A legal and tax analysis of hire purchase, finance leases and financed sales
Hire purchase is possible in Switzerland. Swiss law does not, however, provide a separate, comprehensive statutory regime for a contract type called Mietkauf. What matters is therefore not the title of the contract but the rights and obligations the parties actually agree.
For movable capital goods, the most important distinction lies neither in tax law nor in accounting. It lies in property law:
Does the finance provider remain the legal owner as lessor, or is the transaction a sale in which the seller merely reserves title until the price has been paid in full?
In the customer’s insolvency, this distinction determines whether the finance provider can reclaim the asset from the bankruptcy estate or merely has a claim against the customer. The contract’s label alone does not settle the issue: even a contract described as a lease may be characterised as a sale where the residual amount is nominal.
1. Hire purchase is possible, but it is not a defined statutory contract type
The Swiss Code of Obligations (CO) contains no special provisions for a contract type called Mietkauf. The former rules on instalment sales in Articles 226a et seq. CO were repealed when the Consumer Credit Act entered into force on 1 January 2003.
The general principle in Article 18(1) CO therefore applies when characterising a contract today: the parties’ common, actual intention is decisive, not an inaccurate description. A contract labelled “lease”, “hire purchase” or “financing agreement” must be assessed by its substance.
The Federal Supreme Court treats a finance lease as an innominate contract that does not fit entirely within any statutory contract type. In judgment 4A_404/2008 of 18 December 2008, it describes as typical a transaction in which the leasing company acquires the asset from the supplier and then makes it available to the lessee for use.
That differs fundamentally from a sale subject to reservation of title.
2. The central choice: Lessor’s ownership or reservation of title?
BGE 118 II 150 of 30 April 1992 is the leading decision on this distinction. The leasing company had bought two vehicles from the supplier, who delivered them directly to the lessee. Because the parties intended only to grant use, not to transfer ownership, the leasing company remained the owner. The Federal Supreme Court upheld its claim to recover the vehicles in the lessee’s bankruptcy. The Court also refers to this case law in the joined proceedings 4A_398/2018 and 4A_400/2018 of 25 February 2019, particularly at consideration 3.1.
This leaves two models:
Under a genuine finance lease, the lessor buys the asset and remains its legal owner. The lessee obtains a right to use it. A subsequent sale may be possible, but it is not an essential part of the lease from the outset.
Under a purchase-like hire purchase arrangement, the asset is intended to pass to the customer under the original transaction. If the seller or finance provider wishes to retain title only until payment is complete, the arrangement is, in property-law terms, a sale subject to reservation of title.
The finance provider’s intention alone does not decide the matter. The parties’ intention, as evidenced by the contract as a whole, does. Section 9 returns to this point.
3. A clause saying “title remains with the finance provider” is insufficient in a sale
Under Article 714(1) of the Swiss Civil Code (CC), acquiring title to a movable asset generally requires a transfer of possession. If the asset is handed to the buyer, title passes on delivery unless there is a valid reservation of title.
Under Article 715(1) CC, a reservation of title is valid only if entered in the public register at the purchaser’s relevant place of residence. The debt enforcement office keeps that register. The details are governed by the Ordinance on the Registration of Reservations of Title (SR 211.413.1). For a company limited by shares, BGE 106 II 320 of 30 October 1980 holds that its statutory registered office, as entered in the commercial register, is decisive.
The consequence for hire purchase is clear:
If the substance of the transaction is a sale with deferred passage of title, a clause saying “title passes only when the last instalment is paid” does not itself create an effective proprietary security interest. Without registration, the customer becomes the owner on delivery.
A valid reservation of title can be asserted in bankruptcy under Article 242 of the Debt Enforcement and Bankruptcy Act (DEBA). If the registration was not effective before bankruptcy proceedings began, the seller generally has no right to recover the asset on that basis. BGE 96 II 161 illustrates this for an entry that ceased to be effective after a change of residence. Unless another security interest exists, the unpaid price generally remains an unsecured claim in bankruptcy.
That is the central difference from the lease in BGE 118 II 150.
4. Reservation of title entails substantial administrative work
For a standardised hire purchase product, the current registration system has three practical consequences.
