In a ruling published on September 25, 2024, the Swiss Federal Supreme Court annulled four decisions to levy ex officio taxes on taxpayers who had never filed a tax return, on the grounds that the decisions were invalid because the amounts levied were manifestly excessive and did not take into account the taxpayers’ situation.
Taxpayers A and B moved their residency in Switzerland in 2001 to retire. They never filed a tax return and were systematically taxed ex officio. From 2006 onwards, the tax administration took steps to enforce the tax claims arising from the ex officio tax assessments. These resulted in a certificate of incumbency, which showed that the taxpayers had modest assets and income.
Despite this, the tax authorities maintained the subsequent ex officio tax assessments (2006 to 2009) at a high level, and even decided to gradually increase the taxpayers’ taxable income and wealth, and it was not until 2012, well after the deadline for lodging an appeal, that the taxpayers took steps to have the tax assessments annulled.
According to the Federal Court, the tax assessments for 2006 to 2009 were null and void (and not simply voidable) because the 2006 certificate of default allowed the tax authority to conclude unequivocally that the income it was imputing to the taxpayer was too high, rendering the decision null and void insofar as it violated the taxpayer’s ability to pay.
The Court decision is a useful reminder of the principles applicable to ex officio taxation, and in particular of the tax administration’s obligation to respect a taxpayer’s economic capacity, even when the latter provides little or no cooperation. Acknowledging that a decision which seriously violates this (constitutional) principle is null and void underlines the importance of this principle, at a time when the tax authorities sometimes seem tempted to issue a high level of ex officio taxation in order to put pressure on the taxpayer to submit a complete tax return in a subsequent appeal procedure.
