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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.

Source: primetax.ch

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.

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