Federal Court Upholds FTA’s Input Tax Deduction Practice, Criticizes Revenue Key Method.

• The Federal Administrative Court ruled on the FTA’s practice regarding input tax deduction for investment companies.
• The court focused on Article 29(2) of the VAT Act and its interpretation.
• The case involved an investment company claiming input tax for qualified participations.
• The FTA allocated input tax to a category requiring correction, limiting deductions.
• The court confirmed the FTA’s restrictive approach but criticized the use of the turnover key.
• The turnover key ignored significant business activities, causing distortion.
• The case was sent back to the FTA to find a more suitable method for adjustment.
• The decision confirms the FTA’s restrictive stance but suggests alternative methods for input tax allocation.

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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