Facts

The taxpayers (spouses, appellants, represented by an attorney) had their tax domicile in the Canton of Basel-Stadt. In their 2015 tax return they declared 30'000 registered shares of [D. AG] (partnership limited by shares with registered office in [U.] /BS) with a tax value of CHF 4'200'000.--, but did not record the gross dividend of CHF 900'000.-- that fell due in 2015.

By assessment decisions of 4 May 2017, the Tax Administration of the Canton of Basel-Stadt (KSTV/BS) added the dividend to the taxable income and stated that the claim for refund of withholding tax (CHF 315'000.--) lapsed for lack of declaration. The objection was dismissed by decision of 31 July 2017; the Cantonal Tax Appeals Commission of the Canton of Basel-Stadt dismissed the appeal on 20 September 2018.

By appeal in public law matters of 10 January 2019, the appellants request the annulment of the decision and the refund of the withholding tax together with default interest. The KSTV/BS requests that the appeal be upheld, referring to the new rule of Art. 23 WTA in force since 1 January 2019. The Federal Tax Administration (FTA) requests dismissal, or alternatively remittal for examination of the requirements of Art. 23 para. 2 WTA in the version of 28 September 2018.

Issue in dispute: Whether the refund claim is forfeited depends on whether the dividend was not declared intentionally (including conditional intent) or merely negligently. It was undisputed that the information was subsequently provided in an assessment procedure not yet finally concluded, and that the authority added the income ex officio.

Positions of the parties:

  • Appellants: Only negligent non-declaration; complexity of the asset situation (approx. 100 pages of tax return, numerous securities), repeated conversion and change of name of [D. AG] (2014/2015), advanced age, lack of tax training, health problems, absence of dividend documentation and gaps in memory. Moreover, it would be unrealistic to declare interest on a mandatory convertible loan not subject to withholding tax while deliberately concealing the dividend.

    KSTV/BS: Likewise only negligence; despite the amount of the dividend and the denial of a distribution when asked by the legal representative, mere carelessness existed, not intent to evade tax.

    FTA: The appellant had been registered in the commercial register as a supervisory body of [D. AG] since April 2014 and therefore must have known of the dividend; the tax and legal representative had enquired about a dividend in February and August 2016, so simple forgetting is excluded. Given the exceptional amount of the dividend, it could not be regarded as incidental even for a wealthy person; the appellant nevertheless clearly denied its existence.

    Commercial register: According to the SHAB publication of 10 April 2014 (journal entry of 7 April 2014), the appellant was registered as a supervisory body. The company traded until 30 October 2015 under a name identical to the appellant's family name.

    Considerations

    Applicable law: Forfeiture was newly regulated as of 1 January 2019. Under Art. 23 para. 1 WTA, the refund claim is forfeited by a person who fails to disclose income subject to withholding tax contrary to statutory provisions. Under Art. 23 para. 2 WTA, forfeiture does not occur if the income was negligently not stated in the tax return and is subsequently declared in an assessment, revision or supplementary tax procedure not yet finally concluded (lit. a), or is added by the tax authority on its own initiative (lit. b). Pursuant to Art. 70d WTA, the new law applies to claims since 1 January 2014, provided no final decision has yet been made. As the claim arose in 2015 and has not yet been finally adjudicated, the new law is applicable.

    Distinction between intent and negligence: Drawing on the principles on tax evasion (Art. 12 para. 2, Art. 104 and Art. 333 para. 1 SCC), conditional intent suffices if the taxpayer considers the result possible and accepts it. The question of fact is whether the taxpayer was aware of the incorrectness (knowledge element) and wanted or accepted the incorrect assessment (volitional element). Once knowledge is established, the volitional element is presumed; this presumption is hardly rebuttable. Conscious negligence exists where the actor, in breach of duty, relies on the result not occurring. The breach of duty is assessed according to the circumstances and the personal situation (training, intellectual abilities, professional experience). The distinction is difficult in individual cases. The Federal Supreme Court reviews findings of fact only for obvious inaccuracy, whereas the interpretation of the concept of intent is reviewed freely.

    Consideration of commercial register entries: Lawfully published commercial register entries are regarded as facts accessible to everyone and generally known, knowledge of which is presumed, and may be taken into account by the Federal Supreme Court ex officio. They raise doubts as to the appellants' account that they were not informed because of changes of name.

    No…