Possibilities and limits of securing tax planning (rulings, notifications, assurances, preliminary notices and the like), exchange of information, administrative and legal assistance
Workshop on the occasion of the ISIS seminar on 9/10 September 2019 entitled "Tax planning in the area of conflict between cost optimisation, tax compliance and Good citizenship - opportunities and risks".
1st exit ruling
1.1. facts of the case
In 2007, an international group founded a Swiss subsidiary and brought in intellectual property rights (IP) as part of a contribution in kind. The tax office of the responsible canton as well as the FTA (with reference to withholding tax) sign a ruling stating that in the event of a departure from Switzerland, the IP will be valued according to a defined method (investment costs with the application of a three-year depreciation period).
In 2019, the IP will be transferred to the UK and valued according to the valuation method used in 2007.
1.2.1 Can the group still rely on the information provided in 2007 in 2019?
1.2.2 Is it necessary to inform spontaneously about the 2007 Ruling?
1.2.3 Variant: In the 2007 survey a fixed value for the IP was set.
2. sale of a company
2.1. facts of the case
X. submits a ruling application to the cantonal tax authorities in his canton of residence on 1 March 2019, stating that the proceeds from the sale of a company are to be assessed as tax-free capital gains for him.
The Share Purchase Agreement will be signed on 15 March 2019.
On 20 March 2019, X. receives the Ruling signed unconditionally by the tax authority (which was signed by the authority on 17 March 2019).
The transaction will finally be completed on 31 March 2019 (closing).
2.2.1 Can X. rely on the Ruling even though it was issued only after the contract was signed?
2.2.2 How would the case be assessed if the Ruling had been signed on 30 March 2019 (and X was informed of this by telephone) but X had only been notified by post on 1 April 2019?
2.2.3 How would the case be assessed if the Ruling had been signed only on 5 April 2019?
3. change of practice
3.1. facts of the case
On 15 June 2019, the FTA assures the representative of the X. Group that a subsidy from the grandparent company of the X. Group will not trigger an issue tax either at the domestic second-tier subsidiary or at the domestic intermediate company.
On 1 October 2019, the FTA publishes a practice statement on its website, according to which indirect subsidies are subject to the emissions levy at the domestic intermediate company from 1 November 2019.
On 1 December 2019, the grandparent company will make an indirect subsidy.
3.2.1 Can X. nevertheless rely on the Ruling, even though the FTA has in the meantime announced a change in practice?
3.2.2 How would the case be assessed if the change in practice of the FTA was due to a ruling of the Federal Supreme Court issued on 15 August 2019?
3.2.3 What would be the case if the grant were not made until 14 March 2020?
4. trust (requirements for presentation of facts)
4.1. facts of the case
A tax adviser obtains a ruling for a trust set up under Jersey law as an irrevocable discretionary. The Ruling correctly states that the Settlor has no means of inducing the Trustee to take any action.
However, the Ruling does not explicitly mention the circumstance (presented in the Trust Deed) that the Settlor has the possibility to reappoint the Protector under certain conditions and that the Protector in turn has the possibility to replace the Trustee.
The Trust Deed (in English) is attached to the Ruling.
The cantonal tax authorities consider the trust to be non-transparent.
4.2.1 Does the ruling have legal effects?
5. spontaneous information about Ruling
5.1. facts of the case
The Swiss subsidiary of an international group obtained a ruling from the FTA in 2016, in which the group-internal transfer prices for management services are determined for withholding tax purposes.
In 2016, the Group had Group companies in 30 countries (which were shown in an organizational chart attached to the Ruling). In 2019, there will already be 35 states.
However, the services mentioned by Ruling have so far only been provided with group companies from 5 countries.
5.2.1 Which states must be informed spontaneously about the ruling?
5.2.2 Do you see any possibilities for the taxpayer to restrict the number of states that are informed spontaneously?
6. australia fund
6.1. facts of the case
The following facts were described in a ruling request:
Natural and legal persons resident in Switzerland and the subsidiary of an Australian bank will participate in an Australian limited partnership. Because the partnership has no legal personality, investors will have a direct share in the assets of the partnership on a pro rata basis. Another subsidiary of the bank will also provide a loan to the partnership at the arm's length price, with the annual interest due being added to the debt. The Partnership will acquire shares in an Australian investment company which will invest in various assets, including equity interests and receivables. The Partnership will earn dividends and capital gains on the sale of the shares in the Investment Company.
The tax authority signed the ruling, confirming the tax exemption of the pro rata private capital gains from the sale of the shares and the pro rata deductibility of the debt interest charged to the partnership.
In the following assessment procedures it was found that the partnership financed only 10% of its investments with the investors' deposits; 90% of the investments were financed by the loan from the subsidiary of the co-invested bank. Also, no dividends were paid to the partnership for years. The investors' contribution to the partnership was contractually limited to three years and was repaid at the end of the term. The investors incurred a loss after deduction of the investment commission and debt interest. A positive return for the investors resulted only after taking into account the tax exemption of the capital gain on the return of the unit and the tax deductibility of the debt interest.
The tax authority concludes that the present arrangement qualifies as tax avoidance and that the deduction of debt interest should be denied to investors.
6.2.1. is the tax authority bound by the Ruling granted by it?
6.2.2 If so, can the tax authority revoke the ruling and when does the revocation take effect?
6.2.3 The ruling was not obtained from the investors themselves, but from a tax adviser mandated by the Australian bank. Can the investors refer to the Ruling?
6.2.4 Variant: For direct federal tax, the ruling was signed not by the cantonal but by the Federal Tax Administration. Is the cantonal tax authority bound by the ruling?
6.2.5 The Ruling was signed in 2005. On 1 January 2007, the Federal Act on Collective Investment Schemes (CISA) of 23 June 2006 entered into force, replacing the Investment Fund Act of 18 March 1994. What does this mean for the binding nature of the Ruling?
7. provisional property gains tax ruling
7.1 Facts of the case
X was the owner of a property in the municipality of Y. On 10 May 2018, at the request of his representative, the municipal tax office calculated the amount of the anticipated real estate gains tax in the case of a sale at a price of Fr. 870,000, assuming a market value of Fr. 620/m2 20 years ago and calculating a real estate gains tax of Fr. 32,000. The calculation was entitled "Provisional real estate gains tax ruling of 10 May 2018" and contained the following note: "The definitive assessment will be made after the transfer of ownership on the basis of the tax return to be submitted by the competent authority.
Subsequently, X submitted the real estate profit tax return and the local council responsible for the assessment ordered a real estate profit of CHF 160,000, assuming a market value of CHF 5/m2 20 years ago. It turned out that 20 years ago the property was still located in the agricultural zone. It was not until 2010 that the land was rezoned into the building zone.
7.2.1 Can X rely on the provisional real property gains tax calculation of the municipality Y?
7.2.2. variant: the land is several thousand square metres. The difference between the provisional calculation and the disposable gain on the land is CHF 50 million. Would this change anything in terms of the protection of legitimate expectations?