2.1 Facts of the Case
X. is the sole shareholder and a member of the board of directors of A. AG, a real estate company. He contributes the real estate held in his personal assets to A. AG at a contribution value that is just under CHF 500,000 above the acquisition cost (purchase price plus value-enhancing expenses). Shortly thereafter, A. AG engages a real estate agent to sell the property at a price higher than the contribution value. After a few months, the agent informs A. AG that a sale at that price is not possible. Half a year later, on November 28, 2018, the trustee receives the property gains tax assessment, which clearly shows at a glance the notarized sale price, the acquisition costs, the seller, the buyer, and the property gain.
In a letter dated December 3, 2018, the trustee sends X. Form 103 as well as the annual financial statements for the fiscal year in which X. contributed the property to A. AG, and asks him to sign these documents and forward them to the FTA.
Years later, the FTA initiates criminal withholding tax proceedings against X. and imposes a fine on him for withholding tax evasion.
In his judicial challenge to the penalty decision, X. argues that he was not the perpetrator of the evasion.
2.2 Question
How will the court rule?
2.1 Facts
V. is the sole member of the board of directors of L. AG, headquartered in Zug. The company received license payments from MIBV (NL), resulting in a retained earnings balance of EUR 963,196. After the Dutch tax authorities no longer allowed the license payments from M BV to be deducted and concluded that these payments were actually due to M BV, V. sought a way to distribute the retained earnings to the shareholders in the Netherlands in the most tax-efficient manner possible.
However, the tax consulting firm G. AG, which was consulted, explained to her that this would only be possible after deducting withholding tax. V. then sought a second opinion from H. AG. H. AG recommended converting an alleged claim by the shareholders into a KER, paying the issuance tax, and reporting the KER to the FTA. To be on the safe side, V. asked H. AG to obtain the tax administration’s “go-ahead” for the planned course of action. After the cantonal tax administration granted its approval, the plan was implemented. After the KER was repaid (without withholding tax deduction), the ESTV investigated the matter. Since L. AG was unable to substantiate the shareholders’ claim, it levied the withholding tax and initiated criminal proceedings against V. and the account manager at H. AG for joint and several tax evasion of withholding tax.
2.2 Questions
- How should the behavior of the board member be assessed?
- Did the tax advisor commit a criminal offense?
3.1 Facts
C. AG received a loan bearing 3.25% interest from a foreign affiliate. After the cantonal tax authority of the canton where the company is headquartered raised concerns about the interest rate, C. AG retained the renowned tax consulting firm D. AG to resolve the issue regarding the interest on the loan. Subsequently, D. AG reached a compromise with the cantonal tax authority regarding the permissible interest rate. The account manager at D. AG then pointed out to C. AG that the difference between the agreed-upon interest rate and the compromise interest rate would be subject to withholding tax if the Federal Tax Administration (ESTV) were to conduct an audit. However, since the risk of an audit was low, he recommended waiting until such an audit might occur.
A few months later, the FTA picked up the case during a random audit and retroactively assessed withholding tax. It then initiated criminal proceedings for withholding tax against an unknown party, which it subsequently extended to include the account manager at D. AG. As part of these criminal proceedings, it convicted him of incitement to tax evasion.
3.2 Questions
- Was the conviction justified?
- If so: What should the account manager of D. AG have done to avoid the conviction?
4.1 Facts
A. is the sole shareholder and chairman of the board of directors of B. AG. The board of directors of B. AG has delegated management authority through organizational regulations. The Chief Financial Officer is responsible for tax matters and serves as the point of contact for the external tax consulting firm engaged by the company, which prepares the necessary tax returns and submits them to the Chief Financial Officer and A. for signature.
In its annual financial statements, B. AG has recorded various expenses whose business justification is, at the very least, questionable (limousine service for A.’s trips between his home and workplace, flights to London, where A.’s daughter is studying, and furnishing of A.’s second home). B. AG recorded these expenses as business expenses on A.’s instructions.
After offsetting these non-business-related expenses in the income tax assessment, the cantonal tax administration reports the monetary benefits to the Federal Tax Administration (ESTV), which levies withholding tax and subsequently initiates tax evasion proceedings.
In these proceedings, A. argues that he cannot be the perpetrator of the tax evasion because the filing of the withholding tax return was the responsibility of the external tax consulting firm.
4.2 Questions
- Will he succeed in this argument?
- If so, will this spare him from punishment?
