Facts

Spouses A.A. and B.A. are originally from Germany and were initially employed as dentists there before moving to Switzerland in 1965. From 1973 onwards, they practiced dentistry in their own practice in Switzerland. During their employment in Switzerland, they were insured only in the AHV, but not in the Swiss occupational pension scheme. Instead, they continued to pay contributions to the Bavarian Physicians' Pension Scheme (BÄV) in Germany. From 1999 and 2001 respectively, they received pensions from the BÄV, which the Cantonal Tax Office of Zurich fully included as taxable income. The A. spouses demanded that the pensions be taxed at 40% as annuities.

Considerations

The Federal Supreme Court decided as follows:
  • The pensions paid by the BÄV to the appellants are to be qualified as income from occupational pensions to a large extent, as the appellants voluntarily continued their insurance with the BÄV after the termination of their compulsory membership.
  • Art. 204 DFTA, which provides for a transitional arrangement for the taxation of pensions from the Swiss occupational pension scheme, is not applicable to the present constellation, as the appellants paid their…