Fringe benefits / private shares / expenses / hidden profit distributions

Case 1: Business vehicle - new regulation as of 1.1.2022

1. facts of the case

Flott AG, based in Zurich, distributes textile fashion in the high-price segment (wholesale and retail sales). At its headquarters in Zurich, it operates a boutique in which the employees Emma Kunz and Oliver Baumann, who are not shareholders in Flott AG, also work for the majority of the time. Both Emma Kunz (Marketing Manager) and Oliver Baumann (Sales Manager) have a business vehicle in view of their regular visits to Engros customers. The following is known about the business vehicles and their use:

Emma Kunz and Oliver Baumann do not keep a logbook.

Questions

• What are the income tax consequences for Emma Kunz and Oliver Baumann from the use of the business vehicle under the currently valid regulation?
• What income tax consequences result for Emma Kunz and Oliver Baumann from the use of the business vehicle according to the regulation valid from 1 January 2022?

Case 2: Company vehicle - Board of Directors and related parties

1. facts of the case

Nicolas Rebstein is co-founder (main shareholder) and managing director of Bikeboom AG. The Board of Directors of Bikeboom AG consists of Nicolas Rebstein, his partner Nina Weber, who also works part-time in his company, and the self-employed sports journalist Thomas Müller. Bikeboom AG employs a total of 55 people, 10 of whom work in the field. They are provided with a company car of the lower middle class (CHF 35,000) for their work.

Instead of a fee for the Board of Directors and at the same time as an advertising ambassador, Bikeboom AG provides Thomas Müller with a company car worth CHF 50,000 and Nina Weber with a company car worth CHF 70,000 (free of charge). Bikeboom AG declares the payment in kind of 9.6% on the salary statement 2020 in item 6 "Compensation of the Board of Directors". The car costs of Nina Weber amount to approximately CHF 17,500 per year in the bookkeeping of Bikeboom AG.

The relationship between Thomas Müller and Nicolas Rebstein is mainly characterised by business contacts.

Questions

• How do you assess the facts of the case from a tax law perspective with regard to Thomas Müller?
• How do you assess the facts from a tax law perspective with regard to Nina Weber?

Case 3: Business vehicle - luxury vehicle

1. facts of the case

Architect Petra Glauser is a co-shareholder (50% stake) and member of the management board of Oberland Architekten AG. Petra Glauser has a flair for sporty cars. Since 1 January 2020, she has been using a "McLaren" company car for her frequent visits to clients and construction sites. The following details are known about the company car:

• Purchase price (excl. VAT): CHF 250'000
• Use for business trips (visits to customers and construction sites) and
  private trips. No use for commuting (residence at business location).
• Petra Glauser does not keep a logbook.

In the accounts of Oberland Architekten AG, the business vehicle is recorded under mobile fixed assets and is depreciated by 40% per year on a declining-balance basis.

Oberland Architekten AG shows a private share of CHF 24,000 (corresponding to CHF 250,000 x 9.6%) on Petra Glauser's 2020 salary statement under item 2.2.

Bruno Metzler, who also works as an architect for Oberland Architekten AG, is provided with a VW company car (purchase price CHF 75,000). Bruno Metzler is not a shareholder of Oberland Architekten AG.

Question

• The business vehicle used by Petra Glauser is obviously a so-called luxury vehicle. How should this circumstance be assessed from a tax law perspective?

Case 4: Employee discounts

1. facts of the case

Zweiklang AG distributes sustainably produced food and clothing. It has branches in several Swiss cities. The employees of Zweiklang AG benefit from the following discounts (which are assumed to be customary in the industry) on the sales products offered in the branches:

• Flawless food can generally be purchased at a discount of 15% from the shop price.
• Unsightly (but otherwise edible) produce from the fruit and vegetable section, as well as food that has just expired, is given away at a discount of 75% off the shop price.
• Garments can be purchased at "cost price x 110%". Exhibition goods that are no longer needed can be purchased at half the cost price.

The employed retail specialist Marco Bruggner, who does not hold a stake in Zweiklang AG, purchases the following products during his weekly shopping trip to the Baden branch (the ladies' blouse is intended as a birthday present for his sister):

Question

• How do you assess the purchase of Marco Bruggner from a tax and social security perspective?

Case 5: Expense reimbursements

1. facts of the case

Scheffel AG, based in Zug, is an asset management company. In addition to the "patron" (sole shareholder) and managing director Karl Scheffel, a hedge fund manager and two investment advisors are employed.

As Scheffel AG is active in the fund and investment advisory business, various expenses arise in the course of different official activities.

Questions

• How do you assess the following expense allowances from a tax perspective? (an extract from the account details of the expense allowances)
  - Flat-rate representation expenses for both investment advisors of CHF 12,000 each
  - Flat-rate representation expenses for the hedge fund manager and the managing director of CHF 14,000 each
  - Travel expenses CHF 25,550 ("car per kilometre CHF 0.90", GA public transport)
  - Meal expenses CHF 12,550 while travelling and at the place of work (restaurants, including monthly bills at the club restaurant)
  - Club memberships CHF 12,250 (golf, Widenmoos business club)
  - Invitations CHF 4,550 (concerts, sporting events)

• Scheffel GmbH does not currently have approved expense regulations, but would like to have one approved due to the latent tax risk of hidden profit distribution and additional tax burdens. What advantages can a possible approved expense regulation bring to Scheffel AG and the employees?
• In the context of the assessment of Karl Scheffel's 2019 private tax return, the flat-rate expenses of CHF 14,000 were judged to be excessive by the assessing tax commissioner. What are the tax consequences for Karl Scheffel?

Case 6: Home office

1. facts of the case

Zünd AG, based in the city of Zurich, employs Walter Arnold, who lives in Sarnen, Canton Obwalden. Arnold works in the field and advises (potential) customers. In his home office in Sarnen, he does preparatory work and prepares offers and contracts. If desired, he receives customers in his home office. Arnold does not have an office space at Zünd AG's headquarters.

Zünd AG provides Arnold with most of the necessary work equipment (PC, mobile phone, chair, office supplies) for his home office. Only the height-adjustable desk is purchased by Arnold himself, for which he receives a one-off lump-sum compensation of CHF 1,500 from his employer.

For the business use of the private study, the employer pays Arnold the amount of CHF 650 per month.

Questions

• Does Arnold establish a permanent establishment at his place of residence in the canton of Obwalden for Zünd AG in his home office?
• How should the provision of work equipment and the flat-rate compensation for the desk be classified for tax purposes?
• How should the compensation for the business use of the private study be declared on the salary statement and what are the tax consequences?
• Arnold resigns; he does not have to return the home office equipment financed by the employer. How do you assess this situation from a tax point of view?