The case

The company brokers mortgage products, their core activity being the brokerage and successful financing between private customers and financing partners. The broker brings together the two parties and ensures that a contract is concluded.

Source: BVG, 01.11.2024 , A-5117 / 2023 & MWST-Rechtsprechung 2024 7 MWST-Netzwerk Zürich /RETAX Rohner & Erni TAX AG – pp. 44 – 46.

The commentary

In the present case it is disputed whether the brokerage fee paid by the respective financing partners to the broker constitutes remuneration for a supply of a taxable service at the standard rate or – as the broker argues – constitutes remuneration for an intermediation service that is tax exempt same as the intermediated financial service that is also tax exempt (Art. 21 para. 2 no. 19 let. a Federal VAT Act (SR 641.20).

The Federal Tax Administration (“FTA”) does not agree with this line of argumentation, stating that in the case of pecuniary advantages that are subject to the obligation to perform under Art. 400 para. 1 CO, there is a self-interest, regardless of whether and to what extent the customer, for his part, waives the transfer or whether such a transfer actually takes place. VAT Sector Info No. 14 – Financial sector Section 5.10.1

According to the Federal Administrative Court (“FTC”), the focus of the service provided to the customer is the brokerage of the mortgage loan and not an advisory activity. The company only has an interest in the successful brokerage and not in the contract between the parties. The brokerage fee that the company receives from the financing partners, which the customers contractually waive the right to pass on, is, according to the FTC, nothing other than the remuneration for successful brokerage. This brokerage is exempt from tax within the meaning of Art. 21 para. 2 no. 19 let. a Federal VAT Act because all requirements for tax exemption are met. The appeal is therefore upheld.

The FTA has appealed against the decision and the Federal Supreme Court will finally decide the case. Until then, the legal situation remains uncertain.

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