Facts
The taxpayer A. has her tax residence in U./AG and is covered by basic insurance, but has no supplementary insurance. After two unsuccessful hip operations (1999 and 2012), she had an operation in 2016 at the Private Clinic B. in V./ZH on the recommendation of her family doctor. The clinic is not listed on the hospital list of the canton of Aargau and has no ward for basic-insurance patients. Authorisation from the canton of Aargau under Art. 41 para. 3 HIA was not obtained.
The operation took place on 21 March 2016 and was combined with an inpatient stay in the semi-private ward. The total costs amounted to CHF 33'892.-, of which the canton and basic insurance paid CHF 9'424.-. The taxpayer personally bore CHF 24'468.-, consisting of the surgeon's fee invoice (CHF 10'905.-) and the clinic invoice (CHF 13'563.-).
The taxpayer claimed this amount as medical costs in her 2016 tax return. The Tax Commission of U./AG refused the deduction by decision on objection of 8 May 2018. The Special Administrative Court of the canton of Aargau granted the appeal on 23 May 2019. The Administrative Court of the canton of Aargau granted the appeal of the Tax Office of the canton of Aargau on 27 March 2020 (WBE.2019.282) and set aside the lower-instance decision.
The taxpayer filed a public law appeal with the Federal Supreme Court and requested confirmation of the decision of the Special Administrative Court. The disputed question is whether the costs of a medically indicated treatment in an out-of-canton non-listed hospital, which a basic-insurance holder must bear personally, are deductible as medical costs under Art. 9 para. 2 lit. h DTHA.
Considerations
The general deductions under Art. 9 para. 2 DTHA are exhaustively prescribed by federal law. Medical costs are deductible only insofar as they are borne by the taxpayer personally and exceed a cantonal threshold. Circular No. 11 of the FTA is not binding on the court, but is taken into account insofar as it permits an interpretation appropriate to the individual case. According to No. 3.1 of the circular, expenses for medical treatment belong to medical costs; expenses that exceed the scope of customary and necessary measures or serve prevention or lifestyle are not deductible.
The wording of Art. 9 para. 2 lit. h DTHA and Art. 33 para. 1 lit. h DFTA says nothing on how the HIA is to be considered, since the tax laws are older than the HIA. The legislative materials are unhelpful. The previous case law has not decided the question; it concerned the distinction between medical costs and living costs, whereby a restrictive interpretation applies.
The lower court argued that the costs could have been avoided by choosing a listed hospital, by the procedure under Art. 41 para. 3 HIA, or by supplementary insurance, and that the unity of the legal order speaks against the deduction. The Federal Supreme Court considers this incorrect. The principle of the unity of the legal order applies only where tax law expressly refers to areas of other law; no such reference exists between Art. 9 para. 2 lit. h DTHA and the HIA.
The medical cost deduction has a social policy purpose and is measured by the costs actually incurred, which takes account of the reduced economic ability to pay. For the general deductions, the costs actually paid are in principle taken into account, regardless of whether they could have been avoided (cf. interest on debts, pension contributions, childcare). Before the HIA entered into force, there was no compulsory insurance; it would be contrary to the purpose to refuse uninsured persons the deduction by pointing to an avoidable insurance. The entry into force of the HIA does not change this, especially since persons of advanced age or with a medical history can hardly still obtain supplementary insurance, and basic-insurance holders may in individual cases agree an 'upgrade'.
The 5 percent…