Taxation of the owner of a property encumbered with a building right

Facts

The case concerns the assessment of the owner of a property encumbered with a building right for military service tax. The appellant had granted his contractual partner the right to erect and operate a commercial building on his property for 90 years. In return, he received periodic building right rents.

The tax authorities considered these building right rents as income from immovable property pursuant to Art. 21 para. 1 lit. b WStB. However, the appellant saw it as remuneration for the alienation of a part of his assets.

Considerations

The Federal Court decided that the building right rents represent income from immovable property for the appellant and must therefore be included as income in his military service tax assessment. Although the building right grants the beneficiary ownership of the erected building, this does not change the fact that the appellant has not sold his property, but merely granted the building right holder…