With great satisfaction we can inform you about a positive Federal Court judgment published last week (2C_33/2014 judgment of 27 July 2015). After we had already obtained a positive judgment before the Federal Administrative Court for our client, the Federal Court has also supported our position and rejected the FTA’s appeal.
Specifically the issue was whether under the old VAT Law (effective until the end of 2009) an invoice without a VAT number entitled to input tax deduction. As the provider of the service had become insolvent, the VAT was never delivered to the FTA and there was a loss of tax. The FTA then used this to justify the refusal of the input tax deduction and argued that Art. 45a Old VAT Law was not applicable.
Art. 45a read as follows:
Merely because of formal defects no tax claim will be imposed, if it is recognisable or the tax payer proves that as a result of non-observance of a formal requirement of the law or this ordinance for the drawing up of vouchers the Confederation incurred no loss of tax.
For the Federal Court it was key that the formal defect in the invoice must be a direct cause of the loss of tax for the Confederation and stated: “If on the other hand reasons exist, which are attributable to the service provider or the FTA alone, the loss of tax is a priori not occasioned by the formal defect and therefore it is not attributable to the taxable recipient of the service”. The Federal Court stated further: “All the more it complies with the principle of reasonableness to regard the specific form defect as remedied, to the extent the identification of the provider of the service is assured without doubt and any loss of tax arose for a reason other than the formal defect.”
The judgment demonstrates strikingly that it is worthwhile taking legal action even if in many cases staying power is required. The input deduction was refused at the end of 2010 and the final judgment is now available. In addition to the refund of the input tax deduction refused, early payment interest of more than CHF 130,000 and compensation of costs will be paid. Once again the battle has been worth fighting.