Facts
In 2004, A.X. and B.X. transferred their agricultural business to their son B. and sold a property in C. to their son D. Additionally, they transferred an undeveloped building land plot in A. from their business to their private assets. The Tax Commission A. assessed the X. spouses for the cantonal and municipal taxes 2003 with a taxable income of CHF 443,000.- and taxable assets of CHF 478,000.-.
The X. spouses filed a complaint against the administrative court's judgment, which essentially confirmed this assessment. They requested that the judgment be overturned and certain findings be made.
Considerations
The Federal Supreme Court dismissed the complaint. It stated that for an undeveloped and fully zoned building land plot that does not form the "appropriate curtilage" of a property with agricultural buildings and facilities, the privileged exception rule for capital gains on agricultural and forestry properties cannot be applied.
The Aargau Tax Act follows the dualistic system of real estate capital gains taxation: Gains from the sale of business properties are subject to profit or income tax, while capital gains on agricultural and forestry properties are only subject to income tax up to the amount of the acquisition costs, but beyond that to the cantonal real estate capital gains tax.
However, this privileged exception rule must be appropriately limited by concretizing the tax law concept of "agricultural and forestry property" in line with the scope of application and protection as well as the restrictions on alienation of agricultural land law. For an undeveloped and fully zoned…