Federal Supreme Court, 27.01.2026, 9C_647/2024
Facts
In 2015, a lawyer residing in the canton of St. Gallen became a partner in two Liechtenstein-based simple partnerships: C.________ (legal services) and D.. The purpose of D. is to manage three fiduciary companies, also based in Liechtenstein, which are incorporated as Liechtenstein-law establishments ("Anstalten") (the "Aussengesellschaften").
For the 2015 tax year, the lawyer declared total income of CHF 663,331 as derived from self-employment, split between C.________ and the three "Aussengesellschaften." The cantonal tax authority classified only the income from C.________ (CHF 22,315) as derived from self-employment and exempted it from tax in Switzerland. It treated the remaining income (CHF 641,016) as derived from employment and taxed it in Switzerland. The cantonal authorities upheld this assessment. The lawyer appealed to the Federal Supreme Court, requesting a full tax exemption on his income or, alternatively, partial taxation.
Legal Analysis
Under Swiss tax law (Art. 3 para. 1 and Art. 6 para. 1 of the Federal Act on Direct Federal Tax (LIFD)), individuals domiciled in Switzerland are subject to unlimited tax liability, with the exception of income derived from businesses, permanent establishments, or real estate located abroad. The distinction between self-employment (Art. 18 LIFD) and employment (Art. 17 LIFD) is based on economic reality rather than the legal nature of the contract.
In the international context with Liechtenstein, the 1995 tax agreement stipulates that income from employment earned by a cross-border commuter is taxable in the state of residence (in this case, Switzerland). The agreement contains no specific rule for income from self-employment, the taxation of which is therefore governed by Swiss domestic law.
The legal form of the Liechtenstein "Anstalt" (establishment) is recognized in Switzerland as a distinct legal entity. The principle of transparency ("Durchgriff"), which exceptionally allows for the disregard of a company's legal personality, is based on the prohibition of abuse of rights. According to established case law, a taxpayer who has chosen to use a legal entity cannot invoke transparency for their own benefit to ignore the legal existence of that entity.
Application to the Case
The Federal Supreme Court examined whether the disputed income (CHF 641,016) originated from a permanent establishment abroad within the meaning of Art. 6 para. 1 LIFD, which would justify its exemption in Switzerland.
The appellant argued that his activity was self-employment and that the permanent establishments of the "Aussengesellschaften" should be attributed to him, as the latter are controlled by the simple partnership D.________, of which he is a partner. He thus invoked a form of tax transparency.
The Federal Supreme Court rejected this argument. It reiterated that a taxpayer cannot invoke the principle of transparency for their own benefit. By choosing a structure involving "Aussengesellschaften" with their own legal personality, the appellant must accept the tax consequences of that form. The permanent establishments of these companies cannot, therefore, be attributed to him personally.
Furthermore, the Federal Supreme Court upholds the findings of the lower court that the simple partnership D.________ does not itself have a permanent establishment in Liechtenstein. Its activities are conducted exclusively through the "Aussengesellschaften," and it possesses neither its own infrastructure nor its own accounting records.
Consequently, even if the appellant's activity were classified as self-employment, the resulting income cannot be attributed to a foreign permanent establishment belonging to him or to the company D.________. The exemption condition under Art. 6 para. 1 DBIG is therefore not met. As a result, the income in question is fully taxable in Switzerland, and it is unnecessary to determine whether it stems from dependent or independent activity.
Outcome
The Federal Supreme Court dismisses the appeal and upholds the lower court's decision. The disputed income is fully taxable in Switzerland. Legal costs are to be borne by the appellant.
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