Decision on the Offsetting of Revenue Waivers in Favor of a Sole Proprietorship

Facts

The [X. GmbH] , founded in 2001 and domiciled in [G.] with a share capital of CHF 20,000, was assessed for the 2003 tax period by the tax authorities of the Canton of Schwyz and the Confederation. In doing so, the authorities credited a profit of CHF 57,243 from the sole proprietorship [Y.] to the [X. GmbH] as a valuable consideration. The main shareholder [A.] was employed part-time (30%) at the [X. GmbH] and also operated the sole proprietorship [Y.] domiciled in [F.] . The Administrative Court of the Canton of Schwyz annulled this offsetting and reduced the taxable net profit of the [X. GmbH] to CHF 9,331. The tax authorities appealed against this judgment to the Federal Supreme Court.

Considerations

The Federal Supreme Court dismissed the appeal. It concluded that the main shareholder [A.] , as a part-time employee with a workload of only 30%, could not have violated a non-competition clause, as she did not hold a managerial position in this function and did not even have signing authority. Furthermore, the…