Facts
In a submission dated December 27, 1994, the dental laboratories A. SA, B. SA and C. AG, together with the Association of Dental Laboratories of Switzerland (VZLS), requested a declaratory decision from the Federal Tax Administration that the supply of dental prostheses be exempt from value-added tax as services in the healthcare sector pursuant to Art. 8 para. 2 lit. b no. 2 ÜbBest.BV. The Federal Tax Administration did not enter into the request insofar as it was made by the association and determined that the supply of removable and fixed dental prostheses as well as orthodontic appliances is subject to value-added tax.
The association and the three dental laboratories filed an appeal against the objection decision of the Federal Tax Administration with the Federal Tax Appeal Commission. This upheld the legal remedy and found that the supply of dental prostheses and orthodontic appliances by dental technicians is exempt from value-added tax.
The Federal Tax Administration then filed an administrative court appeal with the request to set aside the decision of the Federal Tax Appeal Commission and to determine that the supply of removable and fixed dental prostheses as well as orthodontic appliances by the dental laboratories is subject to value-added tax.
Considerations
The Federal Supreme Court upheld the appeal of the Federal Tax Administration.
It stated that Art. 14 no. 3 MWSTV, which declares the supply of dental prostheses to be taxable, is within the legislative discretion granted to the Federal Council by the Constitution. The Federal Council may, for substantive reasons, reject a solution provided for in the European Union's directive…