VAT'S IMPORTANT - NEWSLETTER 2025 - 01
NEWSLETTER 2025 - 01
TAX SUCCESSION FROM A VAT PERSPECTIVE
In its ruling A-2151/2024 of December 3, 2024, the Swiss Federal Administrative Court (FAC) had to review whether the appellant had become the tax successor of two other named companies by taking over their companies or an organically self-contained part of their assets or business. The judgment gives detailed and comprehensive reasons for its opinion.
A-2151/2024 DATED DECEMBER 3, 2024
During an audit of the complainant, the FTA determined that the complainant was the tax successor of B GmbH and D GmbH. An appeal was lodged against this.
General explanations
In principle, the FAC states in its ruling that anyone who takes over a company assumes the tax rights and obligations of the legal predecessor. However, whether there is a company takeover must be assessed on a case-by-case basis. The tax succession can occur regardless of whether the transferring business entity ceases to exist under civil law. The term "company" refers to an "organically self-contained part of the assets or business". The fact that the cessation of the business does not have to occur at exactly the same time as the transfer of the (part of the) business does not exclude tax succession. Furthermore, the court states that an important indication of the existence of a tax succession is the fact that business documents, namely the accounts, are also transferred to the transferee with the transaction. The legal consequence of tax succession is that the successor assumes all the rights and obligations of the previous taxpayer. In addition to liability for tax debts, this includes all procedural and substantive rights and obligations in the area of VAT for the acquired company.
Case at hand
First, the FAC states that the appellant took over the furniture. Secondly, those locations that were operated by former 2 companies according to the archived websites were rented by the appellant. This is evident from the rental agreements and the rental expenses according to the annual accounts – which have been with the complainant. In addition, the complainant continued to use the same domain names. Overall, the complainant thus took over the same external appearance as the other 2 companies in the essential points, which speaks for a tax succession. Furthermore, the services offered according to the archived websites remained almost identical. It can therefore be assumed that the complainant has adopted the concepts of both companies, which in turn speaks in favor of a tax succession. In summary, the FAC held that the totality of the circumstances described above led to the conclusion that the appellant had taken over a self-contained part of the assets and business of the 2 companies.
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The court nicely sets out the parameters reviewed for the existence of a tax succession. It can serve as a guidance to avoid making similar mistakes in the future. The costs of incorrect or no prior clarification can be exorbitantly high, as the case shows.
We will be happy to assist you with any questions you may have in the area of VAT.
Your terraVAT team
Sabrina Frey Dr. Florian Hanslik
Senior Consultant Founding Partner
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