Facts
The appellant, an institution under Liechtenstein law, acquired a helicopter in 1998 and an aircraft in 2000. These were primarily used by the beneficial owner, A. The Liechtenstein tax administration reduced the appellant's input tax deduction, as it used the aircraft predominantly for the beneficial owner's private purposes, and thus constituted tax avoidance.
The Liechtenstein Administrative Court upheld the reduction of the input tax deduction. The appellant then filed a complaint with the Swiss Federal Court.
Considerations
The Federal Court dismissed the complaint. It stated that a legal entity and its participants are generally two separate and independent legal entities. A legal entity can engage in transactions with related parties, and services provided to related parties are to be treated the same as services provided to independent third parties with regard to the tax object.
However, in exceptional cases where the factual situation is beyond what is economically reasonable and is obviously only for the purpose of obtaining tax advantages, tax avoidance can be assumed. In the…