X was the principal shareholder and Chairman in the Insurance Agency, Y AG. In 2003, the company went bankrupt, with the bankruptcy proceedings suspended for lack of assets and the company was removed from the commercial register in September 2003. On 12 March 2007, the tax administration initiated a subsequent taxation proceedings against X concerning monetary benefits which it was supposed to have received from Y AG in the years 1997 to 2000. On 2 May 2012, the tax administration imposed an additional tax in the amount of CHF 39’056.20 including default interest. The appeal against this decision was rejected by the Tax Appeals Commission. Before the Federal Supreme Court, X appealed the decision. Excerp from the Federal Supreme Court ruling: “3.1 According to Art. 20 para. 1 lit.c DBG Income from movable assets, in particular dividends, profit shares, liquidation surpluses and non-cash benefits arising from participations of all kinds. In the relevant economic view, this includes all payments, transfers, credits, clearings or other services that can be measured and measured in cash Holders of social participation rights under any title on the basis of that holding receive from the Company and which do not constitute repayment of the existing capital. Specifically, so-called hidden profit distributions within the meaning of Art. 58 para. 1 lit. b DBG, ie contributions by the Company, which are not offset by any or no sufficient consideration by the Shareholder and which would not have been provided to a third party not involved in the Company or only to a significantly lesser extent. This is to be determined by a third-party comparison (the so-called “dealing at arm’s length” principle), in which all concrete circumstances of the concluded transaction must be taken into account. Non-cash benefits include a waiver of earnings for the benefit of the shareholder or a related party, which results in a corresponding reduction in the profit reported in the income statement. Such income waivers exist when the Company waives all or part of the income due to it for the benefit of the shareholder or related parties or if they do not provide the consideration which the Company would require from a non-participating third party. 3.2 In the area of non-cash benefits, the basic rule is that the tax authority bears the burden of proof for tax-increasing and increasing facts, whereas the taxable person is the one who repeals or reduces the tax. In particular, the authority is responsible for proving that the company has rendered a service and that it has no or no reasonable consideration in return. If the authority has established such a mismatch between performance and consideration, it is for the taxable person to rebut the presumption founded on it. If it fails to do so, it will bear the consequences of lack of evidence. It should also be noted that the taxpayer is obliged to cooperate in the mixed assessment system. Anyone making payments that are neither accounted for nor documented is to bear the consequences of such evidential proof, ie his payments are regarded as monetary benefits.” The Federal Supreme Court rules that the appeal was unfounded and therefore dismissed. Click here for translation ...