This is what the Swiss Federal Supreme Court has decided in a decision to be published (2C_263/2020, 10.12.2021). An offshore company owning an important art collection rented works of art to its beneficial owner residing in Switzerland, for his private use. The company was voluntarily liable for VAT in Switzerland and recovered the input tax on the works imported and rented to its beneficial owner. Following the Federal Administrative Court, the Federal Court confirmed the tax authorities’ refusal to deduct the input tax on the grounds of abuse. The Federal Court admits that, as for a private airplane, the holding of works of art by a company can be based on legitimate reasons. It does not question the reality of the services and the existence of an entrepreneurial activity of the company. However, it is the fact that the company is subject to Swiss VAT, that it claims the deduction of the input tax, that a natural person would not be entitled to this deduction and that the company serves almost exclusively the private needs of its beneficial owner, which led the Federal Court to conclude that the structure adopted constituted an abuse of tax law.
Our experts
