods, the Comparable Uncontrolled Price Method (CUP Method) is the primary transfer pricing method to be used for interest rates. In addition, the cost of funds method is also recognised in Swiss practice and appears to have been used by TA ZH in the present case. According to this method, the interest rate is determined on the basis of the lender's cost of funds plus a risk premium and a profit margin. The determination of the margin requires a case-by-case assessment, taking into account the borrower's credit rating. Against this background, the Federal Court's decision to refer the case back to the Administrative Court with regard to the 0.25% interest margin applied by TA ZH, which in turn is based on the SFTA's interest rate circular, is only consistent in the light of the other considerations.
Lastly, the statement by the Federal Court that it is the task of the tax authority to determine a specific interest rate to be applied and not (merely) a range of interest rates also raises questions. This statement cannot be reconciled with state-of-the-art transfer pricing methodology. The Federal Court fails to recognise that, in principle, only a range can be determined for the market interest rate or that it is unlikely that there is only one market interest rate for a specific transaction. [10] The principle applies that a correction to the actual terms agreed between related parties is only permitted at the upper or lower end of the identified arm’s length range. This principle has now been unnecessarily called into question by the Federal Supreme Court, at least as far as interest rates are concerned. It is also questionable to what extent the interest rates published by the SFTA correspond to the arm's length principle, if they cannot be used as a basis for determining deemed dividends. In this context, it should be noted that some tax administrations have taken the view that the range of arm's length interest rates is relatively narrow, meaning that a deviation of more than 25% from the SFTA interest rates is per se inconsistent with the arm's length principle and that the taxpayer is (effectively) denied the opportunity to provide rebuttal evidence. [11] This position can no longer be maintained if the case law of the Federal Court is consistently applied.
With regard to the specific facts of the present case, it can be said that the deviation of the TA ZH from the SFTA interest rates can be regarded as appropriate in individual cases. However, the reasoning chosen by the Federal Supreme Court to justify the deviation from the SFTA interest rates is not convincing and leads to unnecessary uncertainties. It would have been more appropriate to emphasise the special nature of the individual case at hand and thus follow a factual line of reasoning. In this respect, the Federal Supreme Court could have referred to the general rule that the interest rate circulars of the SFTA can (only) be deviated from if they do not convincingly specify the applicable legal provisions, which could certainly have been argued in the present case.
It would now be desirable for the SFTA to take the present decision of the Federal Court as an occasion to amend its interest rate circular and, in particular, to define more precisely the scope of application of the safe harbour rules. [12] This would increase legal certainty for taxpayers, and the expected additional workload for the tax authorities could be mitigated. In this context, it should be noted that the credit rating of the borrower and the specific structure of the financing are of considerable importance in determining an arm's length interest rate on a case-by-case basis. For example, the impact of collateral, maturity and prepayment rights (or lack thereof), as well as whether and how implicit group support or a group rating should be taken into account, must be assessed.
Since deviation from the SFTA's interest rate circulars has always led to a de facto obligation to provide evidence of the arm’s length of the interest rates used, it is still recommended - also in light of the discussed decision - that groups prepare a robust transfer pricing analysis and documentation.
Zurich, August 23, 2024
[1] For a more detailed description of the facts, see the ruling of the Administrative Court of the Canton of Zurich SB.2021.00056 of May 25,2022..
[2] Judgment FSC 9C_690/2022 of July 17, 2024, E. 6.1.
[3] Judgment FSC 9C_690/2022 of July 17, 2024, E. 4.1.
[4] Judgment FSC 9C_690/2022 of July 17, 2024, E. 4.2.
[5] Judgment FSC 9C_690/2022 of July 17, 2024, E. 6.2.
[6] Judgment FSC 9C_690/2022 of July 17, 2024 E. 6.2. in fine
[7] Cf. GRETER, Der Beteiligungsabzug im harmonisierten Gewinnsteuerrecht, Diss., Zurich 2000, p. 142.
[8] Cf. Attenhofer, in: Klöti-Weber/Schudel/Schwarb, Kommentar zum Aargauer Steuergesetz, 5th edition, Bern 2023, para 35 to § 27b; Vitali, ibid., para. 86 to § 76,
[9] See https://www.estv.admin.ch/estv/de/home/internationales-steuerrecht/verrechnungspreise.html, question 23.
[10] See https://www.estv.admin.ch/estv/de/home/internationales-steuerrecht/verrechnungspreise.html, question 32.
[11] See Harbeke/Hug/Scherrer, Verrechnungspreisrecht der Schweiz, Grundlagen und Praxis, Zürich, 2022, para. 1188.
[12] See also the criticism of the SFTA interest circulars in Harbeke/Hug/Scherrer, a.a.O., para. 1226.
Caution should be exercised when classifying the remuneration of financial intermediaries for VAT purposes, as even terms that are clearly defined in administrative practice can be interpreted very differently depending on the circumstances.
In the present dispute, the complainant acted as an asset manager. She received two types of compensation for her activities under an asset management agreement: On the one hand, she was paid the brokerage fees paid by the asset management clients plus brokerage fees from the bank; on the other hand, she received a monthly management fee. Under the brokerage agreements with two different banks, the complainant received remuneration or external asset management fees resulting from the activities recorded in the clients' accounts.
The question is how to qualify these fees for VAT purposes. Even if terms are listed and defined in black and white according to administrative practice, these terms (in this case charges) would have to be analysed precisely and placed in the correct context, otherwise the results would be completely different.
In the present case, it is undisputed that the complainant acts as an asset manager and that the monthly management fee is subject to VAT at the standard rate. However, it is disputed whether the brokerage fees and external asset management fees are remuneration for a tax-exempt brokerage service or a taxable asset management service.
