Article 231, paragraph 1 of the Vaud law of July 4, 2000, on cantonal direct taxes (LI/VD; RSV 642.11) provides that the Cantonal Tax Administration may grant a total or partial remission of taxes, compensatory interest, and late payment interest, as well as tax arrears and penalties, when full payment would be excessively burdensome for the taxpayer due to significant losses or other serious reasons.
The request for remission, which must be justified in writing and accompanied by the necessary evidence, should be addressed to the tax authority. The authority, after consulting the municipal authority, will provide its opinion to the Cantonal Tax Administration, which makes the final decision (Art. 231, para. 2 LI/VD). The remission procedure is free of charge (Art. 231, para. 4 LI/VD).
It is important to note that each canton can regulate this aspect of tax law in its own way, respecting the Federal Constitution. This means that cantons are not required to provide a solution identical to federal law.
We will now examine the conditions under which it is possible to benefit from a potential remission of cantonal and municipal taxes in the canton of Vaud.
Under Vaud law (Art. 231, para. 1 LI/VD), the granting of a remission of cantonal and municipal taxes is subject to two cumulative conditions. First, there must be a disproportion between the tax debt and the taxpayer's economic capacity, such that full payment of the taxes would be excessively burdensome for the taxpayer. Second, the situation must be due to significant losses or serious reasons.
Regarding the first legal requirement, it must be established that the taxpayer has not voluntarily placed themselves in a position where they cannot settle their tax debts. Additionally, it must be deduced from the tax amounts involved and the taxpayer’s financial situation that they will not be able to repay their tax debts within the legal deadlines or without payment facilitation, such that full payment of the tax arrears would be excessively burdensome.
Regarding the second requirement related to the causes of deprivation that may justify a remission, i.e., a significant loss or other serious reason, the practice is that public authorities may grant a remission only if other creditors also agree to a debt write-off. Moreover, it should be noted that cantonal judges have interpreted the notion of serious reason as generally limited to cases of economic deterioration that are beyond the control or gross fault of the taxpayer (e.g., prolonged unemployment, heavy family burdens, significant business losses, or high medical expenses not covered by others).
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