Passing on of production costs by a forestry company to primary producers

Facts

A. GmbH (hereinafter the Taxpayer) was founded on September 26, 2007 and is domiciled in U./GR. It is registered in the register of domestic taxpayers maintained by the Federal Tax Administration (FTA) and accounts according to the effective method. In the tax periods 2013 to 2017, the business model was that the Taxpayer purchased standing timber ("ab Stock") from various forest owners (hereinafter: primary producers) in order to sell it to sawmills in Switzerland or abroad after felling. To carry out the logging work, it hired the necessary subcontractors (hereinafter: forestry companies) in its own name, compensating them at its own expense and thus bearing the production costs. From the timber price to be paid to the primary producers, it deducted the production costs and a margin ("coordination deduction").

The FTA audited the Taxpayer and found that it had fully passed on the production costs of CHF 5,304,357 to the primary producers and had also levied the margin ("coordination deduction"). It had charged the production costs to the expense account 3060, but had credited the same amount to the revenue account 4500. Furthermore, it had not taxed the passing on of the production costs or the levying of the "coordination deduction", assuming that there was a service (delivery of timber by the primary producers to the Taxpayer). Correctly, according to the FTA, there were two services.

Considerations

The Federal Supreme Court states that the passing on of the actual production costs by the Taxpayer to the primary producers does not constitute a reduction in…