New regulation of the tax remission - old wine in new skins?

Introductory remarks

The tax remission constitutes as one of the legal grounds for the extinction of the tax claim the renunciation by the commonwealth of a tax claim to which it is entitled, by which the public property is reduced.01 The reasons for a remission are ultimately always to be found in the "person" of the tax debtor: for humanitarian, socio-political or economic reasons, his economic existence should not be jeopardised.02 However, it should be noted that for reasons of equal treatment of taxpayers (Article 8 BV), tax remission must remain an exception and is only conceivable under very specific conditions.03 However, if these conditions are met, there is an entitlement to the remission.04

‍Legal situation until the end of 2015

Until the end of 2015, the remission of direct federal tax was regulated in only one article of the DBG (aArt. 167 DBG). However, a very detailed regulation was found in the FDF Ordinance of 19 December 1994 on the treatment of applications for remission of direct federal tax05which was in force with various amendments until the end of 2015.06

In the last nine years, the tax remission has been decisively contoured by the case law of the Federal Administrative Court, which, at the beginning of 2007 - when the guarantee of legal recourse07 - had become the competent authority for appeals against decisions of the EEK.08 This case law also met with a significant response in the cantons. Admittedly, questions of tax collection were (and still are) in principle not harmonised (Article 129(2) BV and Article 1 StHG). Nevertheless, the StHG implicitly assumes that the cantons provide for the possibility of tax remission, since the unjustified obtaining of a remission is qualified as tax evasion and is subsequently also mentioned in the statute of limitations for criminal prosecution (Art. 56 para. 1 and Art. 58 para. 2 StHG). As a result, the cantonal legislator had (and still has) a degree of freedom in the design of the decree. However, since many cantonal regulations largely correspond to the content of the direct federal tax, the interpretation of the DBG provision and the relevant case law are usually also applied to cantonal law.09

Legal situation since the beginning of 2016

Origin

The starting point for the revision was the desire to simplify the tax system. The cantons should be given the competence to assess all applications for remission that concern direct taxes and thus also direct federal tax. This would enable the EEK to be repealed, as was also provided for in the planning for the waiver of tasks in the context of the 04 discharge programme. The cantonal authority responsible for issuing the direct federal tax would have to be determined by the cantons.10 This simplification is also accompanied by further standardisation: "The taxpayer can take the same legal remedies against the decision to issue the direct federal tax as against the decision to issue the cantonal income and profit tax. The Federal Tax Administration (FTA) can also take these legal remedies. In order to ensure uniform jurisdiction throughout Switzerland on fundamental issues, the Federal Supreme Court will now judge cases for remission in the last instance. However, this is only the case if it is a legal question of fundamental importance or for other reasons a particularly important case".11 There was no mention of the revision in the Federal Councils at all - in the National Council there was no vote at all, in the Council of States only that of the spokesman for the Commission.12

Based on Art. 167f DBG, the FDF ordinance of 12 June 2015 on the treatment of applications for the remission of direct federal tax (Tax Remission Ordinance; SR 642.121) was then issued, which also came into force on 1 January 2016. The Regulation contains a further 20 articles. No other federal tax therefore has a comparable high standardisation density for the decree as the direct federal tax.

As is usual with "young legal bases", the historical interpretation element and thus the materials have an important meaning. These include not only the - already mentioned - Federal Council Message of 23 October 2013 on the Tax Relief Act,13 but also the explanations of the Federal Tax Administration of 29 May 2015 on the revision of the FDF Ordinance on the Handling of Applications for the Remission of Direct Federal Taxation.14

Significant changes (especially in procedural law)

