Federal Administrative Court Ruling on the Reporting Procedure for WHT Non-Cash Benefits
The Federal Administrative Court sets forth the requirements for the reporting procedure regarding monetary benefits. The decisive factors are the right to a refund and, in particular, the absence of intent in the case of non-reporting.
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Summary of the article
The Federal Administrative Court confirms that the reporting procedure for WHT connection with benefits in kind can only be granted if the recipient’s entitlement to a refund is clearly established. If there are doubts, particularly regarding the intentional failure to declare monetary benefits, the reporting procedure is excluded. In the present case, monetary benefits were assumed to have arisen from the private use of company vehicles and from the sale of a vehicle at a below-market price. The court denied the reporting procedure because there were doubts regarding the right to reimbursement.
Context
Judgment A-2977/2025 of the Federal Administrative Court dated March 2, 2026, concerns WHT connection with monetary benefits and the requirements for the reporting procedure under Art. 20 of the Withholding Tax Act (VStG) in conjunction with Art. 24 of the Withholding Tax Regulation (VStV). The central issue is under what circumstances the WHT may be WHT and the reporting procedure applied instead.
Statement of the Facts
A. AG, headquartered in Zurich, provided its board member B. with benefits in kind in 2018 and 2019. These consisted, on the one hand, of uncharged personal use of company vehicles and, on the other hand, of the sale of a company vehicle to B.’s wife for CHF 2,500, even though the market value was estimated at CHF 15,000.
The Zurich Cantonal Tax Office reported these benefits in kind to the FTA. The company accepted the corresponding offsets for direct taxes. The FTA then required the company to pay withholding taxes amounting to 35 percent of the benefits in kind and to pass these costs on to the recipient.
The company argued that the reporting procedure should apply because direct taxes on the monetary benefits had already been paid and there was no longer a need for security. Furthermore, it disputed the existence of a manifestly disproportionate transaction in the sale of the vehicle as well as any intent to fail to report it.
The FTA rejected the filing procedure. It justified this decision primarily by citing doubts regarding the recipient’s entitlement to a refund. After its appeal was denied, the company took the matter to the Federal Administrative Court.
Legal Considerations of theFederal Administrative Court
The Federal Administrative Court first sets out the principles governing benefits in kind. Such a benefit exists when a company provides a service to a shareholder without adequate consideration, and the service does not constitute a repayment of paid-in capital. The benefit is based on the shareholder relationship and would not have been granted to an independent third party under the same circumstances. Finally, the unusual nature of the benefit—in particular, the disproportion between the benefit granted and the consideration received—must have been apparent to the relevant corporate bodies. For this to be the case, the disproportion between the value of the benefit and that of the consideration must have been obvious and not merely minor.
In this specific case, the court first examines whether it was appropriate to assume a sales price of CHF 2,500 for the company car and, consequently, to treat this as a monetary benefit. It concludes that there is insufficient evidence to the contrary and notes that, under the theory of legal norms applicable in tax law, the appellant bears the burden of proving facts that would reduce her tax liability.
With regard to WHT , the court WHT that it is structured as a security tax and must generally be paid and passed on to the recipient. The reporting procedure constitutes an exception and is permissible only under restrictive conditions.
The key point here is that the recipient of the payment WHT entitled to a refund of WHT . This entitlement is forfeited, in particular, in the event of intentional failure to report the relevant income.
The court emphasizes that the FTA only conducts a preliminary review of the refund claim as part of the notification procedure. If there are doubts regarding the entitlement to a refund, the notification procedure must be denied.
Against this background, the question arose as to whether the complainant was entitled to the notification procedure under Art. 20(2) of the Tax Procedure Act (VStG) in conjunction with Art. 24(1)(a) of the Tax Procedure Ordinance (VStV). It was undisputed that the offsets by the FTA were made in the course of an official audit or examination of accounts and that the relevant payment had already become due in a previous year, thereby fulfilling the requirements of Art. 24(1)(a) VStV. However, it remained disputed whether the recipient of the service was entitled to a refund, in particular whether he had unintentionally failed to declare the income subject to withholding tax in his tax return.
The court notes that the company had already mishandled similar matters in previous years and had been expressly reminded of its obligations by the tax office. This prior knowledge is attributed to Board Member B.
Consequently, the court concludes that there are at least grounds for doubt as to whether the failure to report was merely due to negligence. Thus, the claim for a refund is not clearly established. Since mere doubt is sufficient to preclude the reporting procedure, the court upholds the FTA’s position that the reporting procedure should not be permitted.
Impact of the Federal Administrative Court’s Ruling on Tax Practice and Conclusion
The ruling highlights the restrictive approach taken in the WHT. The decisive factor is not whether the right to a refund actually exists, but whether it can be presumed to exist at the time the reporting procedure is reviewed. Even the slightest doubt can lead to the reporting procedure being denied.
In practice, this means that taxable companies must ensure that benefits in kind are properly reported. Previous objections or notices from the tax authorities may carry significant weight in the context of an intent review.
Taxpayers must provide substantiated evidence of circumstances that reduce their tax liability, such as a claimed decrease in the value of an asset. If they fail to do so, the higher value will be used.
The ruling also confirms that the FTA conducts only a summary review during the reporting process. This shifts the risk to the taxpayer, as any uncertainties are borne by them.
As a result, the decision strengthens the protective function of WHT. The reporting procedure remains a strictly limited exception that applies only in cases where the facts are clear.
Non-cash benefits are advantages that a company grants to a shareholder or a related party without receiving adequate consideration in return. These include, for example, the personal use of company vehicles without being charged for it, or the sale of assets at prices significantly below market value.
The reporting procedure is only possible if the recipient’s entitlement to a refund is clear and beyond doubt. Even the slightest uncertainty—particularly in cases of possible intentional failure to report income—will result in the reporting procedure being denied.
Under the standard theory, the taxpayer bears the burden of proof regarding facts that reduce the tax liability. If, for example, the taxpayer cannot sufficiently demonstrate a lower market value for an asset, the higher value assumed by the tax authority will be used.