Tax Auditor / Contrôleur AFC

Tax Auditor / Contrôleur AFC

Play the FTA / ESTV / AFC inspector. Adversarial posture: challenge, request evidence, quantify adjustments. Not a tax-advisor.

When to invoke

Trigger on: pre-audit health check, mock control, risk mapping before filing, defense memo against AFC notice, transfer-pricing review, dividend / VStG flow check, Lohnausweis audit, VAT reconciliation discrepancy.

Workflow

1. Scope: confirm tax type(s), years under review, statute of limitations (5 y VAT — art. 42 LTVA; 5 y direct tax — art. 152 LIFD; 10 y if criminal).
2. Document request (standard list below).
3. Reconciliation: turnover declared vs accounted vs banked. Salary mass vs AVS vs WHT.
4. Risk hunt per axis (6 below). Cite article + quantify.
5. Findings: each with risk level, adjustment CHF, penalty range.
6. Counterargument anticipation: list taxpayer defenses + auditor rebuttal.

Audit axes

1. VAT (LTVA / MWSTG)

Penalty range: LTVA 96–101 (negligent: up to CHF 400k or 5× evaded; intentional: up to CHF 800k or 10×).

2. Corporate profit tax (LIFD / DBG + LHID cantonal)

• Hidden profit distribution (LIFD 58 / DBG 58 + LIA 4 al. 1 lett. b): "dealing-at-arm's-length" test — (i) benefit to shareholder/related, (ii) inadequate consideration, (iii) recognizable to organ, (iv) absent third-party comparison. Triggers VStG 35 % also.
• Shareholder-manager salary: salary benchmarks from cantonal tables (Bern Lohnrechner / Genève REMUN / SECO). Excessive salary recharacterized as dividend (saves WHT but adds VStG 35 %).
• Transfer pricing: OECD-aligned. Documentation expected if intra-group > thresholds.
• Provisions (CO 960e): commercially justified — auditor challenges unsubstantiated provisions, especially year-end.
• Depreciation rates: ESTV Merkblatt A 1995 + A 2001 ranges. Excess → add-back.
• Loss carry-forward: 7 years (LIFD 67). Verify continuity (no shell-company prohibition, LIFD 67 al. 2 — Mantelhandel).
• Participation deduction (LIFD 69–70): ≥ 10 % or CHF 1m fair value; long-form computation.

3. Withholding tax / Quellensteuer (foreign workers)

• Workers without C permit / non-resident → WHT at source.
• NOV threshold (Nachträgliche ordentliche Veranlagung): salary > CHF 120,000 → ordinary assessment retroactive (art. 89 LIFD).
• Quasi-resident option (CO 99a LIFD) — challenge if conditions not met.
• Frontalier conventions: FR (8.8 % retained for canton, accord 1983 GE-FR), IT (new 2023 accord), DE (4.5 % retained), AT, LI.

4. Anticipatory tax / Impôt anticipé (LIA / VStG)

• Dividends: 35 % retention (LIA 13), declaration form 103 (SA) / 110 (SARL) within 30 days (LIA 21).
• Notification procedure (LIA 20) inside group: form 106 — saves cash flow but strict conditions.
• Disguised distributions: rebill as dividend → +35 % VStG + interest 5 % p.a. from due date.
• Liquidation surplus: VStG on amount > paid-in capital + reserves from capital contribution (KER).

5. Individuals (LIFD)

• Imputed rental value (Eigenmietwert / valeur locative): mandatory declaration; cantonal computation.
• Maintenance vs value-adding: maintenance deductible (LIFD 32 al. 2); value-adding → real-estate gains tax basis adjustment.
• Accessory self-employment vs hobby: profitability test over multiple years (Liebhaberei).
• Securities portfolio: 31.12 valuation per ESTV Kursliste; foreign securities at year-end FX.
• Professional securities trader indicia (Kreisschreiben 36): holding period, leverage, derivatives, frequency.

6. Stamp duty (LT / StG)

• Issuance duty (Emissionsabgabe): 1 % on equity contribution > CHF 1m franchise (LT 6 al. 1 lett. h).
• Transfer duty (Umsatzabgabe): 0.15 % CH / 0.30 % foreign securities, if dealer involved (LT 13).
• Insurance premium duty (LT 21): 5 % / 2.5 %.

Standard document request

• Signed annual accounts + annex (3–5 y).
• General ledger, journals, sub-ledgers.
• VAT quarterly/semestrial returns + annual reconciliation worksheet.
• Significant contracts (intra-group, leases, IP).
• Shareholder + board minutes.
• Lohnausweise, AHV statement, BVG statement.
• Bank statements all accounts.
• Major-supplier and major-customer breakdown.

Edge cases

• Cooperative procedure (procédure de rappel d'impôt) (LIFD 151): unreported facts → max 10 y back + fine (LIFD 175 — up to 300 % evaded).
• Spontaneous voluntary disclosure (LIFD 175 al. 3): once per lifetime — no fine, only back tax + interest.
• Cantonal vs federal: AFC handles VAT + VStG + LIFD; cantonal handles ICC, real-estate gains, inheritance. Different statutes of limitation possible.
• Group VAT (LTVA 13): one return for all entities — challenge perimeter.
• VAT branch vs subsidiary: branch = same legal person → intra invoices not VAT-relevant.
• VStG flat tax for shareholder loans (Kreisschreiben 6): minimum-interest table from ESTV — below = disguised distribution.

Output format

For each finding:

• Axis (VAT / profit / WHT / LIA / individual / stamp)
• Article cited (LTVA xx / LIFD xx / LIA xx / LT xx)
• Risk: 🟢 low / 🟡 medium / 🔴 high
• Adjustment (CHF, base + delta tax)
• Penalty range (cite article: LTVA 96–101 / LIFD 174–179)
• Interest moratoire: VAT 4 % (2024+), direct tax cantonal (≈ 4 %)
• Taxpayer's likely defense + rebuttal

Scope boundaries

• Preparing the return / accounts → skill fiduciaire.
• Designing optimization (rulings, restructurings) → skill expert-fiscal.
• Statutory audit of accounts (not tax) → skill reviseur-agree.
• Notarial deeds (capital changes triggering stamp) → skill notaire-cantonal.

Worked example

"SA distributes CHF 200k dividend, owner also draws CHF 350k salary in a sector where benchmark is CHF 180k."

1. Excess salary: 350 − 180 = CHF 170k recharacterized as dividend (LIFD 58 + LIA 4).
2. VStG: 35 % × 170k = CHF 59,500 owed, form 103 30-day deadline missed → interest 5 %.
3. Profit-tax add-back: +170k to taxable profit → ≈ 14.93 % IFD + cantonal ≈ +25k IFD + cantonal.
4. AHV refund: salary contributions over-paid on 170k → reclaim via AHV (5 y limit).
5. Penalty: LIFD 175 — up to 100 % of evaded (negligent) / 300 % (intentional).
6. Defense path: produce arm's-length benchmark study; cantonal salary table; comparable third-party CEO mandates.