In case law and administrative practice, the view is held that the underlying transaction brokered is decisive for the categorisation of an intermediary activity. If the underlying transaction originates from the area exempt from tax, the remuneration for the brokerage is exempt from tax.
As an asset manager, the appellant offers both investment advice and execution for its clients and also receives separate and contractually agreed remuneration for these services. In the opinion of the complainant (based on point 6.1.6 of MBI 14 and on the previous case law of the Federal Supreme Court), brokerage fees (called: Courtagen) for execution are deemed to be exempt fees for trading in securities. Alternatively, the asset management service should be regarded as an exempt ancillary service to the brokerage service, as the European Court of Justice (ECJ) has already ruled in a similar case (C-453/05, 21 June 2007).
The complainant is of the opinion that it provides brokerage services in accordance with administrative practice. Non-application of this administrative practice would violate the constitutionally guaranteed protection of legitimate expectations.
Brokerage is clearly defined in section 5.10.1 of MBI 14 and refers to the activity of an intermediary acting in this capacity, which consists of working towards the conclusion of a contract in the area of money and capital transactions between two parties without being a party to the brokered contract and without having a vested interest in the content of the contract. Brokerage must be carried out as an independent intermediary activity.
The FTA, on the other hand, considered the appellant's performance to be taxable asset management based on section 5.10.3 of MBI 14 and further believes that the financial contributions (retrocessions) represent a self-interest due to the obligation to deliver, which in turn would be contrary to exempt brokerage.
The Federal Supreme Court is of the opinion that the complainant's execution service is to be regarded as ancillary to the main service of investment advice or asset management, as this service would not make sense on its own. It merely serves as an instrument for utilising the complainant's main service under optimal conditions. This type of service has no independent purpose for clients. If there were no asset management mandates, no client would utilise the execution services alone, but would commission a bank to do so.
Although the appellant is convinced that brokerage fees cannot be listed separately as an ancillary service in administrative practice, the Federal Supreme Court finds that the same service may have to be assessed differently depending on the context. In this case, the execution service (ancillary service) only fulfils a purpose in the context of an asset management mandate (main service).
With regard to the protection of legitimate expectations, the Federal Supreme Court points out that Chapter 6.1 of MBI 14 cited by the complainant under the heading "General banking services" refers specifically to services offered by banks. Therefore, the protection of legitimate expectations cannot be invoked in this context.
This judgement illustrates the relevance of a precise determination of the underlying service in the context of an intermediary activity. In this regard, it should be noted that even the explanations and terminology used in administrative practice are only valid in their respective context.
René Matteotti / Christian Attenhofer, Analysis of the Federal Supreme Court case law on international administrative assistance in tax matters from the second half of 2023, ASA 92 (2023/2024), pp. 965-977
Switzerland committed to extend the international automatic exchange of information to include cryptoassets and salary data, whereby salary data is only exchanged with Italy and France. In order to establish the necessary legal foundation, the Federal Council has submitted amendments to the existing Federal Act on the Automatic Exchange of Information and the introduction of a new Federal Act on the Automatic Exchange of Information on Salary Data for consultation. The main points are outlined below.
In fall 2022, the OECD presented an automatic exchange of information ("AEOI") specifically for digital assets, the so-called Crypto Asset Reporting Framework ("CARF"). In November 2023, around 50 countries, including Switzerland, agreed to extend the AEOI to digital assets and the CARF. The CARF is intended to close existing gaps in the tax transparency regime and eliminate the different treatment of "traditional" financial products and crypto products. It is planned to enact the crypto AEOI on January 1, 2026, so that the first data exchange on the basis of the CARF can take place in 2027. To this end, the international legal basis must first be approved by Parliament and the existing Federal Act and the AEOI must be amended accordingly. At the same time, various recommendations of the Global Forum on Transparency and Exchange of Information for Tax Purposes regarding the already existing AEOI will also be implemented. In this regard, the Federal Council opened the consultation process on 15 May 2024 (see here).
The AEOI for cryptocurrencies follows the same system as the AEOI for financial accounts. It provides for the automatic and regular exchange of information on transactions involving cryptocurrencies. The information to be exchanged is to be collected by the providers of crypto services subject to the reporting obligation and transmitted to the Swiss Federal Tax Administration (“SFTA”) once a year. The information to be exchanged and the qualification as a reportable provider of crypto services are regulated as follows in the multilateral agreement on the crypto AEOI and in the DTA.
Who: Legal entities and natural persons are subject to the CARF reporting obligations, if they provide services for or on behalf of their customers in the form of exchange transactions between various relevant cryptocurrencies and between relevant cryptocurrencies and fiat currencies. As such services also qualify the providing trading platforms or by assuming the role of a counterparty or an intermediary in the aforementioned exchange transactions.
About whom: Reportable users within the meaning of the CARF are natural persons and legal entities (including trusts and foundations) that are clients of a reportable provider of crypto services and are not exempt from the reporting obligation. The beneficial owners of the cryptocurrencies in question are also deemed to be reportable clients. The purpose of recording the beneficial owners is to prevent circumvention of the AEOI.
What: The reports must generally contain information on the identity of the person subject to the reporting obligation (name, address, date of birth, tax residency, tax identification number, etc.) and on the transactions carried out (type of cryptoasset, total gross amount, total number of units, number of transactions, staking and lending fees etc.). The information on the provider of the crypto services concerned subject to the reporting obligation must also be provided.
