Facts
X. and Y. declared income from securities and accounts in their tax returns for the tax periods 2004 and 2005, with the majority of the income coming from shares in corporations and cooperatives. The Cantonal Tax Administration of Schaffhausen adjusted the securities income for 2004 and applied the regular tax rate.
X. and Y. filed objections against the assessments, as under the cantonal tax law (§ 38 para. 3a StG/SH) dividends, profit shares and liquidation surpluses of shareholders with a participation of at least 20% or a fair market value of at least 2 million Swiss francs are only taxed at half the tax rate. Since their participations did not reach this threshold, they were not granted the preferential treatment.
The Federal Supreme Court had to assess whether this selective preferential treatment of qualified shareholders in the taxation of dividends is in conformity with the constitution.
Considerations
The Federal Supreme Court concluded that the cantonal regulation violates the constitutional principles of generality, equality, and taxation according to economic performance. The privileging of qualified shareholders in the taxation of dividends is not objectively justified.
While the canton argued that there is an economic double burden on companies and shareholders that needs to be mitigated, the Federal Supreme Court saw no sufficient reason for this, as dividends merely represent the…