Facts
The present case concerns the refusal by the Federal Tax Administration to refund the withholding tax to company A. SA. The latter had acquired in 2005 the entire share capital of company D. SA, which held significant cash reserves at the time of the sale.
A. SA, a Swiss holding company, purchased from a shareholder domiciled abroad all the shares of D. SA, a Swiss company with substantial reserves represented by bank accounts. The Federal Tax Administration considered this to be a case of tax evasion and refused to refund the withholding tax on the dividend subsequently distributed by D. SA.
Considerations
According to the case law of the Federal Supreme Court, there is tax evasion when the legal form chosen by the taxpayer appears unusual, inappropriate or strange, in any case unsuitable for the economic purpose pursued, when it must be accepted that this choice has been abusively exercised solely for the purpose of saving taxes, and when the chosen procedure would effectively lead to a significant tax saving.
In the present case, the purchase by A. SA of the shares of D. SA, which held significant cash reserves, constitutes a "purchase of a full wallet" within the meaning of the administrative practice of 1990. This creates a suspicion of tax evasion. Furthermore, the distribution of the reserves before the sale of the shares would have resulted in the payment of withholding tax, which was not the case. Finally, the purchase of the shares allowed a significant tax saving for the foreign shareholder.
Therefore, the tax authority has provided sufficient indications revealing the existence of…