How: In order to identify the reportable users of cryptocurrencies, determine the countries relevant for tax reporting and obtain the necessary information, the CARF contains diligence obligations for the reportable providers of crypto services. The intentional breach of these diligence obligations and other obligations under the AEOI can be punished with fines of up to CHF 250,000. In the event of negligence, the fine is up to CHF 100,000.
Potentially reportable providers of crypto services are recommended to check as early as possible whether they or their services fall within the scope of the Crypto AEOI and - if a reporting obligation exists - to implement appropriate processes to ensure reporting.
On June 7, 2024, the Federal Council opened the consultation on a new federal law on the automatic exchange of salary data (see here). The draft of this law is based on the agreements that Switzerland was able to conclude with Italy and France to create new rules for the taxation of cross-border commuters (Italy) and the taxation of teleworking (France).
On 23 December 2020, Switzerland was able to conclude a new "cross-border commuter agreement" with Italy. This agreement entered into force on July 17, 2023 and has been applicable since January 1, 2024. In addition to the redefinition of the term "cross-border commuter" and the new allocation rules for taxable income, the agreement provides for the automatic exchange of information on salary data under the title of "Administrative cooperation". According to the new cross-border commuter agreement, persons are deemed to be cross-border commuters if they
Under the new agreement, “new” cross-border commuters who are resident in the Italian border region and are gainfully employed by an employer based in the Swiss border region or have a corresponding permanent establishment will be subject to ordinary taxation in Italy. However, Switzerland may tax the income at 80% of the withholding tax, whereby Italy credits this tax to avoid double taxation. Existing cross-border commuters, i.e. those who already qualified as cross-border commuters between December 31, 2018 and July 17, 2023 and are still considered cross-border commuters under the new agreement, will continue to be taxed exclusively in Switzerland. The cantons of Grisons, Ticino and Valais are obliged to pay 40% of this tax revenue to the Italian border communes until December 31, 2033.
In order to ensure the correct taxation of new cross-border commuters, the cross-border commuter agreement provides for the automatic exchange of salary data. For employers in the cantons of Grisons, Ticino and Valais, this means that they must report salary data and other information on the person concerned for all cross-border commuters resident in Italy to the cantonal tax authorities for the first time at the beginning of 2025 for the 2024 calendar year. The tax authorities of the cantons of Grisons, Ticino and Valais will then be responsible for forwarding the information.
In relation to France a supplementary agreement to the existing double taxation agreement was concluded on June 27, 2023, which was adopted by Parliament on June 14, 2024 (see hier). With this supplementary agreement, the tax attribution standards for teleworking previously regulated in various mutual agreements will be transferred to the DTA and the protocol to it. The new regulation stipulates that 40% of the working time per calendar year can be performed in the form of teleworking without the employee's country of residence having the right to tax the wages paid. This regulation applies to the whole of Switzerland, with the exception of cross-border commuters who work in the cantons of Basel-Landschaft, Basel-Stadt, Bern, Jura, Neuchâtel, Solothurn, Vaud and Valais. Although the same tolerance of 40% applies to them, they are technically not covered by the DTA.
The employer's state pays the other state compensation amounting to 40% of the tax owed for work performed in the form of teleworking. However, a special rule applies to employers in the canton of Geneva: Here an exemption limit of 15% of the working days for which no compensation payment has been established. In other words, a compensatory payment is only due for teleworking days that account for between 15% and 40% of working time. This provision was included in the agreement since Geneva must continue to pay the departments of Ain and Haute-Sovoie a compensation payment amounting to 3.5% of the gross salary of cross-border workers employed in Geneva. France did not want to waive this payment for domestic political reasons.
It is obvious that monitoring compliance with the aforementioned regulations requires detailed and reliable information on the activities and remuneration of the persons concerned. France has therefore expressed the wish for many years to compare the salary amounts reported by Switzerland with the income declared in France by cross-border commuters. With the supplementary agreement of June 27, 2024, an automatic exchange of information for salary data has now been included. In addition to the personal details of the persons concerned, the following information must be transmitted: Calendar year in which the income was earned; number of teleworking days or teleworking rate in percent; total amount of gross remuneration paid. The introduction of the exchange of information is planned for the beginning of 2026, which means that employers in all Swiss cantons will have to submit information to the competent tax authorities for the first time at the beginning of 2026 for the calendar year 2025 for all employees residing in France. In contrast to the exchange of information with Italy, salary data will be reported to France via the SFTA.
As the international automatic exchange of salary data is being introduced for the first time, the Federal Council intends to create the necessary legal basis for this in a new federal law, the Federal Act on the International Automatic Exchange of Information on Salary Data. In addition to the procedure, responsibilities and confidentiality obligations, the new law also covers the rights of employees. In particular, they have a right to information about the information concerning them and to be transmitted, as well as the rights arising from the Data Protection Act. Finally, the penal provisions should also be emphasized for employers. Negligent or intentional violation of the obligation to provide information that must be reported and violation of the obligation to provide information to employees can be penalized with a fine of up to CHF 1,000. In serious cases or in the event of recidivism, the fine can be set at up to CHF 10,000.
As shown above, the expansion of the international automatic exchange of information to include crypto and salary data also entails corresponding obligations for information holders, i.e. crypto service providers and employers. It is advisable - not least with regard to the criminal provisions - to check at an early stage whether and to what extent the described extensions are relevant for your own company and, if necessary, to set up appropriate processes to ensure the timely and correct provision of the data to be transmitted. It remains to be seen whether and when the automatic exchange of wage data will also be introduced in relation to Germany and Austria.
