Facts
The Federal Tax Administration (FTA) conducted a value-added tax audit of A. AG for the tax periods from the 1st quarter of 2006 to the 4th quarter of 2009. As a result, the FTA issued a subsequent tax assessment of a total of CHF 1,037,611, which resulted from the mixed use of the aircraft as well as unaccounted private shares of car expenses.
A. AG was registered in the register of value-added tax liable persons from February 1, 1999 to September 30, 2010 and was the owner of an aircraft registered in Switzerland, which it had operated through domestic aviation companies from January 1, 2006 until its sale on January 28, 2010.
Considerations
The Federal Supreme Court first had to clarify whether A. AG as an aircraft owner company was even subject to subjective tax liability and could claim input tax deduction, before the issue of tax avoidance was examined.
According to the case law of the Federal Supreme Court, an exchange of services is also possible between closely related persons, provided that the company appears as an independent entity towards third parties. However, the activity of an aircraft owner company cannot be described as commercial to the extent that it is used to satisfy the private needs of the economically entitled person or persons close to him. In this case, there is a lack of the necessary sustainability to be able to exist economically.
The Federal Supreme Court states that transportation of the economically entitled person or persons close to him for private purposes can…