Facts
A. AG (hereinafter the Taxpayer) has its registered office in U./ZH. Its founding shareholder base consisted of the B. Foundation (60 percent; hereinafter: the Majority Shareholder) and the A. Association (40 percent). The statutory purpose is to provide teaching, research and service infrastructure, particularly for university musculoskeletal medicine.
The Taxpayer had the A. Campus built on a building lease plot owned by the Canton of Zurich, which was opened in December 2015. The construction costs amounted to around CHF 64,000,000, in which the Canton of Zurich also wanted to participate. To this end, the Cantonal Council of the Canton of Zurich issued a request on February 26, 2014 regarding "Resolution of the Cantonal Council on the approval of a contribution from the Lottery Fund in favor of the Majority Shareholder". Accordingly, an investment contribution of CHF 9,000,000 was to be made, at the expense of the Lottery Fund of the Canton of Zurich and in favor of the Majority Shareholder.
The Cantonal Council of the Canton of Zurich followed the request of the Cantonal Council and granted the requested investment contribution of CHF 9,000,000 at its meeting on February 23, 2015. The funds were then, as intended, transferred to the Majority Shareholder, who passed them on to the Taxpayer, where the investment contribution was received on June 10, 2015 and recorded in account 1020.
The Swiss Federal Tax Administration (SFTA) later took the position that the Taxpayer had wrongly classified the contribution as a donation instead of a public-law contribution (subsidy) and had therefore wrongly omitted to reduce the input tax deduction.
Considerations
The Federal Supreme Court dismisses the Taxpayer's appeal.
The Federal Supreme Court states that the investment contribution of CHF 9,000,000 from the Canton of Zurich or the Lottery Fund is to be classified as a public-law…