Capital Gains Tax as a Bankruptcy Estate Debt

Facts

The bankruptcy of Real Estate Company X. SA in Lausanne was declared on 25 September 1990. During the auction sale of the company's property on 22 March 1991, the Cantonal Tax Administration of the Canton of Vaud considered that the capital gains tax realized constituted a debt of the bankruptcy estate. The bankruptcy estate contested this qualification, arguing that the capital gains tax claims were not debts of the estate, but rather debts of the company.

Considerations

The Federal Tribunal upheld the appeal of the Federal Tax Administration. It ruled that the debts of the estate include, in particular, public law obligations whose origin is in a fact realized after the opening of the bankruptcy, which is the case of the capital gains tax realized upon the sale of the property after the declaration of bankruptcy. The claim for the full annual tax arises once or several times depending on whether the facts that generate it result in a single or multiple capital gains (or increases in value). For the qualification of the tax, one must rely solely on the moment when the generating facts are realized, i.e. before or after the opening of the bankruptcy.

The Federal Tribunal rejected the argument that Art. 114 para. 3 DEBA would give rise to the tax claim at the time of the opening of the bankruptcy, regardless of the time of realization of the capital gains. It also dismissed the argument of a possible unequal treatment of creditors, considering that insofar as the full annual…