Federal Supreme Court, 09.04.2026, 9C_117/2025, 9C_121/2025
Facts
In 2009, developers (B.________ and others) were granted a permit to build several apartment buildings in the City of Geneva.
In 2010, they were billed a public infrastructure tax of CHF 535,933 to fund the necessary public works (roads, etc.). The developers contested this invoice, triggering a long legal saga.
In an initial ruling in 2020, the Federal Supreme Court remanded the case to the Geneva Court of Justice, ordering it to verify whether the tax amount complied with the principle of cost coverage. This constitutional principle requires that the total revenue from a causal tax must not exceed the total costs it is intended to cover.
In the meantime, the authority to collect the tax was transferred from the canton to the Intermunicipal Equipment Fund (FIE), while the City of Geneva remains responsible for carrying out the work.
On January 14, 2025, the Geneva Court of Justice, ruling on remand, annulled the invoice in its entirety. It held that, based on the accounting documents provided, it was not proven that the principle of cost coverage had been respected, either at the City of Geneva level or at the intermunicipal level.
The City of Geneva and the FIE, considering this decision unfounded, filed separate appeals with the Federal Supreme Court.
Law
1. Standing of public entities to appeal (art. 89 para. 2 let. c LTF)
- A municipality or a public law entity may appeal to the Federal Supreme Court if it claims a violation of its autonomy.
- Autonomy exists when an entity has significant decision-making leeway.
- In this case, Geneva's legislation on the infrastructure tax is so detailed and restrictive that it leaves little room for decision-making by the City or the FIE.
- However, the Federal Supreme Court recognizes their standing to appeal prima facie, as the City is responsible for carrying out the work and the FIE for its financing, and the contested decision has direct financial consequences on the performance of these public tasks.
2. Principle of cost coverage
- This principle requires a comparison between the total revenue from the taxes collected and the total costs incurred by the corresponding administrative activity (in this case, infrastructure work).
- Tax revenue must not exceed costs, or should only do so by a very small margin.
- Building up reserves is permitted, provided they are not so excessive as to constitute unjustified hoarding.
- They must correspond to foreseeable future needs.
Application to the specific case
The Federal Supreme Court reviewed the Court of Justice's accounting analysis and deemed it arbitrary, both at the municipal and inter-municipal levels.
1. Analysis at the City of Geneva level (municipal level)
- Findings of the Court of Justice: City expenditures (2010-2020): CHF 34.3 million.
- Taxes collected for the City: CHF 20.3 million.
- Interim conclusion: Revenue is lower than expenditure, which complies with the principle.
- Flawed reasoning of the Court of Justice:
- The Court then performed an additional calculation deemed "untenable" by the Federal Supreme Court.
- It found that a balance of CHF 7.3 million remained "unidentifiable" in the flows between the collecting entity (FIE/Canton) and the City.
- It wrongly concluded from this that compliance with the principle was not proven.
- Correction by the Federal Supreme Court: The only relevant calculation is the comparison between total costs (CHF 34.3 million) and total revenue (CHF 20.3 million).
- Since costs significantly exceed revenue, the cost-recovery principle is clearly respected at the municipal level.
The reasoning of the Court of Justice was arbitrary.
2. Analysis at the level of all municipalities (inter-municipal level)
- Findings of the Court of Justice: Estimated municipal expenditures (2010-2020): CHF 95.5 million.
- Taxes collected for all municipalities: CHF 97.5 million.
- Interim conclusion: Revenue exceeds costs by approximately CHF 2 million (i.e., ~2%), which "does not necessarily constitute a violation" of the principle.
- Flawed reasoning by the Court of Justice: The Court subsequently invalidated its own analysis on the grounds that certain accounting data (amounts invoiced vs. amounts granted) were missing for the years prior to 2017, concluding that the FIE had not provided the necessary evidence.
- Correction by the Federal Supreme Court: The comparison between costs and revenues was sufficient.
- An overrun of less than 2% is entirely acceptable, especially in a complex system involving 45 municipalities and time lags between collection and expenditure.
- Furthermore, the FIE's reserves were not deemed excessive.
The principle of cost coverage is therefore also respected at the inter-municipal level.
Outcome
The Federal Supreme Court upholds the appeals of the City of Geneva and the Inter-municipal Equipment Fund (FIE). The judgment of the Geneva Court of Justice is set aside. The equipment tax invoice of CHF 535,933.65 is reinstated and becomes due once again.
Legal costs (CHF 10,000) are to be borne by the developers.
Silex tax newsletter published in collaboration with Anna Vladau, Attorney at Law
