Facts

Parties and Instances: The taxpayer (born 1954, appellant) was employed in the 2016 tax period with tax domicile in the Canton of Zurich. The opposing party is the Cantonal Tax Office of Zurich, Legal Department. The lower instance was the Administrative Court of the Canton of Zurich, 2nd Division (decision of 4 November 2020 resp. judgment of 23 November 2020, SR.2020.00015 / SR.2020.00016).

Facts:

  • On 21 October 2016 the taxpayer made a buy-in of CHF 45'000.-- into his occupational pension (BVK Personalvorsorge des Kantons Zürich). He claimed this buy-in as a tax-reducing deduction in his 2016 tax return.
  • On 9 April 2019 he withdrew a capital benefit of CHF 20'813.-- from his vested benefits account with Swiss Life AG (set up in connection with another gainful employment).
  • On 7 April 2020 the Tax Office issued back-tax assessments for federal direct tax and for cantonal and municipal taxes. It offset the amount of CHF 20'813.-- against the final assessments for 2016, as the three-year blocking period under Art. 79b OPA had been violated.
  • In the objection proceedings (objection decision of 7 August 2020) and before the Administrative Court, the taxpayer argued that special circumstances existed due to the reduction of the conversion rate with effect from 1 January 2017 and the transitional acquired-rights guarantee. In addition, it had been possible for him to dissolve the vested benefits account later as well.
  • The Administrative Court dismissed the remedies. The three-year period is an objectified blocking period; every capital payment within the period leads to the offsetting of the deduction. According to Federal Supreme Court case law, the buy-in must be viewed within the overall system of occupational pension, and it is immaterial from which pension institution the benefit originates.

Proceedings before the Federal Supreme Court: On 4 January 2021 the taxpayer filed a public law appeal and requested that the back-tax proceedings be discontinued. An exchange of written submissions was waived (Art. 102 para. 1 FSCA).

Subject matter of the dispute: Back taxes for 2016 for federal direct tax and cantonal and municipal taxes of the Canton of Zurich due to violation of the blocking period for the buy-in into occupational pension.

Considerations

Formal matters and scope of review: The requirements for admissibility of the public law appeal (Art. 82 lit. a, Art. 86 para. 1 lit. d and para. 2, Art. 89 para. 1, Art. 90, Art. 100 para. 1 FSCA in conjunction with Art. 146 DFTA and Art. 73 DTHA) are met. The Federal Supreme Court applies federal law ex officio (Art. 106 para. 1 FSCA) with full cognition (Art. 95 lit. a FSCA). It is bound by the facts established by the lower instance (Art. 105 para. 1 FSCA).

Legal framework of the blocking period (federal direct tax): The buy-in into occupational pension is deductible from income under Art. 33 para. 1 lit. d DFTA. Art. 79b para. 3 first sentence OPA provides that benefits from a buy-in may not be drawn as capital within three years. The blocking period is objectified and applies equally to all forms of capital withdrawals from the second pillar; there is no room for examining individual motives.

Consolidated overall assessment: Every buy-in made during the blocking period must subsequently be excluded from the tax deduction, without examining tax avoidance (BGE 142 II 399). A consolidated overall assessment of occupational pension (pillar 2) must be carried out; a direct connection between the buy-in and the capital withdrawal is not required. The deductibility lapses even if the capital benefit originates from another pension institution. Tied private pension provision (pillar 3a) is excluded from the consolidation; a cross-pillar consolidation cannot be derived from Art. 79b para. 3 OPA.

Legal consequence: The capital benefit remains taxable (special assessment at a full annual tax rate under Art. 22 para. 1 in conjunction with Art. 38 para. 1 DFTA). The buy-in deduction, which was finally assessed, must be neutralized within the scope of the capital…