COVID-19: extension of deadlines in tax matters in Canton Ticino

I. Direct taxes

The Government of Canton Ticino recently adopted Resolution no. 1428 of 16 March 2020 (hereinafter, the "Resolution"), which provided for the following extensions with regard to direct taxes (Federal Direct Tax, Cantonal Tax and Municipal Tax).

Pursuant to the said Resolution, the deadlines for submitting tax returns regarding the tax year 2019 and the previous tax periods (if not already submitted on 16 March 2020) are extended as follows (see Point 8 of the Resolution):

• Individual taxpayers: extension to 30 June 2020 (ex officio extension);
• Corporate taxpayers: extension until 30 September 2020 (ex officio extension).

If the taxpayer does not comply with the new extended deadlines, after a warning, the fine procedure will be enacted.

II. VAT

The Federal Tax Authority (hereinafter, "FTA") clarified that, for the purposes of Value Added Tax, it is possible to request an extension of the deadline both for the filing of VAT returns and for the payment of VAT for a period of three months beyond the ordinary deadline.

The request, free of charge, must be submitted via the FTA's website or via the FTA SuisseTAX portal.

It must be noticed that the said benefits also apply to foreign taxpayers having their tax representation to VAT purposes in Switzerland, regardless of their place of residence or domicile.

III. Default interests on tax debits

With regard to default interests on tax credits, both the federal authorities and the Ticino cantonal authorities adopted similar measures, as follows.

A.     Cantonal tax

For the purposes of Ticino Cantonal Tax (see point 6 of the Resolution), default interests on tax debts, including unpaid down payments, will not be counted for the calendar year 2020, i.e. from 1 March 2020 to 30 September 2020.

B.     Federal Direct Tax

For the purposes of the Federal Direct Tax, the Federal Council and the FTA decided not to charge interests on tax debits from 1 March 2020 to 31 December 2020 (see Art. 3 of the Ordinance on the temporary waiver of default interests; and FTA Circular Letter of 24 March 2020).

C.     VAT, excise taxes, incentive taxes and custom duties

For the purposes of the indirect taxes mentioned above, no default interests on tax debts will be charged from 1 March 2020 to 31 December 2020 (Art. 2 of the Ordinance on the temporary waiver of default interests).

D.     Withholding Tax and Stamp Duty

Conversely, for the purposes of the Withholding Tax and of the Stamp Duty default interests are due in the ordinary way.

IV. Freezing of procedural deadlines

With regard to deadlines for submitting a complaint or appealing a decision of the tax authority before the competent tax court (ordinarily, 30 days after the notification of the decision), it should be noticed that the federal procedural law does not provide for any suspension related to judicial vacations. By contrast, the Federal Supreme Court excludes that any suspensions provided for by cantonal law can apply to complaint or appeal procedures regarding Federal Direct Tax.

In the view of the present COVID-19 emergency, this implies a discrepancy between the suspensions applicable to appeal and complaint procedures for the purposes of Cantonal and Municipal Tax on the one hand and Direct Federal Tax on the other hand.

A.     Procedural deadlines regarding Cantonal and Municipal Taxes

The Tax Act of Canton Ticino (Legge Tributaria, LT) does not provide for any deadline suspensions related to judicial vacations.

However, the Government of Canton Ticino recently decided a general suspension of deadlines due to the COVID-19 emergency (see art. 3 of the Cantonal Executive Decree concerning the procedural actions of the cantonal and municipal administrative authorities and the administrative and civil judicial authorities in times of epidemiological emergency from Covid-19 of 20 March 2020).

In particular, all deadlines pending as of 20 March 2020, in administrative and civil matters, are suspended until 19 April 2020.

The aforesaid suspension also applies to the deadlines for the submission of complaints to the cantonal tax authorities and for appealing the decisions rendered by the said authorities, which are suspended until 19 April 2020.

B.     Procedural deadlines regarding Federal Direct Tax

The Federal Council decided a general suspension of procedural deadlines by means of the Federal Ordinance on the suspension of time limits in civil and administrative proceedings for the maintenance of justice in relation to coronavirus (COVID-19) of 20 March 2020. The said ordinance provided for a suspension of deadlines from 21 March until 19 April 2020.

Nevertheless, the said suspension does not apply to procedures regarding direct taxes delegated to the cantonal authorities, such as Federal Direct Tax. The reason is that the said Ordinance provides that the suspension applies only if the applicable procedural law - in the present case, the Ticino cantonal law - provides for a suspension during the Easter period. Since the applicable procedural law of the Canton of Ticino does not provide for such a suspension, the suspension ordered by the Federal Ordinance is not applicable.

Therefore, the deadlines for the submission of complaints to tax authorities and for the appeal of tax decisions before the competent tax courts will not be suspended if the complaint or appeal regards the Federal Direct Tax.

C.     Procedural deadlines regarding VAT, Withholding tax and Stamp Duty

With regard to the deadlines related to complaints and appeals concerning Value Added Tax, Withholding Tax and Stamp Duty, the suspension of the deadlines from 21 March 2020 to 19 April 2020 - pursuant to Articles 1 and 2 of the aforementioned Ordinance - is applicable.

By contrast, no extension is allowed in other procedures regarding VAT, Withholding Tax and Stamp Duty, different from complaints and appeals.

Our professionals will be glad to provide you any further clarifications and assistance in this respect.