Withholding Tax: Repayment of the Refund Following Revocation and Intertemporal Application of Art. 23 para. 2 WTA

Facts

Parties and Instances: The appellants, a married couple, were the sole owners of [D. AG] , which was deleted from the Commercial Register of the Canton of Thurgau on 7 June 2016. The respondent was the Tax Administration of the Canton of Thurgau; the Swiss Federal Tax Administration (ESTV) and the Tax Appeals Commission of the Canton of Thurgau (lower instance) were also involved.

Facts: The liquidation of the company resulted in a liquidation dividend of CHF 142'526.--, on which withholding tax of CHF 49'884.10 was settled. The company declared the dividend using Form 102; the appellants declared the shares but not the liquidation dividend in their 2016 tax return.

The municipal tax office of Neukirch discovered the incorrect declaration and, by final assessment decision of 24 November 2017, offset the liquidation dividend and granted the repayment of withholding tax of CHF 49'884.10, which was paid out on 18 December 2017.

Proceedings: During an audit by the ESTV, the claim for repayment was regarded as forfeited. On 1 May 2018 the ESTV ordered a precautionary reduction. The Tax Administration of the Canton of Thurgau demanded repayment of the amount by repayment decision of 7 June 2018. The Tax Appeals Commission dismissed the appeal on 8 April 2019.

Legal Question: Whether the claim for repayment under Art. 23 para. 2 WTA (in force since 1 January 2019, applicable retroactively pursuant to Art. 70d WTA) may still be reclaimed, although the assessment granting the repayment had become formally final. The lower instance denied retroactive application on the ground of the formal finality of the assessment. The appellants complained that there was a gap in the law and unequal treatment.

The appellants filed a public law appeal with the Federal Supreme Court and requested the annulment of the decision of the lower instance and the fixing of the repayment at CHF 49'884.10. The lower instance and the ESTV requested dismissal.

Considerations

Admissibility: The appeal concerns a public law matter (Art. 82 lit. a FSCA) against a final cantonal decision (Art. 90 FSCA) in conjunction with Art. 56 WTA and Art. 86 para. 2 FSCA. The appellants have standing (Art. 89 para. 1 FSCA). The Federal Supreme Court examines federal law ex officio with free cognition (Art. 106 para. 1, Art. 95 lit. a FSCA).

Legal Nature of the Repayment Decision: The repayment under Art. 52 para. 2 WTA is a decision that becomes formally final after the expiry of the objection period. However, it is subject to review by the ESTV (Art. 52 para. 4, Art. 57 WTA) within temporal limits (Art. 58 paras. 1 and 4 WTA). The repayment decision under Art. 58 para. 1 WTA constitutes a revocation of a materially erroneous, formally final repayment decision; it is itself an appealable decision (Art. 58 para. 2 WTA). The formal finality remains unaffected, and the period for appeal against the repayment begins to run anew.

Intertemporal Interpretation of Art. 70d WTA: The transitional provision links to the formal finality of the decision on the claim for repayment. The legislative history (dispatch, National Council, Council of States, final vote of 28 September 2018) shows that the legislator did not intend to cover cases that had been concluded with finality.

No Gap in the…