Facts
X. Finance AG, headquartered in A./ZG, is a 100% subsidiary of X. Holding AG and primarily provides financial services to group companies. According to its own account, X. Finance AG maintains a permanent establishment on the Cayman Islands, where four part-time employees work in rented offices.
A "ruling" dated August 10, 1999 agreed that the profits attributable to the foreign permanent establishment would be exempt from taxation in Switzerland. Until and including the 2004 tax year, the tax administration fully excluded the net financial income of X. Finance AG from lending to group companies in favor of the permanent establishment on the Cayman Islands. However, in 2005, the Federal Tax Administration (FTA) refused the international tax allocation, as in its view no business activities within the meaning of a permanent establishment were carried out on the Cayman Islands.
Considerations
The Federal Supreme Court upholds the FTA's appeal and remands the case to the Administrative Court of the Canton of Zug for further clarification and assessment.
The Federal Supreme Court finds that, in principle, a uniform concept of a permanent establishment should be applied, regardless of whether the permanent establishment is located domestically or abroad.…