- The Swiss Federal Supreme Court has clarified the concept of a subsidy or public law contribution.
- A movement of funds within the same public body does not fall under the definition of a subsidy.
- This overturns previous administrative practice and opens up new input VAT deduction opportunities for public administrations.
- The Swiss Federal Tax Administration (SFTA) plans to amend its guidelines to align with the court decisions.
- The court’s decisions clarified the VAT treatment of funds between departments within the same municipality.
- The SFTA had previously treated these flows as subsidies, reducing the amount of input VAT deduction available.
- The court ruled in favor of taxpayers, allowing them to claim input VAT deduction.
- The court based the definition of a subsidy on relevant federal law, stating that financial means must leave the municipality and be allocated to a beneficiary outside of the public body.
- Public bodies can now recover VAT paid on investments and may be able to recover VAT paid in previous years.
- Stakeholders in communes and cantons should examine if they are affected and ensure correct VAT recovery processes are in place.
Source: taxathand.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
