Daniel Holenstein
Criminal withholding tax law - liability risks for directors and trustees/statute of limitations/intent
Workshop by Daniel Holenstein on the occasion of the ISIS) seminar on October 21, 2024 entitled "Criminal withholding tax law - liability risks for board members and trustees/statute of limitations/intent"
Case 1: Write-off of inventory purchased at inflated prices
1. facts of the case
X. AG, which belongs to an international group based in Zug, acquired a warehouse from its sister company at an inflated price. AG, based in Zug, which belongs to an international group, acquired a warehouse from its sister company at an inflated price, which is why it recognized a write-down of CHF 1.5 million in its annual financial statements.
In the course of his work for the Group, attorney Y. took a seat on the Board of Directors of X. AG. As one of the three members of the Board of Directors, he co-signed the contract concerning the takeover of the warehouse, discussed the annual financial statements with the auditors and approved the write-downs. Three years later, after his resignation from the Board of Directors, X. AG acknowledged a non-cash benefit of CHF 1.5 million in an audit and paid the tax owed.
Questions
- Has Attorney Y. committed a punishable offense against the Withholding Tax Act?
- If so, what liability risks does he face?
Case 2: Subsequent declaration of benefits in kind
1. facts of the case
A. is a shareholder and member of the Board of Directors of B. AG. The Board of Directors has delegated the management of the company. B. AG has called in a regional fiduciary company for tax matters.
After the cantonal tax administration did not allow payments to A. as business-related expenses and added them to the taxable profit, B. AG reported these non-cash benefits to the FTA. After the External Audit Department levied the withholding tax owed for this, the Criminal Matters and Investigations Department initiated administrative criminal proceedings against A. for evasion of withholding tax.
Questions
- Is A. guilty of evading withholding tax?
- If so, how is the fine to be calculated?
Case 3: License payments to offshore company
1. facts of the case
G. GmbH, domiciled in Frauenfeld, concluded a license agreement with H. Ltd, domiciled in the BVI, in which it undertook to pay license fees of CHF 10,000 per month for software developed by the shareholder of G. GmbH. The sole shareholder of H. Ltd is the shareholder of G. GmbH domiciled in Frauenfeld. The latter recorded the license fees as operating expenses.
Following a VAT audit, the External Audit Department opened collection proceedings against G. GmbH for the 2017-2020 financial years and the Criminal Matters and Investigations Unit (ASU) opened administrative criminal proceedings against the managing director of G. GmbH. After questioning the managing director, the ASU extended the criminal proceedings to I., the trustee of G. GmbH. I. is a licensed auditor.
G. GmbH held its Annual General Meeting in January of the year following the financial year. It has not submitted any annual financial statements to the FTA.
On September 9, 2024, the FTA issued the collection order.
Questions
- Was I. guilty of evading withholding tax?
- If so, what liability risks does he face?
- What would be the consequences under criminal tax law of an objection to the assessment order?
