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Challenges in Input Tax Deduction (Not Only) in Transaction Context

  • The Federal Court has ruled on the deductibility of input tax in relation to consultancy services in the context of the sale of investments.
  • A taxable person in Switzerland can only claim input tax if the services were provided during a period in which the person was already registered for VAT.
  • The burden of proof lies with the taxable person to demonstrate when the services were actually provided.
  • The Swiss Federal Tax Administration (ESTV) denied the input tax deduction, arguing that only services provided after the registration date could be deducted.
  • The ESTV assumed a proportional allocation of fees based on the duration of the contracts, as detailed information on the timing of the services was lacking.
  • The Federal Court agreed with the ESTV’s position that input tax deduction is only allowed for services provided during the period of tax liability.
  • The court focused on the burden of proof for the timing of the services, placing the responsibility on the taxable person to provide evidence.
  • The A AG, the taxpayer in this case, had entered into consultancy contracts before registering for VAT, and the services were invoiced after registration.
  • The court concluded that the input tax deduction could only be allowed for services provided after the registration date.


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.


VAT news
VAT news