Taxability of an SNF scholarship upon relocation to the Netherlands: appeal of the taxpayers dismissed

Facts

The appellants, a married couple (appellant 1 as a researcher, appellant 2 as her husband), filed a tax return for the 2019 tax period (1 January 2019 to 21 February 2019). On 21 February 2019 they moved their residence from [U.] /ZH to the Netherlands ([V.] ). They declared taxable income of Fr. 14'186.-- (cantonal and municipal taxes) and Fr. 14'241.-- (direct federal tax), as well as taxable wealth of Fr. 760'047.--. They also argued that a first instalment of Fr. 69'125.-- of a scholarship from the Swiss National Science Foundation (SNF) totalling Fr. 103'725.-- was tax-exempt, according to a telephone enquiry with the municipal tax office of [U.] .

The Tax Office of the Canton of Zurich assessed the appellants on 8 November 2019 and included the scholarship in full. On 13 March 2020 the Tax Office partially upheld the objections and considered only the first instalment of Fr. 69'125.--. The Tax Appeals Court of the Canton of Zurich partially upheld the appeals on 29 January 2021 and taxed the scholarship by analogy with the tax rate for lump-sum payments in lieu of periodic benefits (taxable income of Fr. 83'900.-- and Fr. 83'400.-- respectively). The Administrative Court of the Canton of Zurich dismissed the taxpayers' appeals on 15 September 2021, upheld those of the cantonal Tax Office, denied the applicability of the tax rate for lump-sum payments and confirmed the objection decisions.

By public law appeal of 1 November 2021, the appellants requested before the Federal Supreme Court that they be assessed in accordance with their tax return. The Administrative Court and the Tax Office requested dismissal, and the Federal Tax Administration (FTA) likewise requested dismissal with respect to direct federal tax.

The subject matter of the dispute was essentially whether the first instalment of the SNF scholarship is taxable, to what extent it may be taxed in view of the relocation to the Netherlands, whether the DTA CH-NL precludes taxation, and whether the protection of legitimate expectations based on a telephone enquiry stands in the way.

The appeal comprised 56 pages and was largely taken verbatim from the appeal to the Administrative Court. The Federal Supreme Court therefore only entered into the appeal insofar as the appellants engaged with the reasoning of the lower court.

Considerations

The Federal Supreme Court dealt with direct federal tax and cantonal and municipal taxes in a single judgment, as the relevant legal questions are regulated identically under federal law and harmonised cantonal law (Art. 82 ff. FSCA, Art. 146 DFTA, Art. 73 para. 1 DTHA). The appeal was deemed admissible (Art. 89 para. 1, Art. 100 para. 1 FSCA). Due to the lack of sufficient engagement with the lower court's reasoning (Art. 42 para. 2 FSCA), the court only entered into those complaints that did engage with it. The facts were based on the lower court's findings pursuant to Art. 105 para. 1 FSCA.

On realisation: according to the due-date method (Soll-Methode), income is considered realised as soon as a fixed legal entitlement exists over which one can dispose; the actual-receipt method applies only in the case of a particularly uncertain claim. A theoretical repayment obligation in the event of termination of the research project does not lead to a corresponding reduction in assets at the time of inflow. The first instalment was therefore realised, as it was paid out and freely available.

On tax exemption: the scholarship falls under the general clause of net asset increase (Art. 16 para. 1 DFTA), so subsumption under the positive list (Art. 17-23 DFTA) is immaterial. A gift (Art. 24 let. a DFTA) was not invoked, as the SNF lacked donative intent. A tax-exempt support payment under Art. 24 let. d DFTA requires need, intention to support and gratuitousness. Need is to be assessed according to the subsistence minimum under Art. 9 and 11 SBA, with spouses' figures aggregated; this does not violate the prohibition of discrimination. Given taxable wealth of Fr. 760'000.--, need was lacking. FTA Circular No. 43 follows case law and is not contrary to statute. A possible deduction as expenses or costs of training and further education was not examined due to the lack of engagement with the lower court's reasoning, especially as there was no employment relationship with the SNF.

On periodisation: tax liability existed only for part of the tax period (Art. 40 para. 3 DFTA). The first instalment accrued within the shortened tax period and must be fully recorded; the date of departure is decisive in the case of periodic assessment. Since the scholarship was paid in two instalments of different amounts, it constitutes income that does not flow regularly, which is subject to the full annual tax but is not converted into an annual income. Art. 37 DFTA (lump-sum payment in lieu of periodic benefits) presupposes a benefit over several tax periods, which is not the case here.

On the double taxation agreement: pursuant to Art. 20 DTA CH-NL, payments to a student or apprentice who is present in the other state exclusively for study or training and who receives them from sources outside that state may not be taxed. The concept of student is to…