Shoddy accounting? – what are the tax consequences?

The taxpayer is a shareholder in various companies. The tax authorities conclude that the taxpayer has received benefits (qualified as «appreciable monetary benefits» - "PAA") from these companies that have not been accounted for. The tax authorities request certain documents, without success, with the taxpayer sending documents other than those requested. The tax authorities proceed to an ex officio assessment of the PAAs and notify the tax assessments. The taxpayer considers the ex officio tax assessments to be void because they target the wrong person (the companies should be targeted, not their shareholder).

Federal judges refer to their ruling of 19 August 2023. For official assessments to be void, they must be manifestly erroneous. To prove they are manifestly erroneous, the taxpayer must provide all evidence of the manifest error. In this case, the taxpayer merely criticised the official assessments (which had become final) of the companies. The taxpayer provided explanations concerning the elements of the PAA but never substantiated their claims by producing the supporting documents requested by the tax authorities to clarify the facts. The federal judges note that the taxpayer had never provided proof of manifest errors in the official assessments, nor designated such means (of proof).

The judgment is in German. It concerns a St. Gallen case.

Federal Tribunal, decision 9C_288/2024, of 30 January 2025