The VAT treatment of "simple" supplies of goods can lead to complex VAT issues in individual cases. It becomes even more complex when additional elements are added to the element of a pure supply of goods. In these cases of "complex supplies", the terms contractual supply of goods (“werkvertragliche Lieferung”), supply under a contract for work and labour (“Werklieferung”) and supply and assembly of goods (“Montagelieferung”) are used in the German speaking DACH region (Switzerland, Germany and Austria). What do these terms mean from a VAT perspective? And do they differ at all?
The "werkvertragliche Lieferung" is a speciality of Swiss VAT with its very broad understanding of a "supply of goods". There is no definition in either the law or the ordinance. The FTA considers a "werkvertragliche Lieferung" to be "all supplies of movable or immovable goods that are newly manufactured or processed before delivery on the basis of a contract for work and services or an order", see VAT Info 06 "Place of supply", point 3.1. The extent of the processing is irrelevant. It is also not necessary for material to be used, replaced or added as part of the processing.
The definition in the VAT information on the "place of supply" shows the primary importance of the “Werklieferung” in contrast to a "simple" supply of goods: the determination of the place of supply for VAT purposes. In accordance with the general principle of Art. 7 para. 1 let. a VAT Act, the supply of a “Werklieferung” is deemed to have taken place where the contractual work is performed or where the goods are delivered. However, please note: If the additional service under the “Werklieferung” (e.g. assembly/installation) is merely an ancillary service to a supply of goods, the supply is deemed to have been made where the transport or dispatch begins.
Example: The Swabian tool manufacturer sends its fitter to Switzerland to replace a spare part for a customer in Winterthur (not a warranty case). The fitter brings the spare part with him from Germany. The tool manufacturer is registered for VAT in Switzerland.
The place of supply under the "contractual supply of goods" is the place where the contractual work is performed. The necessary assembly work is not merely ancillary to the "supply of the spare part". The tool manufacturer is the importer of the spare part and is subject to domestic tax on its delivery to the Swiss customer under the "contractual supply of goods".
In other (German-speaking) European countries, the term "werkvertragliche Lieferung" is not officially used in connection with VAT. In Austria and Germany, however, the term "Werklieferung" (“supply under a contract for work and labour”) is used and is defined as the treatment or processing of an object by an entrepreneur in which the entrepreneur uses materials that he has procured himself and which are not merely ingredients or ancillary items, Section 3 (4) VAT Act DE/AT. A Werklieferung is therefore a complex supply in the sense of a bundle of different supply elements (usually supply of goods and services elements in the sense of the European understanding) that are so closely linked that they are to be treated as a single supply for VAT purposes.
The existence of a supply under a contract for work and labour in this sense therefore requires that
The requirements for the existence of a “Werklieferung” are therefore much more narrowly defined than for the existence of a "werkvertragliche Lieferung".
From the point of view of Swiss VAT law, this is a “werkvertragliche Lieferung”, as the work of art is produced on behalf of and according to the wishes of the client. From the perspective of Austrian VAT law, it is not a “Werklieferung”, as the artist does not treat or process any goods belonging to his Austrian client.
The distinction between a “Werklieferung” and a simple supply of goods is initially used to determine the place of performance for VAT purposes. As in Switzerland, no special regulations apply to “Werklieferungen”, but rather the general principles for determining the place of supply in connection with supplies of goods.
The distinction is also important when it comes to the question of who is liable for VAT in each case. Neither in Germany nor in Austria does the reverse charge procedure currently apply to "simple" supplies of goods (reverse charge = reversal of the tax liability from the supplier to the recipient). The situation is different in the case of “Werklieferungen” by an entrepreneur based abroad to a service recipient who is also an entrepreneur. In these cases, the recipient is liable to pay VAT to the tax authorities if the place of supply is in Germany or Austria.
The “Montagelieferung” is not included in either the German or Austrian VAT Act. Rather, this is a term derived from the European VAT Directive. The VAT Directive forms the basis of the harmonised VAT system in the EU member states ("Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax", referred to in this article as the VAT Directive).
As the term "Montagelieferung" suggests, this is a supply where the goods are installed or assembled at the customer's premises by or on behalf of the supplier. In this case, the Directive states that the place of supply is the place where the installation or assembly is carried out, Art. 36 of the VAT Directive. Accordingly, the assembly supply differs from the German or Austrian “Werklieferung” in that it does not require the working or processing of a material provided by the customer. There is disagreement between the various member states as to which services make an assembly supply such a supply (specifically: does it require fixing at the supplier's premises or is it sufficient to assemble the goods and make them ready for use?) In German-speaking countries, the prevailing view seems to be that assembly requires the object of the supply to be attached or fixed to a specific location using technical aids.
Example: Belt AG, which is domiciled in Switzerland, specialises in the production of conveyor belts. It is commissioned by the German company Worldwide Shipping GmbH to supply a mobile conveyor belt. Belt AG will adapt and install the conveyor belt to the existing conditions on site in Germany, but without working or processing Worldwide Shipping GmbH's goods.
Similar, but completely different - or "same same but different". With VAT, the devil is in the detail. If you consider that the relevant circumstances usually involve the import of goods and that the input tax deduction is only ever granted to the "correct" importer, it becomes clear why errors still regularly creep into the VAT treatment of seemingly commonplace transactions, resulting in extensive offsetting and at least a large administrative burden in the event of an audit.
With appropriately trained staff and up-to-date work aids, risks can be minimised and the focus can be directed towards the essentials.
Value added tax and real estate is one of the perennial favourites in advisory services. The regulations are complex in detail and the amounts for individual transactions are comparatively high. In our blog, we present a series of relevant problem areas and discuss what to look out for. In this contribution, we deal with VAT issues in connection with dismantling and demolition costs (hereinafter "dismantling costs") and input VAT deduction.
