Facts
The company ([A.] Ltd) with its registered office in [U.] has been registered in the VAT register of the Federal Tax Administration (FTA) since 1 January 2009. It operates a multi-family office and provides various financial services. During the relevant period, [B.] was registered in the commercial register as an authorised signatory.
On 1/2 December 2014, the FTA conducted an audit at the company. On 17 August 2016, it opened a criminal investigation against [B.] , which was communicated to the company and [B.] on 14 October 2016. [B.] was questioned on 19 December 2016. The criminal investigation was closed on 9 November 2021 after the statute of limitations had expired.
On 30 March 2021, the FTA sent the company the audit results for the tax periods 2011 to 2013 and claimed additional tax of a total of CHF 275,392.-, as the company had not declared certain remunerations. With a ruling dated 2 November 2021, the FTA confirmed the additional tax claim in the amount of CHF 117,202.- (2011), CHF 70,820.- (2012) and CHF 87,370.- (2013). The objection filed against this ruling was partially upheld by the FTA on 17 February 2022 with regard to the tax period 2011 due to the expiry of the absolute limitation period; the additional tax claim was otherwise confirmed. The Federal Administrative Court dismissed the company’s appeal on 27 October 2022.
With an appeal dated 2 December 2022, the company requested the annulment of the contested judgment due to the expiry of the relative limitation period, with costs and compensation to be borne by the FTA. The FTA requested the partial grant of the appeal insofar as it concerns the tax period 2012, and otherwise the dismissal of the appeal.
Considerations
The Federal Supreme Court examined the company’s appeal, which was based exclusively on the plea of the limitation of the tax claim. The appeal was filed in due form and time and the appellant was entitled to file the appeal, so the Federal Supreme Court could proceed with the appeal.
The limitation period for VAT claims is governed by Article 42 of the Value Added Tax Act (VATA). Under this provision, the right to establish a tax claim expires five years after the end of the tax period in which the tax claim arose (relative limitation period, para. 1). The limitation period can be interrupted, after which the period starts anew and amounts to two years (para. 3). The limitation period is suspended as long as a tax criminal proceedings under the VATA is conducted for the relevant tax period and the person liable to pay tax has been informed thereof (para. 4). Irrespective thereof, the right to establish the claim expires at the latest ten years after the end of the tax period (absolute limitation period, para. 6).
For the tax period 2012, the absolute limitation period expired on 1 January 2023, so the appeal is well-founded in this respect. With regard to the tax period 2013, the absolute limitation period has not yet expired. The company argued that the relative limitation period had expired because the FTA had not expedited the tax criminal proceedings. The Federal Supreme Court held that the suspension of the limitation period during tax criminal proceedings under Article 42 para. 4 VATA does not depend on whether the criminal proceedings were conducted lawfully or expeditiously. The provision is intended to ensure that the tax criminal proceedings are not dependent on the assessment…