Circular No. 43 – Part 1: Subject

On February 26, 2018, Circular No. 43 of the Federal Tax Administration came into force. This supersedes two older circulars. The new circular now solely regulates the tax treatment of prizes, honorary gifts, awards, scholarships, and support contributions in the cultural, sports, and scientific sectors.

Commencement and repeal of previous circulars

‍Circular No. 43 of the Federal Tax Administration (ESTV) took effect upon its publication on February 26, 2018. It replaces two previously valid circulars: No. 15 of April 8, 1953, concerning the tax treatment of prizes, honorary gifts, and scholarships to writers, musicians, painters, sculptors, scientists, etc., and No. 8 of February 25, 1971, concerning donations from the Swiss National Science Foundation to support scientific research.

‍Scope of Regulations

‍Circular No. 43 covers the entire scope of the regulations of the two circulars that have now been repealed. This can be easily recognized from the title, which reads: "Tax treatment of prizes, honorary gifts, awards, scholarships, and support contributions in the cultural, sports, and scientific sectors." In drafting the circular, the ESTV not only followed the statutory regulations but also increasingly aligned with the jurisprudence of the Federal Court. The reason for the circular is that prizes, honorary gifts, awards, scholarships, and support contributions in the cultural, sports, and scientific sectors can be donations or support services, which are exempt from direct federal tax. However, this is only the case if certain conditions are met. If these conditions are not met, it is considered taxable income.

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