From a VAT perspective, the commercial use of a property regularly passes through three "life phases":
From a VAT perspective, different and sometimes controversial questions arise in every phase of this lifecycle. In the recent past, the courts have ruled on issues relating in particular to the demolition of properties and the associated right to deduct input tax.
The taxable person can in principle deduct the VAT invoiced to and paid by them, the acquisition tax and the import tax as input tax within the scope of their business activity.
There is no entitlement to input tax deduction for supplies and the importation of goods that are used for the provision of services that are exempt from tax and for the taxation of which has not been opted.
This reservation is of particular relevance in connection with real estate, as the transfer and creation of rights in rem to real estate, services provided by condominium owners' associations to the condominium owners and the transfer of real estate and parts of real estate for use or utilisation are generally exempt from tax.
There are exceptions for certain uses (e.g. the letting of living rooms and bedrooms for the accommodation of guests and the letting of rooms in the hotel and catering industry or the letting of spaces not in public use for the parking of vehicles).
It is also possible to voluntarily subject the corresponding supplies to VAT (so-called option). However, the option is subject to the proviso that the item is not used or intended to be used by the recipient exclusively for residential purposes.
When deducting input tax in connection with demolition costs, a distinction must first be made as to whether the demolition costs were preceded by a change of ownership (i.e. the demolition is carried out by the purchaser of the property) or not (i.e. the demolition is carried out by the previous owner of the property).
The dismantling represents the final phase of the previous business use. The assessment of whether input tax is deductible in connection with the dismantling is based on the previous use for supplies that entitle input tax to be deducted or supplies that do not entitle input tax to be deducted. The intended future use and any associated change of use is not relevant.
In the opinion of the Federal Supreme Court, further differentiation is required here:
If the purchaser initiates the demolition of the property "immediately" after acquisition, he enters the first VAT-related life phase of the future property ("construction"). Accordingly, the right to deduct input tax depends on the future use of the property (to be constructed).
If the purchaser does not initiate the demolition of the property "immediately" after acquisition, but instead puts it to an interim use, it must be examined whether this interim use is to be regarded as an independent operating phase or as a "non-independent interim use".
In the case of an independent operating phase, the demolition costs are part of the last life cycle phase of the current use of the property and the right to deduct input tax is based on the previous use. In the case of non-independent interim use, on the other hand, the demolition costs are included in the first life cycle phase of the "construction" of the new property to be built.
Particularly in connection with interim use, it must be carefully examined whether this must be regarded as an independent operating phase or whether it merely represents non-independent interim use. However, the demarcation criteria are not very clear-cut and neither the administration nor the relevant case law offer any help here.
On the other hand, it is clear that forward-looking planning in connection with property transactions offers considerable potential for optimisation.
The so-called "platform economy" refers to a popular business model that is based on an (online) platform bringing together providers of certain goods and services with customers. This business model is so popular and so "special" from a VAT perspective that legislators in Switzerland and abroad feel compelled to address the special features by amending their respective VAT law. In the EU, for example, specific regulations have applied to online marketplaces and platforms since 2021. In Switzerland, a corresponding new regulation will be introduced to the VAT Act on 1 January 2025. However, this will only affect supplies of goods that are brokered via online platforms. Services will (initially) not fall within the scope of the regulation. Against this background (and because the legal situation applicable until 1 January 2025 also applies to all supplies), administrative practice and case law from this area are still of interest - such as the interesting Federal Administrative Court ruling of 7 December 2023 (A-1573/2022).
In the case of supplies via online platforms, the question regularly arises from a VAT perspective as to whether the platform itself is deemed to be the VATable provider of the brokered supply (case 1) or whether, from a VAT perspective, it merely provides a brokerage service that is decoupled from the brokered supply (case 2).
In case 1, the brokered supply and its recipient are decisive for the VAT qualification of the supply provided by the platform. The remuneration of the recipient of the service constitutes the basis of assessment for VAT. In this constellation, consumers are often deemed to be the recipient of the supply (b2c), which leads to extended tax obligations for the platform, particuarly abroad.
In case 2, only the brokerage service itself forms the content of the broker’s supply; the commission charged to the supplier and/or the recipient of the brokered supply forms the basis for calculating the platform's turnover. If a fee is only charged to the suppler, the brokerage service of the platform is often provided to an entrepreneur (b2b).
In the opinion of the administration, the constellation in which the parties find themselves is largely determined by the external appearance and whether it is objectively clear from the circumstances as a whole that the platform merely acts as an intermediary and does not provide the supply itself.
The case in question concerned an intermediary platform for food deliveries. The platform was of the opinion that it qualified as a "food supplier" due to its public appearance. This was contested by the FTA, which considered the platform to be merely an intermediary that provided intermediary and delivery services taxable at the standard rate. The FTA based its qualification on, among other things, the general terms and conditions, which clearly stated that there was a direct service relationship between the restaurant and the customer for the meals themselves. In the view of the administration, this position was strengthened by the fact that the customer could not only select the dishes during the ordering process, but also the specific restaurant from which he wished to order.
As a result, the court ruled in favour of the platform and based its judgement largely on the customer's perception of the ordering process and afterwards ("user experience"). The platform had acted as a point of contact or counterparty for customers throughout the entire ordering process as well as during delivery and in the event of complaints and payment. Any ambiguities as to whether there was an intermediary relationship or a direct service relationship with the platform were "at the expense" of an intermediary service. If it is not clear from the circumstances that the platform is acting as an intermediary, it should be assumed in case of doubt that the platform itself is acting as the supplier.
