Assessment procedure including the special features of discretionary assessment

Case 1: Cantonal elitism

1. facts of the case

Rütli-Immobilien AG is based in the canton of Schaffhausen. It holds a real estate portfolio that extends throughout Switzerland. In addition to properties in the canton of Schaffhausen, its properties are located in the canton of Zurich, the canton of Thurgau, the canton of Aargau, the canton of Solothurn, the canton of Bern and the canton of Vaud.

The tax representative of Rütli-Immobilien AG applies to the canton of domicile for an extension of the deadline for submitting the 2024 tax return until the end of 2025, which is granted as requested. The tax representative is astonished when he receives reminders from the other cantons in the course of 2025 to submit the 2024 tax return.

The sole shareholder Baldwin W. Bringolf receives annual lump-sum expenses of CHF 48,000, which the assessment authority of the canton of domicile has granted him in the assessment procedure. When assessing the 2024 tax period, the canton of Thurgau reviews the lump-sum expenses and charges CHF 24,000 as benefits in kind. The tax representative raises an objection and argues that a secondary tax domicile canton cannot deviate from the treatment of the main tax domicile canton.

Variant: The expense regulations are based on expense regulations approved by the Canton of Schaffhausen, which will apply from the 2023 tax period.

Rütli-Immobilien AG has set aside corresponding provisions for planned major repairs. The tax representative has submitted a corresponding ruling to the canton of Schaffhausen, which was approved on 21.3.2023 with effect from the 2023 tax period. The canton of Solothurn does not adhere to the rates stated in the ruling for the 2023 assessment. The tax representative raises an objection and challenges the ruling.

The 2024 tax period will be assessed by the cantons involved at different times. The canton of Vaud, which is the last canton to assess, will not open the 2024 assessment until 3.8.2028. The assessments of the other cantons are already legally binding. The canton of Vaud deviates from the separation proposal accepted by the other cantons, which leads to intercantonal double taxation. The tax representative, who does not speak French, assumes that the cantons will come to an agreement and thus eliminate the double taxation. After all, there is a corresponding constitutional right.

Questions

• What applies in the intercantonal relationship for deadline extensions?
• Is a secondary tax domicile canton bound by the assessment practice of the main tax domicile canton? How should the variant with approved expense regulations be assessed?
• Does the ruling obtained in the main tax domicile canton also apply to the special tax domicile cantons?
• How should the taxable person proceed in the event of double taxation?

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Case 2: Long processing time

1. facts of the case

The Frauenfelder couple submitted their 2018 tax return in August 2019. It contains no reference to a representative relationship.

For various reasons, the tax return is delayed for a very long time. As a result, the tax administration sent the interruption of the limitation period for the 2018 tax period to Trust Me Treuhand AG as tax representative by A Mail Plus in November 2023. Although there is no written power of attorney for this fiduciary office in the files, Trust Me Treuhand AG prepared Mr. Frauenfelder's 2018 annual financial statements and requested an extension of the deadline for submitting the 2018 tax return in March 2019.

The assessment was issued to Trust Me Treuhand AG on December 20, 2024. The Frauenfelder couple did not take action against it and paid the tax bill. Only later did they claim that the 2018 tax assessment was invalid due to the statute of limitations and demanded their money back.

Questions

• With which act was the first interruption of the limitation period made?
• In what form should the limitation period be interrupted?
• Does the letter from November 2023 interrupt the statute of limitations?
• Does an assessment that has been issued despite the fact that the statute of limitations for assessment has expired have any legal effect at all?

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Case 3: Request for recusal

1. facts of the case

Egon Gründlich is an investment expert in the municipality of Neuhausen. Although he does not currently live in this municipality, he grew up in Neuhausen and is still well connected. He knows most of the residents personally and maintains a large circle of friends and acquaintances in Neuhausen.

Mr. Gründlich also processes the tax return of Mr. Flegel, whom he has known since childhood and whose son he went to school with. Various details and supporting documents are missing, which is why Mr. Gründlich makes a request. Mr. Flegel answers the requirement within the deadline. Nevertheless, ambiguities remain and Mr. Gründlich is forced to send Mr. Flegel a second request. As this is also not fulfilled to his satisfaction, he sends an additional reminder, which remains unanswered. Mr. Gründlich then assesses Mr. Flegel, but does not accept various deductions due to a lack of receipts.

