TF, 02.17.2026, 9C_649/2025
Facts
A.________ INC. is a company incorporated in C., of which D. is a director, manager, and shareholder. Following an investigation by the Criminal Affairs and Investigations Division (DAPE) of the Federal Tax Administration (FTA), it was determined that the company, despite being based abroad, was conducting undeclared business activities in Switzerland.
The DAPE report concluded that A.________ INC. maintained a permanent establishment in Geneva at D.'s business premises, where it managed investment funds. The investigation also revealed that D. was the company's majority shareholder and had received benefits from the company, which were classified as hidden profit distributions. The DAPE rejected the existence of a genuine current account between the company and D.________, noting that the balance of fund movements was consistently in the latter's favor and that there was no clear intent for repayment. Furthermore, the company's financial statements were deemed unreliable, justifying an assessment based on estimation.
On this basis, the Geneva Cantonal Tax Administration (AFC-GE) initiated proceedings for attempted tax evasion for the 2010 to 2014 periods, issuing tax assessments and penalty notices. These decisions were upheld upon appeal and subsequently confirmed in substance by the Administrative Court of First Instance and the Court of Justice of the Canton of Geneva, with the latter only annulling the 2009 assessment. A.________ INC. then filed a public law appeal with the Federal Supreme Court.
Legal Analysis
The Federal Supreme Court examines several substantive and procedural legal issues:
- Statute of limitations for tax assessment: The Federal Supreme Court examines the issue of the statute of limitations ex officio. The right to proceed with an assessment generally expires after a certain period (art. 120 para. 4 DBTA ; art. 47 para. 1 HTA).
- Statute of limitations for criminal prosecution: For attempted tax evasion, the limitation period only begins to run upon the final conclusion of the tax assessment procedure (art. 184 para. 1 let. a DBTA ; art. 58 para. 1 HTA). Indeed, the offense cannot be established and the amount of evaded tax cannot be calculated until the assessment has become final.
- Right to be heard (Art. 29 para. 2 of the Federal Constitution): This right guarantees a party the opportunity to express their views on relevant matters, to produce evidence, and to participate in the administration of such evidence. However, it does not oblige the authority to address every argument or to admit all evidence offered. The authority may perform an anticipatory assessment of evidence and decline an investigative measure if it determines, without arbitrariness, that the measure will not alter its conviction. A legal opinion submitted by a party is considered a mere allegation rather than a means of proof.
- Permanent establishment (Art. 51 para. 2 of the Federal Act on Direct Federal Tax (LIFD)): A foreign company is subject to limited tax liability in Switzerland if it operates a permanent establishment there. This refers to a fixed place of business through which the business of the enterprise is wholly or partly carried on. A representative office may constitute such an establishment.
- Constructive dividends: This is a form of hidden profit distribution. It occurs when a company grants an advantage to its shareholder (or a related party) that it would not have granted to a third party under identical conditions. The granting of loans without interest, without collateral, and without a clear repayment plan may constitute such a benefit.
- Taxation by estimation: In the absence of reliable and properly maintained accounting records, the tax authority is entitled to proceed with taxation by estimation, based on the elements at its disposal (Art. 125 para. 2 of the Federal Act on Direct Federal Tax (LIFD)).
- Attempted tax evasion (Art. 176 of the Federal Act on Direct Federal Tax (LIFD)): The offense is committed when a taxpayer intentionally attempts to evade tax by failing to file a return or by providing incomplete information. The fault of the governing body (director, manager) is attributable to the legal entity.
Application to the specific case
The Federal Supreme Court applies these principles to the facts of the case:
- Statute of limitations: The Court notes ex officio that, as of the date of its judgment, the right to tax the 2010 fiscal period has expired. However, the statute of limitations for criminal prosecution regarding the attempted evasion has not expired, as the period only began to run with the present judgment, which renders the taxation final.
- Right to be heard: The Federal Supreme Court rejects the appellant's claims. It confirms that the Court of Justice could, without violating the right to be heard, exclude the submitted legal opinion, as it only held the value of a party's allegation. Similarly, the refusal to hear certain witnesses falls under a non-arbitrary anticipatory assessment of evidence, as the cantonal court determined that their testimony would not provide new or decisive elements compared to the documents already in the file.
- Permanent establishment: The Federal Supreme Court validates the cantonal court's analysis. A body of consistent evidence (presence of offices in Geneva, documents seized on-site, contracts mentioning a Swiss address, choice of Swiss law, and jurisdiction in Geneva) demonstrates the existence of a representative office constituting a permanent establishment. The assessment by FINMA, which concluded that the company was not subject to the Collective Investment Schemes Act (CISA), is not relevant in tax matters, as the objectives of the two regulations differ.
- Shareholding and constructive dividends: The Federal Supreme Court rules that the cantonal court did not act arbitrarily in concluding that D.________ was indeed the beneficial shareholder, based on numerous documents (share certificates, shareholder register, trust agreement, draft will). Consequently, the financial advantages granted to him can be classified as constructive dividends. The argument regarding a current account is dismissed, notably because the balance of financial flows was systematically in favor of D.________ and the terms of these "loans" (absence of interest and repayment terms) would not have been granted to a third party.
- Taxation by estimation: As the appellant's accounting was deemed unreliable ("informal records"), the tax authority was justified in proceeding with taxation by estimation. The taxable profit was set based on the benefits granted to D.________, and the refusal to deduct expenses not supported by reliable documentation was upheld.
- Attempted evasion and fine: The objective conditions (failure to file a return) and subjective conditions (intent) for attempted evasion are met. The intent of D.________, an experienced businessman, not to declare the company's Swiss activities is established, and his fault is attributed to the company. The amount of the fine, taking into account the severity of the fault and the significance of the amounts evaded, is not considered excessive and does not result from an abuse of discretion.
Issue
The Federal Supreme Court has partially upheld the appeal. It has set aside the judgment of the Geneva Court of Justice regarding direct federal tax and cantonal and communal taxes for the 2010 tax period, due to the statute of limitations on the right to tax. For the remaining periods, specifically the 2011 to 2014 tax years, the appeal is dismissed, and the tax assessments as well as the fines for attempted tax evasion are upheld. The appellant is ordered to pay a portion of the legal costs.
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