Input Tax Deduction for Demolition Costs of a Business Property

Facts

The Swiss Federal Tax Administration (SFTA) issued a decision in which it determined that [A. AG] was not entitled to deduct the input services related to the demolition of its business property, due to the planned use of the new buildings for residential purposes. [A. AG] appealed against this decision to the Federal Administrative Court, which upheld the appeal and overturned the SFTA's decision. The SFTA then appealed the case to the Federal Supreme Court.

Considerations

The Federal Supreme Court dismissed the SFTA's appeal and confirmed the decision of the Federal Administrative Court. It stated that the demolition of a property previously used for business purposes should be considered the final phase of the entrepreneurial activity. As long as the ownership remains unchanged, the demolition work belongs to the previous use of the property. Since the demolished property was previously used for commercial purposes,…