Deduction of Personal Campaign Expenses as Business Expenses

Facts

The taxpayer Viola Amherd has been a member of the National Council since 2005 and was re-elected in 2007, 2011, and 2015. In 2011, she paid contributions amounting to CHF a to the Christian Democratic People's Party of Upper Valais (CVPO), on whose list she was a candidate. Additionally, she incurred personal campaign expenses of CHF b in 2011, which she deducted as professional expenses or business expenses.

The cantonal tax administration accepted a portion of the party contributions but rejected the deduction of the personal campaign expenses in full. The appeal filed against this was upheld by the Tax Appeal Commission of the Canton of Valais. The tax administration of the Canton of Valais then filed an appeal in public law matters with the Federal Supreme Court.

Considerations

The Federal Supreme Court states that the concept of business expenses under Art. 26 of the Federal Direct Tax Act (DBG) not only includes final expenditures made directly for the generation of income, but also causal costs that are a consequence of the income generation and are directly caused by the professional activity.

However, the necessary link between the expenditures and the income generation also requires a temporal connection. Expenditures can only be qualified as business expenses insofar as they are incurred simultaneously with the income generation.

The personal campaign expenses…