It is remarkable how much importance the court attaches to the supposed "user experience", even if this - in the court's view - contradicts the explicit written documentation. It is not at all unusual for consumers not to take any in-depth knowledge of general terms and conditions, in the eyes of the court. It follows from this that the websites and order processing of corresponding platforms could be of great importance and must be included in a VAT assessment.
The judgement was appealed to the Federal Supreme Court. It therefore remains to be seen whether the decision will be upheld. For platforms that broker supplies of goods, the new regulation will create a certain degree of legal certainty from 1 January 2025. Platforms that broker services are required to keep an eye on developments - and to thoroughly review their current public perception.
Value added tax and real estate is one of the perennial favourites in VAT advisory services. The regulations are complex in detail and the amounts for individual transactions are comparatively high. In our blog, we present relevant problem areas in loose succession and discuss what to look out for. In the first part, we deal with VAT issues in connection with the transfer of real estate.
There are basically three ways to account for the sale of a property for VAT purposes:
The transfer as an exempt supply means that the sales transaction itself does not trigger VAT. As the supply itself is "non-taxable", the (taxable) seller cannot claim input tax deduction on the input taxburdened expenses in connection with the transaction.
If the (taxable) seller has used the property until the sale (in whole or in part) for purposes entitling him to deduct input tax, the sale as a taxexempt supply constitutes a "change of use" (old use: partially or fully entitling to deduct input tax, new use: not entitling to deduct input tax). Ac-cordingly, the seller must make an input tax adjustment due to own use in accordance with Art. 31 of the VAT Act.
The taxable company Hans Muster AG in Walchwil holds a property as part of its business assets. The property houses the joinery of Hans Muster AG. In October 2014, Hans Muster AG had the roof of the property recovered. Hans Muster AG claimed the VAT invoiced for this as input tax. On 1 July 2024, Hans Muster AG sells the property to Müller Immo AG. The sale is to take place in accordance with the statutory base case as an exempt supply.
Hans Muster AG previously used the property extensively for taxable purposes (carpentry). The sale as an exempt supply results in a change of use. Accordingly, Hans Muster AG must correct the input tax deduction in connection with the property. In this case, the input tax deduction in connection with the renovation of the roof is affected. The extent of the correction depends on the current value of the renovation. To determine the current value, the input tax amount is reduced by 5% on a straightline basis for each year that has elapsed for immovable property. The accounting treatment is not rele-vant. Accordingly, Hans Muster AG must correct the originally deducted input tax by 50% (5% * 10 years, the current year of sale is generally not taken into account when deter-mining the current value).
The purchaser acquires the property free of VAT. If the property is used for non-taxable purposes (e.g. as a retirement home), there is no risk of a change of use for the purchaser. On the other hand, the purchaser does not transfer any potential for de-taxation.
Hans Muster AG includes the input tax adjustment to be made by it in the sales price. Müller Immo AG initially intended to demolish the business premises and build a modern residential property on the site. It is changing its plans to the effect that shops are now planned on the ground floor and offices on the first floor.
In the case of the construction of a residential property, Müller Immo AG is interested in minimising the input tax burden in connection with the acquisition of the property. In the case of taxable use (shops and office space can be let/sold on an optin basis), the input tax burden plays a rather minor role, as Müller Immo AG is entitled to deduct input tax. The "hidden" VAT transferred from the input tax correction of Hans Muster AG, on the other hand, results in a definitive additional charge for Müller Immo AG.
If the contracting parties have not made any special agreements and VAT is not shown in the purchase contract, the sale is to be treated as a tax-exempt transaction.
As a first alternative, the taxable seller of a property has the option of voluntarily subjecting the sale to VAT ("option"). The prerequisite for exercising this option is that the property is not used by the buyer exclusively for residential purposes. If the buyer acquires the property in order to sublet it for residential purposes, the option is possible, as the buyer himself does not intend to use the property exclusively for residential purposes.
The seller can also opt for only part of the sale of the property. When selling developed properties, the seller can claim input tax on the costs directly related to the sale in full or in part (depending on the option).
The taxable company Hans Muster AG in Walchwil holds a property as part of its business assets. The property houses Hans Muster AG's joinery workshop. Above it is a penthouse with a view of Lake Zug. In October 2014, Hans Muster AG had all the windows in the property replaced. Hans Muster AG claimed the VAT invoiced for this as in-put tax insofar as the windows of the joinery were affected. On 1 July 2024, Hans Mus-ter AG sold the property to Müller Immo AG.
Hans Muster has the option of selling the property as a whole on an optin basis, as Mül-ler Immo AG will not use the penthouse flat itself for residential purposes. By opting for VAT for the transfer, Hans Muster AG would not have to make an input tax adjustment in relation to the input tax claimed in connection with the renovation of the windows in the joinery area. Rather, there is a change of use with regard to the penthouse flat, which entitles Hans Muster AG to make a input tax deduction with regard to the input tax not claimed in connection with the renovation of the windows in the penthouse flat area Inso-far as Müller Immo AG continues the previous use of the penthouse flat, its opted trans-fer will result in an additional VAT charge for Müller Immo AG, which will presumably have an impact on the purchase price negotiations.
There is also the possibility that Hans Muster AG merely opts for the sale of the joinery and transfers the penthouse flat as a taxexempt supply. In this case, Max Muster AG does not have to calculate either an own-consumption correction or a subsequent input tax deduction.
Formally, a sale with an option only requires that the VAT is shown separately in the purchase contract on the purchase price without the value of the land or that the declaration is made in the statement in sections 200/205.
