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Ralf Imstepf

Roger Rohner

Services between closely related persons from a VAT perspective


Workshop by Ralf Imstepf and Roger Rohner on the occasion of the ISIS) seminar of March 28, 2023, entitled "Monetary Benefits in National and International Relations".

The complete PDF of the seminar folder can be downloaded for CHF
The corresponding case solutions can be purchased for CHF
(introductory price)
can be purchased in the shop.
The workshops are also available individually in the "Documents" section.
The case solutions and other documents can be obtained free of charge in the shop.

Case 1: Services among closely related persons - basics

1. basic facts

All shares of Sophokles S.A., which is registered for VAT purposes, are held by its founder, Mr. Ulysses. The corporate purpose ofSophokles AG is the manufacture of medicines.

The brother of Mr. Ulysses is an enthusiastic sailor. Every few years Sophokles AG buys a new sailboat (purchase price CHF 150'000 plus VAT) and transfers it to Mr. Ulysses' brother for the purchase price of CHF 100 plus VAT. Sophokles AG claims the input taxes on the sailboat.


  • How should this procedure be assessed for VAT purposes?

2. facts variant1 - excursus: aircraft case

Sophokles AG provides Mr. Ulysses with an airplane free of charge, with which he privately jets around the world.


  • How should this procedure be assessed for VAT purposes?

3. facts variant2 - foundations and associations

Sophokles AG established the pension fund "Achille" years ago, which insures the entire staff.

A few years ago, Sophocles AG established the Philoktet Foundation, which is dedicated to research into snakebites. It is exempt from direct federal tax. The foundation is funded by the management of its own capital and by donations from Sophokles AG. The foundation board consists of three representatives of the board of directors of Sophokles AG.

Some employees of Sophokles AG have founded the "Lemnos" association. This association supports refugee projects on Greek islands. Various employees use part of their vacation time for activities on site. The association is exempt from direct federal tax.

Sophokles AG supports both foundations as well as the association by providing the respective secretariat completely and free of charge. The "Philoktet" Foundation also receives equipment and consumables at a preferential price. The association "Lemnos" is regularly supplied with free medicines to Greece.


  • How should this procedure be assessed for VAT purposes?

Case 2: Intra-Group services

1. basic facts - intragroup services

AlphaHolding AG, which is domiciled in Zug, holds interests in operating subsidiaries subject to value added tax (manufacture of industrial goods) in the cantons of Zurich, Thurgau and St. Gallen. It has no staff of its own, apart from its two shareholders on the Board of Directors, who each receive an annual fee of CHF 5,000.

The subsidiaries were granted loans by Alpha Holding AG, whereby the maximum interest rates according to the circular of the FTA on non-cash benefits were complied with. No dividends were distributed by the subsidiaries in recent years. No other intercompany transactions were recorded.


  • What needs to be taken into account in terms of value added tax in this situation?

2. facts variant1 - interest-free loans

AlphaHolding AG grants the loans to the subsidiaries without interest.

3. facts variant2 - foreign subsidiaries

The operating subsidiaries are not domiciled in Switzerland but abroad and are not registered for VAT purposes in Switzerland.

Case 3: Private shares

1. basic facts - company car

Barbara Grau,resident in Biel, is the sole shareholder and managing director ofBagrau AG, VAT-registered and effectively invoicing, with registered office in Bern. The company provides fiduciary services, has two employees and has an annual turnover of CHF 500,000.

Bagrau AG buys a company car for Barbara Grau for CHF 250'000.


  • How should the company car be treated for VAT purposes?

2. facts variant1 - veteran vehicles

Babara Grau and her spouse, who does not work for Bagrau AG, have been lovers of veteran vehicles for years.

Bagrau AG has now acquired ten such vehicles, which are parked in Biel. The vehicles are only moved to avoid damage when stationary and are shown at trade fairs, shows and exhibitions. Three of them have been registered in the name of Barbara Grau and her spouse, respectively, with regard to vehicle documents and license plates. Occasionally, a vehicle is sold again within a period of several years.


  • How should these vehicles be treated for VAT purposes?

3. facts variant2 - SBB General Abonnement

Bagrau AG subsequently sells the veteran vehicles and provides Barbara Grau and the other employees with an SBB General Abonnement (GA), which they can also use for private journeys.


  • How should the delivery of the GA be assessed for VAT purposes?


Case 4: Assessment of the third party value - selected case law

1. facts 1(cost-plus method)

Hektor AG, based in Chur/GR, is the owner of a plot of land which is covered with a hotel. The property (including the hotel) is leased to Priam AG, also based in Chur. Priam AG operates the hotel and charges balance tax rates.

The two companies are closely linked (same top holding). The annual rent is one symbolic franc.


  • How could the FTA calculate the third-party price for the lease?

2. facts 2(resale price method)

Castor-und-PolluxAG operates an architectural practice. The shareholders Castor and Pollux each own 50% of the share capital and are both active in the company.

Castor AG and Pollux AG provide services in the real estate sector. Mr. Castor is the sole shareholder of Castor AG and also its managing director. Mr. Pollux is the sole shareholder of Pollux AG and also its managing director. The balance sheets and income statements of the two companies do not show any fixed assets, IT equipment or other infrastructure or wage expenses.

BothCastor-and-Pollux AG andCastor AG and Pollux AG account for their financial statements using thebalance tax rate method.

In 2021, Castor AG will achieve a turnover of CHF 120,000 (excluding VAT); Pollux AG will achieve a turnover of CHF 140,000 (excluding VAT).


  • Can services provided by Castor-und-Pollux AG to closely related persons be assumed in the present case? What would be the basis of assessment of the services provided by Castor-und-Pollux AG?


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