Mr. Flegel does not agree with the assessment and raises an objection. At the same time, he requests that Mr. Gründlich recuse himself, as he does not want the assessment and objection to be handled by the same person. He also argues that Mr. Gründlich did not take his submissions seriously and issued overly extensive requests for files that went far beyond what was necessary and reasonable for the tax assessment.

Variant 1

Mr. Gründlich had already assessed Mr. Flegel in the previous year and decided against him in the objection. Mr. Flegel thus justifies his request for recusal.

variant 2

The two gentlemen have been friends for years and meet regularly as members of the board of the Neuhausen Music Association. Nevertheless, Mr. Gründlich carries out Mr. Flegel's tax assessment.

Questions

• Is Mr. Flegel's request for recusal justified in the basic facts and variant 1?
• Should Mr. Gründlich have resigned in variant 2?

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Case 4: Incomplete tax return

1. facts of the case

Kevin Looser submits his 2024 tax return. During the assessment procedure, it is established that Kevin has not declared all taxable items.

For example, sideline income of 5% of total income is missing (variant: 40%).

In addition, he declared property maintenance costs of CHF 100,000, of which CHF 60,000 are value-enhancing expenses.

Likewise, benefits of monetary value were not declared by his employer, whereby these were

1. the increase in the private car share or
2. the assumption of private living expenses.

Questions

• What is the obligation to declare?
• When is the offense of attempted tax evasion fulfilled?
• How should the specific facts of the case be assessed?
• What is the responsibility of a consultant who has completed the tax return?

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Case 5: Conditions / assessment proposal

1. facts of the case

Ms. Moser feels offended by a condition imposed by the assessment expert. The condition demands more details on the claimed work travel costs (car costs) and property maintenance. Ms. Moser responds to the requirement with a single sentence: "That's none of your and your snooping authority's business!"

Furthermore, the assessment expert suspects that Ms. Moser has not declared all her accounts. She contacted the regional bank with the requirement to disclose all of the taxpayer's banking relationships.

Variant

The assessment expert refrains from sending Ms. Moser a condition. Instead, she sends her an assessment proposal in which only the public transportation costs are allowed as a deduction instead of the commuting costs. She reduces the claimed property maintenance with detailed justification. The assessment proposal states that Ms. Moser can raise her objections to this within 30 days and must provide supporting documents.

The assessment expert is not surprised when Ms. Moser informs her that she does not agree with the assessment proposal, does not submit any justification or supporting documents and expects an assessment in accordance with the declaration.

Questions

• Is Ms. Moser right not to provide any information?
• What can the investment expert do?
• Can the investment expert place the request with the bank or is there an alternative?
• Can the assessment expert send an assessment proposal instead of a requirement?

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Case 6: Inspection of files

1. facts of the case

Justin and Kevin McGregor, brothers, are the two shareholders of McGregor AG. Justin holds 60 percent of the shares, Kevin 40 percent. Kevin left McGregor AG in 2025 and sold his shares to Justin. Kevin, a born sales representative, was never interested in finance and accounting. Until his departure, Justin was a member of the Board of Directors with joint signature (variant: individual signature).

For the 2024 tax period, the tax assessment authority will add CHF 200,000 in unused expenses and allocate these to Justin and Kevin in the shareholding ratio. Justin has also booked his honeymoon with Cinderella in the amount of CHF 40,000 as expenses. Kevin is surprised at the high offsetting and calls in lawyer Kuno Achtsam. He demands access to the investment details of McGregor AG.

Questions

• Who has the right to inspect the files of an AG?
• What legal remedies is Kevin entitled to if the assessment authority refuses to allow him to inspect the files?
• How is the inspection of files to be assessed in the constellation of joint signatures in pairs?
• How should the inspection of files with an individual signature be assessed?

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Case 7: Hidden profit distributions

1. facts of the case

BE Trug AG is domiciled in the canton of Thurgau. The Chairman of the Board of Directors and sole shareholder of BE Trug AG is B. Trüger, who is resident in the canton of Schaffhausen. The following items were recognized as expenses in the annual financial statements of BE Trug AG:

• Private vacation trip by B. Trüger CHF 10,000
• Jewelry to life partner CHF 20,000
• Unallocated expenses CHF 35,000

These items will be corrected for tax purposes in the 2023 tax assessment of BE Trug AG. It will become legally binding without being contested.

