Facts
Company X. Sàrl, headquartered in Geneva, has been operating an escort agency under the name Agence Escortes Y. since August 2002. The company was subject to an audit for the tax periods from the 1st quarter 2007 to the 4th quarter 2011. The Federal Tax Administration found that the company met the conditions for taxation as of January 1, 2007, and registered it with retroactive effect as of that date.
The company filed complaints against the assessment notices of July 23, 2012, which claimed an amount of 194'466 fr. and 115'359 fr. as a correction of the tax in its favor. The Federal Administrative Court dismissed the appeals and confirmed the decisions on complaint, considering that the escorts were not independent from the point of view of VATA and that the services offered were located in Switzerland even when meetings with clients took place abroad.
The company appealed these decisions to the Federal Court, requesting that its taxable turnover be limited exclusively to the percentage received by it and that the turnover for services performed abroad be exempt.
Considerations
The Federal Court examined the location of escort services under Art. 14 al. 1 and 2 let. d VATA and Art. 8 al. 2 let. a and c VATA. It considered that recreational services are characterized by the fact that they are presented to the general public, without corresponding to the specific needs of an individual or a small group of people.
The Federal Court also examined the interpretation of Art. 8 al. 2 let. a VATA, which provides that services that are usually provided directly to physical persons present are located at the place of the provider. It considered that this provision does not require that services be provided at the provider's headquarters…