Taxation of Lump-Sum Payments from a Pension Insurance

Facts

In the year 2000, A.D. (the appellant) took out a life annuity insurance policy in US dollars with insurance company X. In December 2005, before the first annuity payment was due, A.D. applied for the surrender of the insurance policy. In January 2006, the insurance company paid him an amount of USD 305,630. In the 2006 tax assessment, the Cantonal Tax Administration of Schaffhausen included the surrender amount of CHF 400,375.30 (converted) to the extent of 40% together with the other income. A.D. and his wife B.D. demanded that the surrender payment be taxed only on the yield component.

Considerations

The Federal Supreme Court upholds the appeal. It states that lump-sum payments from pension insurances cannot be subsumed under Art. 20 para. 1 let. a or Art. 24 let. b DFTA, as these provisions only concern (surrenderable) capital insurances, but not pension insurances. Art. 22 para. 3 DFTA, which provides for the taxation of life annuities at 40%, is also not applicable to the present surrender…