Tax refund and AHV provision

The taxpayer, who was self-employed, had not declared all of their turnover during several tax periods.

A tax recovery and deduction procedure has been initiated by the tax authorities. In calculating the amounts deducted, the tax authorities refused to calculate the AHV provision, thereby reducing the profit.

When carrying out a tax recovery procedure, the tax authority must place the taxpayer in a situation that corresponds as closely as possible to the taxpayer's actual financial situation.

The tax administration would have been automatically obliged to (provisionally) calculate the amount of old-age and survivors« insurance contributions likely owed by the appellant for the relevant tax periods and to take into account the corresponding provisions which reduce taxable profit, so that the taxation corresponds as closely as possible to the taxpayer's actual financial situation. (Rec. 8.5)

The penalty for evasion is a fine ranging from one-third to three times the amount of tax evaded. Increasing the tax burden by not applying tax legislation concerning the determination of net income (including exemptions and reliefs) and net wealth (including exemptions and reliefs) is illegal.

The penalty is the fine and only the fine, not an illegal increase in the taxable base.

The judgment is in French. It is a Geneva case.

Federal Tribunal, judgment 9C_762/2023, of 26 June 2024