Federal Supreme Court, 01/26/2026, 9C_107/2025
Facts
A limited company (A.________ AG), whose sole asset is a piece of real estate, was registered in the VAT register effective January 1, 2018. This property is leased exclusively to its sole shareholder. Following major renovation work in 2018 and 2019, the company deducted the corresponding input tax. After an audit, the Federal Tax Administration (FTA) retroactively removed the company from the register, deeming the arrangement to be tax evasion. It demanded the repayment of the input tax collected for the 2018 to 2020 periods, totaling CHF 865,495 plus interest. The Federal Administrative Court upheld this decision, leading the company to appeal to the Federal Supreme Court.
Legal Analysis
The Federal Supreme Court (FSC) applies by analogy its new case law (BGE 149 II 53), developed for companies holding aircraft, to companies holding vacation homes. According to this approach, before examining tax evasion, it must be determined whether the company is subject to VAT. In accordance withArt. 10 para. 1bis of the VAT Act, subjective tax liability requires the independent pursuit of a professional or commercial activity aimed at generating sustainable revenue. An activity that serves exclusively to satisfy the private needs of the beneficial owner cannot be classified as commercial, as it is not focused on generating turnover and lacks the necessary sustainability. Such an activity falls outside the scope of VAT. Alternatively, the FSC reiterates the three cumulative conditions for tax evasion:
(1) an unusual or inappropriate legal structure (objective element),
(2) an intention to evade tax that appears to be the primary motive for the arrangement (subjective element), and
(3) an actual and significant tax saving if the arrangement were accepted (effective element).
Application to the Case
The FSC first examines the company's subjective tax liability. It notes that the company's sole real estate asset is made available exclusively to its sole shareholder to satisfy their private needs. The occasional use of the property for professional purposes by the shareholder does not alter the private nature of the use from the perspective of the owning company. The company's activity therefore cannot be classified as commercial within the meaning of the VAT Act. Consequently, the company is not subject to VAT. The FTA was therefore correct to remove it from the register and correctly demanded the repayment of the improperly deducted input tax.
Alternatively (obiter dictum), the FSC considers that even if the company were considered liable, the conditions for tax evasion would be met. The legal structure is unusual, as there is no valid economic reason to maintain a limited company solely to hold the shareholder's private residence. The intention to evade tax is presumed, and the tax saving resulting from the deduction of input tax is significant.
Finally, the FSC confirms that default interest is due on the repayment claim. By registering itself for VAT and obtaining refunds, the company must be treated as a taxable person for the purposes of recovering the amounts improperly received.
Outcome
The Federal Supreme Court dismisses the company's appeal.
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