Questions

• Can B. Trüger defend himself against the offsetting of the monetary benefits?
• B. Trüger can provide meaningful evidence of the expenses charged in excess of CHF 15,000 in his assessment proceedings. Should this be taken into account?
• The Cantonal Tax Administration of Thurgau has reported the corresponding monetary benefits to the FTA for the collection of withholding tax. Is B. Trüger's application for a refund likely to be successful?

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 Case 8: Discretionary assessments

1. facts of the case

Anne Klingler, born in 1948, was a professor of international law until her retirement and spent a large part of her career abroad. She returned to Switzerland in 2015. Overwhelmed by administrative matters and focused on her publishing and lecturing activities, which she continues to pursue after her retirement, she does not submit any tax returns despite reminders, meaning that the assessment authorities have to make discretionary assessments.

The following tax factors are used as a basis:

In addition, there are fines within the meaning of Art. 174 DBG totaling CHF 30,000.

Anne Klingler does not raise any objections, so the discretionary assessments become legally binding. The tax collection always results in income seizures, which also end with certificates of loss as tax claims increase. From the attachment proceedings, the reference authority is aware of the actual income situation, which is significantly lower than the estimated tax factors.

Questions

• What are the requirements for making a discretionary assessment?
• How is the discretionary assessment to be made?
• What are the legal consequences of translated discretionary assessments?
• How should the present case be assessed?

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Case 9: Rulings

1. facts of the case

World Wide Services AG is based in Arbon, Canton Thurgau, and spun off a production division to a subsidiary in 2021. The tax representative Mostindien Steuerberatungs AG submitted a ruling to the Cantonal Tax Administration in advance for this purpose. In this ruling, the blocking period pursuant to Art. 61 para. 2 DBG is waived on the assumption that this is dispositive law, but at the same time it is stated that no sale of the subsidiary or the transferred business is planned.

Due to the high pressure of pending cases and shortly before the summer vacation, the responsible clerk signs the ruling without having taken note of the "removal" of the blocking period.

In 2025, World Wide Services AG sells all participation rights in its subsidiary to a competitor. The cantonal tax administration then initiates a supplementary tax procedure. World Wide Services AG defends itself against this by submitting the ruling.

Questions

• Under what conditions does a so-called ruling have a binding effect?
• Can the cantonal tax administration also approve rulings on direct federal tax?
• How should the specific facts of the case be assessed?
• What needs to be considered if a cantonal tax authority wants to revoke a ruling?

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Case 10: Subsequent ordinary assessment

1. facts of the case

Luna Looping is a German citizen. She is unmarried and lived in Munich for a long time. As several people in her circle of acquaintances had already settled in Switzerland, she applied for an interesting job with an international company headquartered in the canton of Schaffhausen in 2022. She got the job, left Munich, obtained a B permit and moved to Schaffhausen. Her employer will pay withholding tax in the canton of Schaffhausen on her income of CHF 100,000 from the start of her employment in September 2022.

Luna Looping has been subject to Swiss social security since moving to Switzerland. She has learned that she can reduce her tax burden in Switzerland by making contributions to pillar 2 and 3a. Her financial circumstances allow her to make contributions to pillar 3a in the year she moves to Switzerland.  

A short time later, Luna Looping met her future husband in Schaffhausen. He is based in Singen (DE). They married in 2024 and have lived in Singen ever since. Luna Looping continues to work for her Swiss employer and commutes from Singen to Schaffhausen. Her husband works for an employer in Singen. Luna Looping earns 60% of the couple's total income.

Variant

Luna Looping marries Hans Meier, who is a Swiss citizen and lives in Schaffhausen. They live together in Schaffhausen. Unfortunately, their luck does not hold out and they divorce at the end of 2025. Luna Looping continues to live and work in Schaffhausen.

Questions

• What does Luna Looping have to do to ensure that she is properly assessed in 2022, the year she moves in?
• Luna Looping is also subject to withholding tax in 2023. She does not comply with the request to submit the 2023 tax return as her withholding tax has already been paid and she has forgotten to make the payments into pillar 3a in 2023. She assumes that the withholding tax will be lower than the ordinary tax and does not reapply for NOV. What are the consequences of her behavior?
• As she was already taxed properly in previous years, she assumes that this will also be the case for 2024 (move to Singen). Is her assumption correct?
• Would the assessment be different if Luna Looping and her husband lived in Munich rather than Singen and she rented a room in a shared flat in Schaffhausen where she could stay overnight during the week?
• Variant: How is Luna Looping taxed during her marriage to Hans Meier and after her divorce?