Application: Under Article 4 of the Registration Ordinance, the parties may apply jointly or one may apply alone. A unilateral application requires the other party’s written consent on all essential registration details. The signed standard contract should therefore cover those details in full; the documents should be coordinated with the competent debt enforcement office.
Updating the entry: If the purchaser changes residence or the relevant registered office, the entry at the former location ceases to be effective after three months unless a new entry is made at the new location (Article 3 of the Registration Ordinance; BGE 96 II 161). The period runs regardless of when the seller learns of the move. A finance provider with many live contracts must therefore monitor changes in customers’ locations systematically.
Public notice: The register does not have the same publicity effect as the land register. Third parties are not generally obliged to consult it. This further limits its protective effect (see Section 5).
This decentralised mechanism is itself the subject of reform. Motion 22.4254, “Revision of the law on security interests in movables (reservation of title)”, was adopted by the Council of States on 14 December 2022 and by the National Council on 1 June 2023. Parliament lists it as referred to the Federal Council; according to the Swiss Leasing Association, the Federal Office of Justice has been tasked with preparing the revision. Until the law changes, the existing system under Articles 715 et seq. CC remains in force.
5. Even a registered reservation of title does not provide absolute protection
Registration does not protect the seller retaining title against every third party. Article 714(2) CC, read with Article 933 CC, protects an acquisition in good faith of rights in movable property entrusted to the transferor under certain conditions.
According to BGE 85 II 580, possession of an asset subject to a reservation of title can also be “entrusted possession” within the meaning of Article 933 CC. A third party may therefore acquire a right in rem under the statutory conditions even though the person in possession was not yet the owner.
Whether a third party acted in good faith depends on the circumstances and the attention required by Article 3(2) CC. This risk matters especially for assets that are easy to resell. For vehicles, eCode 178 can additionally be entered on the registration certificate to prevent a change of registered keeper without the beneficiary’s consent. It is available to all vehicle owners, including a seller retaining title.
6. Article 716 CC materially changes the recovery of a hire purchase asset
Under Article 716 CC, an owner may demand the return of an asset transferred subject to a reservation of title only if the instalments already paid are refunded. The owner may deduct reasonable rent and compensation for wear and tear.
That is very different from assuming that, after a payment default, the finance provider may simply recover the asset and retain every instalment paid. Whether, and to what extent, a different repossession clause would be effective in a business-to-business contract requires a separate legal assessment. Product design should not assume that Article 716 CC can freely be contracted out of.
Default, termination and repossession clauses must therefore take Article 716 CC into account from the outset. Under a genuine lease, the consequences of returning the asset rest on a different ownership and contractual structure.
7. Entering a completed purchase later creates a particular ownership risk
In BGE 119 II 236 of 25 May 1993, the future lessee had concluded a purchase agreement for a machine with the supplier, specifying payment of the price “through leasing”. The machine was delivered before the lease was signed. The Federal Supreme Court held that title had passed to the customer on delivery. The leasing company’s subsequent payment of the purchase price did not make it the owner. It could not reclaim the machine in the bankruptcy of a third party to whom the customer had lent it.
The product-design consequence is:
If the finance provider is to become the owner under a direct purchase from the supplier, that acquisition chain must be clearly agreed and documented before delivery to the customer.
This applies to both models. Under Model B, the finance provider must itself acquire title before it can reserve title against the customer. Purporting to enter into the customer’s already completed purchase after the event fails as a matter of property law.
8. Sale and leaseback of movable assets requires a separate ownership analysis
If a business sells a machine to a finance provider and simultaneously leases it back, the machine remains in the seller’s possession. Title is then intended to pass by means of a Besitzeskonstitut, an agreement under which the transferor continues to possess the asset under a different legal relationship.
Article 717 CC applies. If the asset remains with the transferor under a special legal relationship, the transfer of title is ineffective against third parties where it is intended to prejudice them or circumvent the rules on possessory pledges. The court decides this at its discretion (Article 717(2) CC).
