Current developments in VAT law (2020)

Case 1 (tax avoidance)

Facts

Inspired by BVGer v. 13.3.2018 A-1487/2018 / A-1486/2018 / A-1485/2018 and BGer v. 5.10.2018, 2C_119/2017

Ferienhaus AG, which is entered in the register of taxpayers, holds as its sole assets two properties that it has constructed and which it makes available free of charge and exclusively to its sole shareholder Julius. Julius uses them for private purposes.

How is the provision to be assessed for VAT purposes?

Variant 1

The rent charged for use is 30% of the normal rent.

Does anything change in the VAT valuation?

variant 2

The rent charged for use corresponds to the annual rental value according to RS of 21.2.2008 of the direct federal tax with a surcharge of 25%.

How is the provision to be assessed for VAT purposes?

Variant 3

Treuhand AG, which is entered in the register of taxpayers, is active in the classic trust business. In addition, it is the owner of two properties that it has constructed and which it makes available exclusively and for a symbolic price to its sole shareholder Julius. Julius uses them for private purposes.

How is the provision to be assessed for VAT purposes?

Variant 4

Treuhand AG, which is entered in the register of taxpayers, is active in the classic trust business. In addition, it is the owner of two properties which it has constructed and which it makes available exclusively to its sole shareholder Julius. Julius uses them for private purposes. The rent charged for this purpose corresponds to the annual rental value according to RS of 21 February 2008 of the direct federal tax with a surcharge of 25%.

Does anything change in the VAT valuation?

Variant 5

The properties are not only let to the sole shareholder Julius, but also to third parties.
How is the provision of the property to be assessed for VAT purposes?

Case 2 (reference tax)

Facts

Ressource Investment AG, with its registered office in Zug, was founded to acquire shares in a foreign corporation that holds mining rights abroad. Ressource Investment AG is not VAT-registered in Switzerland.

Ressource Investment AG has commissioned a foreign closely related group company to carry out a due diligence of this foreign corporation. Ressource Investment AG will be invoiced for the corresponding costs by the foreign group company, which is also not registered for VAT purposes in Switzerland.

Due diligence services amounting to CHF 300,000 were obtained in 2018. Of these, CHF 175,000 was invoiced and paid in 2018, CHF 100,000 was invoiced and paid in 2019 and CHF 25,000 was not invoiced and paid until 2019.

How are the services provided by the foreign group company taxable? Is there an input tax deduction?

Variant 1

Ressource Investment AG will register for VAT purposes in Switzerland as of 1 January 2019, whereby it will effectively charge according to agreed fees.

variant 2

The foreign Group company will register for VAT purposes in Switzerland as of 1 January 2019, whereby it will effectively charge according to the fees received.

Case 3 (tax exemption for medical treatment)

Facts

Inspired by BGer v. 21.8.2018, 2C_476/2017, BVGer v. 2.5.2019, A-719/2018, BVGer v. 2.5.2019, A-5966/2018, BVGer v. 10.1.2019, A-1620/2018 (all BVGer rulings not yet legally binding at the time of the workshop)

Andrew works as a chiropractor in the canton of Berne (for illustration purposes, the names of cantons are used below, regardless of the actual legal situation in these cantons). He is in possession of a professional licence issued by the Canton of Berne.

Do Andrew's services constitute tax-exempted treatment within the meaning of Article 21(2)(3) of the VAT Act?

Variant 1

Andrew works as a chiropractor in the canton of Zurich. He holds a licence issued by the Health Directorate of the Canton of Zurich to use the title of chiropractor awarded by the Conference of Cantonal Health Directors (GDK).

Do Andrew's services constitute tax-exempted treatment within the meaning of Article 21(2)(3) of the VAT Act?

variant 2

Andrew works as a chiropractor in the canton of Appenzell Innerrhoden. The canton has neither a professional licence nor a title licence. The question of whether such a licence should be introduced was never discussed in the cantonal parliament.

Do Andrew's services constitute tax-exempted treatment within the meaning of Article 21(2)(3) of the VAT Act?

Variant 3

Andrew works as a chiropractor in the canton of Aargau. The Cantonal Council has expressly decided against the introduction of a professional licence when drafting the cantonal health law. According to the legislative will, the practice of chiropractors should in any case be possible without a licence.

Do Andrew's services constitute tax-exempted treatment within the meaning of Article 21(2)(3) of the VAT Act?

Variant 4

Andrew works as a doctor in the canton of Valais. He is in possession of an appropriate licence to practise his profession. In addition to his "normal" medical activity, he is also active as a chiropractor.

Do Andrew's chiropractor services constitute tax-exempted treatment within the meaning of Article 21(2)(3) of the VAT Act?

Case 4 (transfer of land)

Facts

Elektro Meier AG and Meier Immobilien AG (both subject to VAT) are wholly owned subsidiaries of Meier Beteiligungen AG. All companies have their headquarters in Winterthur.

In December 2018, two commercial properties with a book value of CHF 2 million (including land value) will be transferred from Elektro Meier AG to Meier Immobilien AG with direct tax neutrality as a transfer of assets within the Group in accordance with Art. 61 para. 3 DBG. The publicly notarised purchase agreement is relatively rudimentary and simply contains the transfer at book values of the two properties without any further information on land value or VAT treatment. In the VAT statement Q4/2018 the transfer is declared in the reporting procedure by Elektro Meier AG. Form No. 764 of the FTA on the reporting procedure has been signed by both parties involved.

In April 2019, the auditors will ask how the restructuring was accounted for in terms of VAT.

Follow-up question: The auditors will not clarify the correct VAT transfer further and in 2020 Meier Immobilien AG will sell the operational properties to an independent third party. What are the VAT consequences and how do they affect the real estate gains tax?