Challenges of tax procedural law and criminal tax law

Case 1: Tax sovereignty

1. facts of the case

SuperSmart AG was founded on 4 May 2015 with entry in the Commercial Register of the Canton of Zug (with exemption from ordinary auditing). It advises and supports small and medium-sized enterprises in the IT sector directly on site or via remote maintenance. Half of its customers are located in the Canton of Zurich and the rest mainly in Central Switzerland and the Canton of Aargau. The sole shareholder and managing director of SuperSmart AG is Claudia Fuchs (resident in Thalwil/ZH). Claudia Fuchs is the sole employee of SuperSmart AG.

Even before the act of incorporation, SuperSmart AG sought advice in this regard from Hans Zwackelmann, who runs a trust office as a sole trader. Hans Zwackelmann made SuperSmart AG the following offer: SuperSmart AG may use the address of his trust office as a business address. In addition, Hans Zwackelmann receives the mail daily, scans it and forwards it by e-mail to the manager of SuperSmart AG. SuperSmart AG also has the option of using the meeting room of the trust office if required and for an additional fee (CHF 30 per use). In return, SuperSmart AG pays a monthly amount of CHF 300 to Hans Zwackelmann.

To date, Hans Zwackelmann has already been able to inspire more than 50 companies with the same offer. Claudia Fuchs had approached Hans Zwackelmann on the recommendation of a business partner. She asked him whether such a contract would be accepted for tax purposes. Hans Zwackelmann replied with reference to his more than 50 satisfied customers that this is "how it is done today" and that there have never been any problems. One would be (quote:) "stupid" to pay several times the tax in the canton of Zurich. He recommended that she hold the general meeting of SuperSmart AG in his premises. Claudia Fuchs then concluded the so-called domicile agreement with Hans Zwackelmann:

For the tax years 2015 to 2020, SuperSmart AG, with the support of Hans Zwackelmann, submitted the tax returns to the Canton of Zug on time and paid the tax amounts. The tax years 2015 to 2019 have now been legally assessed.

In a letter dated 1 February 2022, the Zurich Cantonal Tax Office contacted SuperSmart AG and informed it that it would like to clarify SuperSmart AG's tax liability in the Canton of Zurich for the tax years 2015 to 2021. An internet search had revealed that, in addition to SuperSmart AG, a large number of other companies used the same business address. It could therefore be assumed that the domicile in Baar (Canton Zug) was merely a letterbox domicile. The actual administration of SuperSmart AG, on the other hand, was assumed to be at Claudia Fuchs' residence in Thalwil (Canton of Zurich). In order to clarify the facts, the Zurich Cantonal Tax Office therefore requested SuperSmart AG to submit the annual financial statements for the years 2015-2021 together with account sheets, a complete description of the business activity (type and location of activity, employees), a rental or domicile agreement, copies of all receipts for administrative and IT expenses for the business years 2015-2021 as well as the fully completed tax returns for the tax years 2015 to 2021.

2. questions

1. Is SuperSmart AG subject to unlimited tax liability in the canton of Zurich?
2. If necessary, does an intercantonal tax equalisation with Baar have to take place?
3. Is SuperSmart AG obliged to submit the tax returns for the tax years 2015 to 2021 so that the Cantonal Tax Office Zurich can clarify the
   subjective tax liability in the Canton of Zurich?
4. Is SuperSmart AG obliged to submit the documents requested by the Cantonal Tax Office and to answer questions so that the Cantonal Tax Office Zurich can clarify the subjective tax liability in the Canton of Zurich?
5. Can the Cantonal Tax Office Zurich still assess the taxes for the tax years 2015 to 2021 in the open procedure?
6. Which tax procedure is used for the assessment of the respective tax year?
7. Does SuperSmart AG have to expect consequences under criminal tax law? If so, what are they?
8. Does Claudia Fuchs have to expect consequences under criminal tax law? If so, what are they?
9. Does Hans Zwackelmann have to expect consequences under criminal tax law? If so, what are they?
10. Is SuperSmart AG entitled to a tax refund in the canton of Zug?
11. How can SuperSmart AG claim the tax refund in the canton of Zug, if applicable?

Case 2: Discretionary assessment

1. facts of the case

Hans Müller is single, resides in the city of Zurich, is the sole shareholder and managing director of H. Müller AG. For the 2018 tax period, he was assessed as follows based on his correctly completed tax return:

• Taxable income: CHF 180,000 (incl. CHF 12,000 WS income)
• Taxable assets: CHF 800,000
• Withholding tax refund claim: CHF 4'200

As Mr Müller did not submit a tax return for the 2019 tax period despite a reminder, he was assessed as follows according to dutiful discretion:

• Taxable income: CHF 30'000
• Taxable assets: CHF 0
• Withholding tax refund claim: CHF 0

Effectively, Mr. Müller had a taxable income of CHF 200,000 (incl. CHF 15,000 securities income with withholding tax deduction) and taxable assets of CHF 1 million in the 2019 tax period.

2. questions

• Can the under-taxation that occurred in the 2019 tax period be corrected?
• Does Mr Müller have to expect criminal consequences?
• What further consequences can Mr Müller expect?