When using the notification procedure, VAT is settled with the FTA by notification instead of payment. The notification procedure therefore offers the possibility of processing the transaction without the buyer having to finance the VAT. By using the notification procedure, the buyer assumes the seller's taxable base and the utilisation level entitling to input tax deduction for the transferred assets.
The taxable company Hans Muster AG in Walchwil holds a property as part of its busi-ness assets. The property houses Hans Muster AG's joinery workshop. Above it is a penthouse with a view of Lake Zug. In October 2014, Hans Muster AG had all the windows in the property replaced. Hans Muster AG claimed the VAT invoiced for this as in-put tax insofar as the windows of the joinery were affected. On 1 July 2024, Hans Mus-ter AG sells the property to Müller Immo AG. The transfer is handled by means of a noti-fication procedure.
Müller Immo AG takes the place of Hans Muster AG with regard to the property for VAT purposes, i.e. it takes over a property that was used in the taxable area with regard to the joinery and in the taxexempt area with regard to the penthouse. If it rents the penthouse to a business consultant in the future, it can claim a subsequent input tax deduction for the replacement of the windows in 2014 (50% of the original input VAT paid). The pre-requisite is that she can prove the extent to which VAT was originally invoiced and paid.
In connection with possible changes of use after the transfer in the notification procedure, proof of previous use by the seller is of central importance. It is the buyer's responsibility to provide this proof. He must ensure that he receives all input tax receipts relevant to a change of use, evidence of valueenhancing expenses or extensive renovations over the last 20 years and records of previous input tax corrections.
If the buyer is unable to provide this evidence, they run the risk of input tax corrections being calculated on the basis of the purchase price due to changes in use. In this case, the FTA assumes that the property has been used entirely within the taxable area to date.
In example 4, Hans Muster AG is unable to provide any evidence of the history of the property due to a water ingress in its archive.
If Müller Immo AG continues to use the penthouse for residential purposes, it would have to make an input tax adjustment due to a lack of evidence of the previous use. This is based on the purchase price with Hans Muster AG. If it rents the penthouse to a man-agement consultant in the future, it cannot claim a subsequent input tax deduction.
Accordingly, the notification procedure should be used with caution in property transactions if there are uncertainties regarding the previous or future use and there are gaps in the documen-tation.
Even if the above summary of VAT structuring options in connection with real estate transactions is only an initial overview, it is clear that real estate transactions should also be thoroughly examined in advance from a VAT perspective in order to make optimum use of the structuring options available. We have summarised the various structuring options in simplified form below
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| Exempted supply | Taxed supply ("opted") | Notification procedure |
Tax liability of the seller required? | No | Yes | Yes |
Tax liability of the buyer required? | No | No | Yes |
Note/application requi-red? | No | Yes | Yes |
Is VAT due for pay-ment? | No | Yes | No |
Does the seller possibly have to take into ac-count the correction of the input VAT? | No | No | No |
Can the seller possibly claim subsequent input tax deduction? | No | Yes | No |
Does the buyer possibly have to take into ac-count a correction of the input VAT? | No | Yes | Yes |
Can the buyer possibly claim subsequent input tax deduction? | No | No | Yes |
Is the VAT history of the property relevant? | No | No | Yes |
The world of e-commerce has seen unprecedented expansion in recent years, with digital platforms and online commerce revolutionising the global market. However, with this growth comes complex challenges, particularly with regard to value added tax (VAT) and its application to cross-border trans-actions. The dynamic nature of e-commerce, combined with international business practices, has led to a complex legal landscape that poses new challenges for participants in e-commerce. The follow-ing article deals primarily with VAT issues in b2c trade (i.e. sales to consumers, as opposed to busi-nesses). This is a rough initial overview. The relevant regulations are complex and should therefore be examined on a case-by-case basis based on the specific business model.
No thresholds for third countries!
Anyone who provides b2b deliveries (and certain services) in the EU without having a fixed place of business in the EU may be liable to pay tax immediately (i.e. from the first euro of turnover). Special schemes for small businesses usually only apply to companies based in an EU member state.
Settling VAT in 27 member states: the One Stop Shop
In the case of b2c deliveries to different member states (so-called distance sales) from an EU ware-house (duty paid goods), the VAT rate of the country in which the warehouse is located initially ap-plies.
If the turnover from such distance sales exceeds EUR 10,000 per year across the EU, the VAT rate of the country in which the customer is based applies. Until recently, e-commerce traders may have had to register for VAT separately in all member states in order to fulfil their reporting and accounting obligations. Since 2021, it has been possible for them to fulfil their reporting and accounting obliga-tions via a central registration, the so-called One Stop Shop ("OSS").
Example: as above, but the retailer now has a turnover of EUR 17,000 p.a., of which EUR 6,000 is generated in Austria and EUR 5,000 in the Netherlands.
Delivering goods from a third country to the EU: the Import One Stop Shop
Like distance sales within the EU, distance sales from a third country are also subject to VAT at the VAT rate applicable in the customer's country. Up to a goods value of EUR 150, retailers have the option of processing the corresponding distance sales via the so-called Import One Stop Shop (IOSS).
If the application of the IOSS is waived, a special regulation may apply, according to which the import tax is collected by the freight forwarder directly from the respective customer. Freight forwarders regularly charge their customers additionally for their customs clearance services - so that this proce-dure appears expensive and less transparent from the customer's point of view.
Finally, it is possible for distance sellers to register in the respective member states of their custom-ers and invoice their deliveries to the national tax authorities themselves.
