Facts
X. Inc. is a company under the laws of the Cayman Islands with an exempted status, which has no own personnel. The sole managing director is M. from N. AG, a tax and business consulting firm in Zug. The company was registered as a value-added tax payer with effect from November 1, 2000 and, according to its statements, intended to charter aircraft.
On April 24, 2001, X. Inc. imported a Bombardier Learjet 31A aircraft into Switzerland and claimed the import tax of CHF 800,579.95 paid on it as input tax deduction. Previously, on March 7, 2001, X. Inc. had concluded an aircraft management contract with O. Ltd., under which O. Ltd. was to provide all services for the operation of the aircraft in return for a fee. X. Inc. also claimed these services as input tax deduction.
The Federal Tax Administration then requested various documents, conducted an audit and ultimately charged X. Inc. the entire claimed input taxes in the amount of CHF 870,298. It justified this by stating that the aircraft was used exclusively by A., but there was no evidence that he had paid the corresponding invoices. Furthermore, tax evasion had to be assumed.
The Federal Administrative Court dismissed an appeal by X. Inc. against the objection decision, as it also assumed tax evasion. The Federal Supreme Court dismisses the appeal of X. Inc. in public law matters.
Considerations
The Federal Supreme Court states that the principles developed by case law on tax evasion also apply to value-added tax. Accordingly, tax evasion exists if (1) the legal structure chosen by the parties appears unusual, inappropriate or peculiar, (2) it is to be assumed that the chosen legal structure was abusively chosen solely to save taxes, and (3) the chosen approach would actually result in significant tax savings.
In the present case, the purpose of the appellant is limited to holding a single aircraft for its…