Facts
The [X. AG] had incorrectly failed to report the salaries of its director couple to the competent social insurance institution in the years 2001 to 2003. This resulted in the compensation office not calculating any OPA or AHV contributions on the couple's salaries. The company booked the subsequently determined amount of CHF 249,207.-- in its 2004 financial records and also declared it in its tax return for the same year as operating expenses. The tax administration of the canton of Valais refused the deduction, as the subsequent booking of expenses violated the periodization principle.
The [X. AG] filed an appeal with the Federal Supreme Court and requested that the judgment of the cantonal tax appeals commission be overturned. The cantonal and federal tax administration as well as the tax appeals commission argued for dismissal of the appeal.
Considerations
The Federal Supreme Court dismissed the appeal. It stated that the periodization principle is a fundamental principle of tax law, which provides that a company must tax the profit it has earned in the corresponding period in the tax year. The court found that the subsequent booking of expenses by [X. AG] violated the periodization principle, as the social security contributions had already accrued in the years 2001 to 2003 and not only in 2004.
The court also pointed out that [X. AG] had breached its duty of care by not checking the benefit amounts determined by the compensation office and the miscalculation was only discovered by the compensation office during a…