Non-payments and non-services

1. the distinction between subsidy and performance (GS)

BGE (2C_585/2017 of 6.2.2019) on the financing of support for the generation of research funds.

1.1. facts:

According to BGE (strongly summarized), the association advises universities and research institutions on the generation of research funds. The association is financed by membership fees, contributions from the State Secretariat for Education, Research and Innovation (SERI), income from various agreements, income from assets and other grants.

With "Performance Mandate 2014 - 2016", SERFI commissions the Association in detail to run an information service in the field of research funding and bears its costs.

1.2 The question

Does the payment of the SBFI to the association represent the remuneration for a (taxable) service provided by the association to the SBFI or third parties (exchange relationship with sufficient economic link between service and remuneration) or is it a subsidy (promotion, support without direct consideration)?

2. the distinction between the forwarding of subsidies and performance (MR)

2.1.case study 1

2.1.1. facts of the case

The Swiss Federal Office of Energy has become aware of the latest invention of Licht&Sicht AG. The lighting system, which can be used in a wide range of industries, requires only 2% of the usual energy consumption to create optimal lighting conditions. Therefore the Swiss Federal Office of Energy has decided to promote the conversion of as many companies as possible to the technology of Licht&Sicht AG within the next 5 years. According to the concluded contract, the Swiss Federal Office of Energy takes over 20% of the costs for the conversion to the lighting system of Licht&Sicht AG per order in Switzerland.

Licht&Sicht AG invoices its first customer, Prima AG, for the new lighting system as follows:

2.1.2 Questions

1. What amount must Licht&Sicht AG settle with the FTA as turnover and what else must it take into account?
2. What must the invoice look like if Licht&Sicht AG wants to claim a forwarding of the subsidy from the Swiss Federal Office of Energy from the FTA?

2.2 Case study 2

2.2.1. facts of the case

Licht&Sicht AG is inspired by the success of the new lighting system and has set itself the goal of converting C02 into electricity. In order to be able to continue its already started research, Licht&Sicht AG has contacted various institutions in Germany and abroad for financial support for its project. Among others, it receives funds from the EU and the Swiss National Science Foundation. In order to accelerate the progress of its project, Licht&Sicht AG is consulting the Clever&Smart Foundation, which is carrying out part of the research.

2.2.2 Questions

1. How do they qualify the funds that Licht&Sicht AG passes on to the Clever&Smart Foundation?
2. What would it take for you to arrive at another solution?

3. distinction between subsidy and capital contribution (GS)

3.1Case study / facts:

A community formally brings equity capital into a legal entity controlled by it (AG, GmbH, cooperative, association, foundation, independent public-law institution, special-purpose association, etc.) ...).

The capital contribution is made partly in cash and partly as a contribution in kind.

3.2 Questions

1. Can a capital contribution simultaneously constitute a subsidy and lead to a reduction in input tax for the recipient?
2. Can the capital contribution in kind constitute a payment in kind and thus trigger a VAT liability on the part of the investor?

4. delimitation of benefits for rights in land (MR)

4.1 Case study

The Wohlen power plant has decided to expand its electricity network in order to be able to offer its services also in the surrounding communities. For this purpose, the power plant has to build a transformer station on some plots of land, including Mr. Witzig's land. The power station and Mr. Witzig have concluded an easement contract for this purpose and are still in disagreement as to whether this easement should be entered in the land register.

4.2 Questions

1. What are the different consequences if an entry or no entry is made in the land register?
2. The parties have registered the easement in the land register. A few years later, the Wohlen power station acquires from Mr. Witzig the property on which the easement is registered. How do you treat this sale for VAT purposes?

5. the distinction between sovereign and entrepreneurial performance (MR)

5.1 Case study 1

Attorney Hans Hügli has made a name for himself in various fields of law and is registered as a taxable person in the VAT register with his law firm. The child and adult protection authority of Schaffhausen has entrusted him with several advisory services. How should Hans Hügli treat the remuneration he receives for the management of the legal advisors for VAT purposes?

One of his previous clients appointed as executor of his will, which was deposited on the church. How do you assess this activity? Would anything change in your assessment if the community appointed Hans Hügli as executor of the will in place of the testator?

5.2 Case study 2

The organizers of an open-air concert commission Sicherheit AG to ensure peace and order at the event, to carry out the entrance controls to the concert area and to regulate the traffic around the area.

1. How does Sicherheit AG charge for its services?
2. Does something change in your assessment if the cantonal police take over these tasks instead of the Sicherheit AG?
3. What happens if the cantonal police decide to carry out vehicle checks on the access roads to the concert site?
4. How does Sicherheit AG charge for its services when it receives an order from the cantonal police to regulate traffic around the concert site before and after the concert?