Value-added tax also for small communities

That was not planned: At the end of the last term of office, the Zurich cantonal council, from the far left to the right, agreed on how to deal with planning added value. The great compromise of spring 2019 undoubtedly included the voluntary introduction of value-added compensation for the municipalities. A good three years later, things look different.

Since 1980, the Federal Spatial Planning Act (RPG) has stated that owners have to hand over part of it if their land is given more value by decisions of the authorities. The funds are intended to enable investments in public space in order to increase acceptance of interior development.

However, it was not until the revised RPG in 2014 that binding requirements came into force. There was agreement from the Federal Council to the Federal Councils, from the cantons to the municipalities that a value-added tax of at least 20 percent would only have to be paid to the canton when new building land was zoned.

“Meikirch” applies to everyone

If a higher utilization is possible on building land through a zoning or rezoning, the municipalities should be able to skim off part of this added value. But they don’t have to, was the widespread opinion. The Bern municipality of Meikirch also wanted to do without. In April, however, the Federal Supreme Court found in her case that such a compensation must be provided, either by the canton itself or delegated to the municipalities.

The Supreme Court’s judgment now has greater repercussions. In the canton of Zurich, most cities and agglomeration municipalities have added value compensation in their building codes, but many small rural communities want to do without. The government council now writes that this violates federal law in response to a request from the cantonal council.

As early as the end of June, the building department requested the municipalities in a circular letter not to submit any proposals waiving the value-added compensation. Those that have already been received will not be approved, even if they have passed the preliminary examination by the canton. If the revision of the building and zoning regulations includes other topics in addition to value-added compensation, these parts can still be approved.

What is “appropriate”?

Sonja Rueff-Frenkel (FDP, Zurich), the first signatory of the request, is disappointed that the government council has not expressed a word of its surprise at the judgment from Lausanne. It was never the opinion that all communities had to make a regulation. Rueff-Frenkel has no understanding of how quickly the government caved in and accepted the verdict as God-given.

From the point of view of the municipalities, this is a major annoyance, says Jörg Kündig, President of the Association of Municipal Councils. The compromise was forged at the time in the presence of cantonal lawyers. Now the legislation will be overridden by a judgment of the Federal Supreme Court. There is a lot of work to be done in the communities. Those who did not want any added value compensation would now have to supplement their building regulations and deal with the complex calculation of the levy.

Kündig criticizes the fact that the construction department does not say clearly what is a “reasonable tax rate” according to the RPG. The circular only states that a few percent would not conform to federal law. With the addition that no municipality has introduced a tax rate of less than 20 percent, the lower limit is indicated.

The construction department is probably hoping for a solution in Bern. In June, the Council of States supplemented the article in question in the next, ongoing revision of the RPG in such a way that all lawyers are aware that the value-added tax for municipalities is voluntary. But the business, which is about a different topic, still has a long way to go with an uncertain outcome.