Facts
The appellant, a personnel benefit foundation based in Zurich, sold three properties in St. Gallen in 2009 and made a profit. At the same time, it sold a property in [U.] at a loss. The appellant requested to distribute the loss proportionally to the three properties sold in St. Gallen and to offset it with the corresponding profits. The Cantonal Tax Office of St. Gallen and the Administrative Court of the Canton of St. Gallen rejected the appeal.
The appellant filed an appeal with the Federal Supreme Court, arguing that as a tax-exempt pension institution, it could offset the losses from the sale of the property in [U.] with the profits from the sale of the properties in St. Gallen.
Considerations
The Federal Supreme Court examined the application of harmonized cantonal tax law by the cantonal authorities and found that the appellant, as a tax-exempt pension institution, is subject to real estate capital gains tax. The court found that offsetting losses from sales of other properties with real estate capital gains is not inconsistent with the system and that the cantons must provide for loss deduction for real estate capital gains tax for tax-exempt legal entities.
The Federal Supreme Court pointed out that Art. 23 para. 4 second sentence DTHA obliges the cantons to provide for loss deduction for real estate capital gains tax for tax-exempt legal entities. The court found that the lower court had wrongly…