Value Added Tax in the Realization of Real Estate in Bankruptcy

Facts

The present case concerned the distribution of the proceeds from the realization of real estate in the bankruptcy of R. AG. The Bankruptcy Office of Zug allocated a portion of the proceeds to the Federal Tax Administration for the due value added tax. Bank B., as a mortgage creditor, filed a complaint against this and demanded that the value added tax not be paid with priority from the proceeds, but be collated in the third class. The Higher Court of the Canton of Zug, as the supervisory authority for debt enforcement and bankruptcy, dismissed the complaint of Bank B. The Federal Supreme Court upheld this decision.

Considerations

In its reasoning, the Federal Supreme Court stated that the value added tax incurred in the realization of real estate in bankruptcy is to be treated as a bankruptcy liability. Like other realization costs pursuant to Art. 262 para. 2 DEBA, it must be paid in advance from the gross proceeds of the real estate before the net proceeds are distributed to the creditors.

The Federal Supreme Court sees the value added tax in this situation comparable to the capital gains tax, which it has also classified as a bankruptcy liability in previous decisions. The taxpayer and the tax recipient are the bankruptcy…