In view of the aforementioned objective of the revision, little or nothing has changed - not surprisingly - with regard to material aspects. First of all, it is a matter of a "norm hierarchical upgrade" of previous ordinance provisions at the legislative level and of writing down previous court practice. It is worth mentioning as an (alleged) innovation that particularly high requirements are to be imposed not only on the remission of (infringement) fines, but also on those of additional taxes, in that these are also to be remissioned only in particularly justified exceptional cases (Art. 167 para. 3 DBG). According to the message, this clarification is due to a ruling by the Federal Administrative Court, which stated that the supplementary tax is not a punitive sanction and thus does not constitute a public-law claim different from the actual tax claim.15 If you look at the whole thing a little more closely, you can certainly see that the message does not assume that additional taxes and fines are the same. In fact, they often go hand in hand in that the reduction of a tax claim which triggers an after-taxation also constitutes the objective fact of tax evasion and, therefore, 'after-taxes are often claims which could have been paid in an earlier period if they had been taxed correctly'.16 However, there are also cases where this is not the case. With Locher it is therefore to be pleaded that Art. 167 para. 3 DBG is not to be applied in application of the teleological reduction if additional taxes have nothing to do with a missed earlier taxation.17 Art. 167a DBG, designated with the marginal "grounds for refusal", which denotes the ineligibility for remission, deserves a comment. The passage in Art. 167a Ingress DBG, according to which the tax remission can be refused if there is a corresponding reason, uses unusual terminology. If such a ground for refusal exists, the application for remission must be rejected.18 In this context, the paragraph stating that the reason for the emergency is generally irrelevant has been deleted. In practice, it had become apparent too often that the taxpayer had to be held accountable for his or her past conduct.19

Art. 167 (1) DBG continues to use an "optional formulation". It is therefore not entirely clear whether or not the conditions are met to qualify for tax relief. In contrast to the Federal Administrative Court, the Federal Supreme Court had20 - denies such a claim.21 However, the fact that at least selected questions of the tax remission can now be referred to the Federal Supreme Court with an appeal in matters of public law, speaks in favour of such a claim, as these would otherwise not be justiciable.

With regard to procedural law, two amendments should be highlighted. First, as mentioned above, the Federal Decree Commission for Direct Federal Taxation was abolished (cf. Art. 205e and Art. 207b DBG). Art. 102 para. 4 DBG, which contained the basic features of the organisation of the EEK, was consequently repealed when the Tax Relief Act came into force on 1 January 2016. As a result, it is now possible to assess the remission of direct federal taxes in the same procedure as the remission of cantonal and municipal taxes, provided that cantonal law so provides. This avoids duplication of effort (which is inevitable when two different authorities have jurisdiction).22 Secondly, this will result in changes in the appeals in the first and, if necessary, second instance, which will consequently also remain purely cantonal (Art. 167g para. 1 DBG). In order to ensure uniform application of the law throughout Switzerland, Art. 103 (1) e DBG now also provides the EStV with a supervisory role in the remission procedure, in that it must be given the opportunity to issue orders, objection and appeal decisions on applications for remission of direct federal tax on request. In addition, it is now possible to refer decisions on the deferral or remission of direct federal tax to the Federal Supreme Court with an appeal in public law matters if a legal question of fundamental importance arises or if the case is particularly important for other reasons (Art. 167g para. 5 DBG; Art. 83 lit. m BGG).23 This is intended to ensure that, despite the abolition of a federal authority and subsequent judicial review by the Federal Administrative Court on appeal, the law is applied uniformly throughout Switzerland with regard to the remission of direct federal tax.24 The Federal Court will set the associated guard rails in the coming months and years.25

Finally, if further prerequisites are met, the lodging of a subsidiary constitutional complaint within the meaning of Article 113 et seq. BGG against all enactment decisions on the grounds of violation of constitutional rights, since the decision will now in any case be made by the cantonal authorities and courts.

Würdigung

As has already become clear from the above, the assessment is divided into two parts. In terms of content, one can indeed speak of "old wine in new skins" - at least from a legal point of view. For the most part, existing ordinance regulations have been raised to the level of legislation and the relevant case law of the Federal Administrative Court has been emulated. However, it remains to be seen to what extent this will continue to have an effect. Because as stated: In terms of procedural law, fundamental changes have taken place and it is no longer possible to speak of "old wine". Even though tax remission is still not a question of tax harmonisation, the DBG's exclusive cantonal competence means that the role of the Federal Supreme Court has been greatly enhanced. Ultimately, however, only the Federal Supreme Court can guarantee that tax remission is handled in the same way throughout Switzerland and as uniformly as possible. It is to be hoped that the Federal Supreme Court will be able to deal with this task appropriately despite the high burden.

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