Facts
The [X.] Research Foundation, a foundation according to Art. 80 ff. CC, supports the long-term interest of [Z. AG] and its group companies as independent, technology-oriented companies. The Federal Tax Administration conducted a control according to Art. 50 of the Ordinance of 22 June 1994 on Value Added Tax (Value Added Tax Ordinance; VATO) at the foundation in September and November 1997. The period from 1 January 1995 to 30 September 1997 was reviewed. Subsequently, the Federal Tax Administration issued a supplementary invoice for a subsequent charge of CHF 5,376,638. This amount consisted of various items, mainly consisting of input taxes deducted in excess.
The foundation objected to the subsequent charge and filed an appeal, which was rejected. The foundation then requested the cancellation of the appeal decision by the Federal Tax Appeals Commission, which dismissed the complaint. The foundation subsequently filed an administrative court appeal with the Federal Court.
Considerations
The Federal Court examined the administrative court appeal and found that the appellant had not met the requirements for input tax deduction. Input tax deduction is only permissible if the taxpayer uses the input performance for taxable supplies or services. The appellant could not prove that the input turnover it received was actually used for output turnover.
The Federal Court also rejected the appellant's argument that the services it provided were subject to payment, as they were provided to the…