(No) news: The practitioner method and the wealth tax

Sometimes you have to say “no”! From time to time, we receive inquiries as to whether we can help with a property tax valuation. The valuation carried out using the Praktiker method is – justifiably – perceived as unfair and we would like to remedy the situation with a DCF valuation. Even if we are otherwise up for any sporting challenge, there is no tilting at windmills. This is also shown by the following ruling: the appeal was not allowed in each case, as the courts also see the hopelessness of the undertaking. Nevertheless, there are interesting insights for practical work.

The case

The decision of the Zurich Tax Appeal Court of 28.05.2024 (2 ST.2023.139) was based on the following case: A one-man AG was founded in 2016 and valued at net asset value during the start-up phase (up to and including 2017). The tax office then assessed the company using the practitioner method. The personal nature was taken into account with a simple weighting of the capitalized earnings value.

However, the taxpayer continued to insist on a valuation at net asset value, which is quite understandable given the difference in value of around CHF 22 million. The appeal was based, among other things, on the Federal Supreme Court ruling of 24.11.2022 (5A_361/2022), which we have already commented on. There, a valuation of a personal sole proprietorship using the practitioner method for matrimonial property law purposes was rejected as arbitrary.

Read the full blog post here.