Facts
[X. AG] , a corporation headquartered in [A.] , provides various services in the health and social sector on behalf of the Sanitary Directorate of the Canton of Basel-Landschaft. These include the operation of a street outreach facility for the care of drug addicts and a project for outreach drug work. The Federal Tax Administration took the view that these services are subject to VAT, as they constitute taxable remuneration rather than subsidies. The appellant argued that its activities are exempt from VAT as they constitute social welfare and social assistance services. The Federal Supreme Court dismissed the appeal of [X. AG] .Considerations
The Federal Supreme Court concluded that there is a service exchange relationship between [X. AG] and the Canton of Basel-Landschaft. The Canton is legally obliged to take measures against drug abuse and to provide care for drug addicts. It has delegated this task to [X. AG] and compensates it accordingly. Therefore, this is not a subsidy, but taxable remuneration.
While [X. AG] also provides services directly to the drug addicts, such as the free distribution of meals and…