Objection against an assessment made at the discretion of duty.

If the tax declaration is still missing after an expired reminder period, or if the tax factors cannot be determined clearly due to a lack of reliable documents, the tax authorities will assess based on their duty of discretion. An objection against such an assessment can only be raised if it is obviously incorrect.

Under normal circumstances, tax authorities assess based on the information provided in the tax declaration. However, if taxpayers do not submit a tax declaration, the authorities will assess after a lapsed reminder period based on their duty of discretion. In doing so, they consider experience figures, asset development, and the living expenses of the taxpayer. The taxpayer can only raise an objection against such an assessment based on discretion if it is obviously incorrect. The substantiated objection along with any potential evidence must be made within 30 days.

In May 2017, the Federal Court had to rule on a case where the objection against an assessment based on discretion had become a contentious issue. A GmbH subject to taxation in the Canton of Schaffhausen had not submitted a declaration for the tax period 2014. After letting reminders from the tax authorities pass without response, it was assessed based on discretion. The GmbH now had 30 days to raise an objection against an obvious incorrectness. The company's trustee did this within the deadline and reported that the GmbH had incurred a loss. However, he did not submit an annual financial statement or a tax declaration, but merely promised to submit them later. The documents arrived at the tax authorities two weeks later, after the deadline had expired, and they no longer addressed the matter. The GmbH brought the case before the Schaffhausen High Court, where it was successful. According to the High Court, the justification for the objection was sufficient, as it indicated that the fiscal year 2014 had ended with a loss. Additionally, it was promised that the financial statement and the tax declaration for 2014 would be submitted later, which corresponded to a timely offer of evidence.

The tax authorities had a different opinion and escalated the case to the Federal Court, which ruled in their favor. The objection must be structured in such a way that the tax authorities can recognize at a glance, based on the justification and the evidence, whether the discretion-based assessment was obviously incorrect. Within the legal objection period of 30 days, the GmbH submitted no documents at all, making it impossible for the tax authorities to assess whether the assessment was obviously incorrect. The comprehensive proof of this only arrived afterward. Therefore, the submission is considered to be made late, which means that the right to object has entirely lapsed.

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