Alternatively, the retailer has the option of applying the "special regulations for the import of consignments with a material value of no more than 150 euros" (as described in the corre-sponding Section 21a of the German VAT Act). In this case, the freight forwarder collects the tax (and any handling surcharges) directly from the customer.
Thirdly, Swiss traders still have the option of registering for VAT in Austria, Germany and the Netherlands and settling VAT locally.
Platform taxation
Special rules have applied in the EU for several years to distance sales that are initiated or processed via so-called "electronic interfaces", provided that the goods are dispatched within the EU and the seller itself is based in a third country. An electronic interface is, for example, an electronic market-place or an electronic platform that enables the buyer and seller to come into contact, resulting in the delivery of goods to the recipient of the service (e.g. Amazon Marketplace, ebay or Alibaba).
In cases where an electronic interface is included in the supply chain in this sense, a so-called "supply chain fiction" occurs: While there is actually only a single sales transaction, two supplies are fictitious for VAT purposes by assuming a (first) supply from the trader to the operator of the electronic inter-face and a (second) supply from the operator of the electronic interface to the final purchaser. The fictitious supply from the online trader not established in the Community to the operator of the elec-tronic interface is exempt from VAT. The supply of the electronic interface to the end customer fol-lows the general principles for distance sales.
Dropshipping and other modern sales channels offer tantalising opportunities to tap into new sources of income. It is essential to consider the (value-added) tax consequences right from the start. If you wait until your business has reached a critical size, you will be chasing your own past failures. With a clever setup, the business can be scaled without major risks and the administra-tive effort can be kept within reasonable limits.
In a recent ruling (BGer 9C_154/2023 of 3 January 2024), the Fed-eral Supreme Court dealt with the admissibility of input tax deduction for acquisition tax (VAT on services purchased from abroad) for con-sultancy services in connection with the sale of shareholdings. Ac-cordingly, a person liable for VAT in Switzerland is only entitled to claim the declared purchase tax as input tax if the corresponding ser-vices were provided in a period in which the taxable person was al-ready liable for VAT (registered). The taxable person is responsible for providing proof of this.
A AG, which was only entered in the VAT register as a taxable person on 1 April 2019, planned the sale of shares in two companies. To this end, it commissioned several foreign service pro-viders to prepare, plan and implement the sale, who were to provide advice in the areas of in-vestment, auditing, tax and law, depending on their expertise. The consultancy agreements be-tween A AG and the consultants were concluded in 2014 and 2018 respectively, i.e. before A AG was registered as a company subject to VAT. The project was then completed in May 2019 with the successful sale of the shares. All consultants invoiced their services after 1 April 2019, whereby A AG, which was now liable for VAT, duly declared the purchase tax and reclaimed the resulting VAT amount as input tax. None of these purchased services were capitalised during the duration of the project from 2014 to May 2019.
Following an examination, the FTA largely refused the input tax deduction, arguing that the tax-payer could only deduct the input tax on services that (regardless of the invoice date) had actu-ally been provided after it was entered in the VAT register on 1 April 2019 (cut-off date). Due to a lack of detailed information on which consultant provided which services at exactly what time, the FTA methodically assumed an even, linear purchase of services according to the duration of the contracts (pro rata temporis). The input tax deduction was therefore only permitted to the extent that the services were provided after the reference date according to this proportional distribution of fees.
The position of the FTA, according to which the right to deduct input tax can only cover supplies that were received during the period of existing tax liability, was not (or no longer) disputed in the proceedings before the Federal Supreme Court.
The court therefore focussed on the question of proving when the advisory services were actu-ally provided. In accordance with the principle that facts justifying and increasing the tax must be proven by the tax authority, and facts reducing and excluding the tax must be proven by the per-son liable to pay the tax, the court held that A AG had the burden of proof that the services from the consultancy agreements concluded long before the VAT registration were only provided after entry in the register of taxable persons. A AG had failed to provide this evidence. In the absence of any other evidence, the approach of the FTA, which assumed a continuous provision of services over the period since the conclusion of the contract and accordingly divided the fees "pro rata temporis", was not objectionable in the present case.
In the sense of a contingent application, A AG had argued that it was entitled to a claim for sub-sequent input tax deduction. This is the possibility of correcting the input tax deduction (pro rata) at a later point in time than the purchase of the service if the conditions for the input tax deduc-tion subsequently materialise, Art. 32 VAT Act.
The input tax deduction on goods and services put to use can be corrected if they are still avail-able and have a current value at the time when the conditions for input tax deduction have mate-rialised, Art. 72 para. 2 sentence 1 VATO.
However, there is a legal presumption that services in the areas of consulting, accounting, re-cruitment, management and advertising are already consumed and no longer available at the time they are purchased, Art. 72 para. 2 sentence 2 VATO. In the opinion of the court, the standard codifies, to a certain extent, an obligation for immediate depreciation, solely in relation to the VAT treatment. The accounting treatment (which Art. 70 para. 1 sentence 1 of the VAT Ordi-nance generally prescribes) is cancelled out by this special standard.
The generally generous regulations on input tax deduction in Switzerland can sometimes lead to a certain carelessness in the area of VAT. The judgement makes it clear that early VAT registra-tion of the parties involved in connection with potential transactions should always be carefully checked and is usually advisable.
The judgement is not only relevant in the context of transactions, but also, for example, in the case of business start-ups, especially if a mandatory tax liability is not necessarily assumed at the beginning of the entrepreneurial activity.
In addition, the judgement shows that particular attention should be paid to documenting the timing of the provision of services - for example, through detailed invoicing or the documentation of certain "project milestones".
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T +41 58 252 22 00
info@primetax.ch
Friesenbergstrasse 75
8055 Zürich
www.primetax.ch