Recognition of an approved expense regulation

Effective expense reimbursements can be declared using receipts. Many employers use the opportunity to have an expense regulation approved by their cantonal seat. Once approved, it must be recognized by the tax administration, even if it was approved by a canton other than the one of the tax administration.

Expenses are outlays incurred by employees in the performance of their duties at the official office or on business trips, and in the interest of the employer. These include travel costs, meal costs, or accommodation costs. The compensation of business-related expenses is tax-free. These must either be declared in the form of actual expense reimbursements using receipts, or the employer can create an expense regulation which can be approved by the cantonal seat. It is advisable to use the model template of the Swiss Tax Conference. In November 2016, the Tax Appeal Commission of the Canton of Basel-Stadt decided on a case regarding this issue. S. AG, based in the Canton of Basel-Landschaft, had its expense regulation approved by the cantonal tax administration of Basel-Landschaft in 2008. For so-called "Contractors" of the S. AG, whom it employs temporarily and who provide work services at third-party clients, average expenses of 2500 Fr. were used. In 2012, an employee of the S. AG declared her income at the level of 119'927 Fr. and 26'605 Fr. lump-sum expenses. She attached the (by the cantonal seat of S. AG approved) expense regulation to her declaration and sent it to the tax administration of her canton of residence, Basel-Stadt. Subsequently, they demanded proof of the actual expenses, which the taxpayer did not provide, and therefore did not accept the lump-sum expenses. The employee filed an objection. She argued that the regulation should be recognized due to the approval by the Canton of Basel-Landschaft and that the lump-sum expenses of another employee of the S. AG had been accepted, so she must be treated similarly. The tax administration rejected the objection. The expense regulation had been approved, but it did not correspond to the model template of the Swiss Tax Conference, so the tax administration was not bound by it. With regard to the recognition of the regulation by other taxpayers, it was pointed out that the regulation had not been submitted with their tax declarations, so the tax administration had not been able to recognize that it did not correspond to the model template.

The taxpayer appealed the decision to the Tax Appeal Commission, which judged the case differently. An expense regulation approved by the cantonal seat should be recognized. If only regulations corresponding to the model template could be submitted, the purpose of an approval would be lost.

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