Facts
This decision concerns an appeal against the National Defence Tax Appeal Commission of the Canton of Zurich. The main issue is whether the receipt of free shares is subject to tax under Art. 21(1)(c) of the Federal Act on the Federal Defence Tax (DFTA).
The Federal Tribunal confirms its consistent case law that the distribution of free shares constitutes an appreciable monetary benefit that must be taxed as income from participations within the meaning of Art. 21(1)(c) DFTA, even for individuals who are not required to keep accounting records.
Considerations
First, the Federal Tribunal notes that Art. 21(1)(c) DFTA, in its original version and especially in the version expanded by the Federal Council Decree of 31 October 1944, is based on the provisions of federal stamp duty legislation, in particular Art. 5(2) of the Stamp Duty Act. This extension was intended to clarify that all appreciable monetary benefits from the company or cooperative in favor of holders of participation rights, which were then subject to stamp duty on coupons and withholding tax, should also be taxed as income tax for national defence.
Furthermore, the Federal Tribunal rejects the appellant's arguments that this case law would be incompatible with the National Defence Tax Decree and would lead to shocking results. It considers that the allocation of free shares does constitute an appreciable monetary benefit, as the company makes available to the shareholders, by deducting from its accumulated profits, the funds necessary to pay up the new shares, which are thus transferred to the disposal of the…