The Federal Supreme Court described the arrangement in BGE 119 II 236, which only resembled a leaseback, as problematic in light of Articles 717 and 884 CC. In that case, however, the leasing company had not actually repurchased the machine. The decision does not establish a general prohibition of every sale and leaseback. Where title is transferred while the seller retains possession, the acquisition chain and the requirements of Article 717 CC must be assessed carefully in each case. Without an effective ownership position, recovery from the bankruptcy estate is not assured.
The property-law analysis is separate from the VAT treatment of the same transaction under Article 2(3) of the VAT Ordinance.
9. A nominal residual value can also put the lessor’s title at risk
Buying the asset from the supplier does not by itself secure the lessor’s ownership position. BGE 118 II 150 upheld recovery because the parties intended the contract only to grant use. If the contract was in fact intended to transfer the asset to the customer, title may pass directly to the customer on delivery.
Whether a purchase option causes an original lease to be characterised as a sale depends on the parties’ overall intention and the specific contract. A nominal option price is a significant indicator, but not conclusive proof.
The CHF 1 purchase option
A machine costs CHF 500,000. Over five years, the customer pays instalments covering virtually the full price plus the financing costs. At the end, the customer may buy the machine for CHF 1.
If its market value is substantially above CHF 1, exercising the option is practically preordained. The small option payment may indicate that acquisition of ownership was the intended purpose from the outset. If the transaction is in fact characterised as a sale, the finance provider’s ability to recover the asset may fail without a validly registered reservation of title. The entire contract still has to be assessed.
A nominal purchase option may put the lessor’s position at risk in bankruptcy if the contract is in substance a sale and no valid reservation of title exists.
Automatic transfer of title after the last instalment brings the structure even closer to a sale. A finance provider seeking to retain genuine lessor ownership should offer a real return option and set any purchase option on economically defensible terms, while clearly documenting the parties’ intention.
10. Hire purchase of real estate follows different rules again
Under Article 216(1) CO, contracts for the sale of real estate must be executed as a public deed. Under Article 216(2) CO, the same applies to preliminary contracts and agreements creating an option to purchase or repurchase real estate.
In BGE 132 III 549 of 30 June 2006, the Federal Supreme Court held that a real estate lease is not, as such, a contract transferring title and therefore need not be executed as a public deed. A lessee’s option to purchase for a price fixed in advance is an exception: it falls under Article 216(2) CO and requires a public deed.
Article 216a CO also limits purchase options to ten years and permits their notation in the land register for that period. This creates a separate design issue for longer real estate lease or hire purchase contracts.
Real estate transactions also require analysis of property gains tax and real estate transfer tax, particularly whether an economic transfer of the property occurs. For leases of commercial or industrial real estate, the relevant guidance includes Circular No. 29 of the Swiss Tax Conference of 27 June 2007 and Circular No. 19 of the Federal Tax Administration (FTA) of 6 February 2008 on direct federal tax.
The product structure described for movable assets cannot simply be applied to real estate without specific formal and tax analysis.
11. Consumer hire purchase may face stricter Consumer Credit Act rules than leasing
The Consumer Credit Act (CCA) generally does not apply to purely business-to-business transactions with legal entities. Under Article 3 CCA, a consumer is a natural person concluding a contract for a purpose outside their professional or commercial activity.
Care is needed with sole proprietorships. A sole proprietor is a natural person, and the purpose of the particular transaction is decisive. Mixed private and business use requires especially careful classification.
Article 1(1) CCA covers deferred payments, loans and similar financing arrangements. Article 1(2)(a) CCA additionally covers leases of movable goods for private use that provide for an increase in instalments if terminated early. A hire purchase arrangement intended from the outset to result in acquisition against instalment payments is more likely to be treated as deferred payment. The CCA would then apply in full, rather than only to the limited extent applicable to leases under Article 8 CCA.
The most important practical difference concerns the assessment of creditworthiness:
Consumer credit (Article 28 CCA): Under Article 28(4), repayment must be assessed on the assumption that the credit is amortised within 36 months, even if a longer term is agreed.
Leasing (Article 29 CCA): The assessment asks whether the lessee can pay the instalments without drawing on the portion of income protected from attachment.
A 48- or 60-month consumer hire purchase agreement would therefore be assessed as though repayment had to be completed within 36 months. This can materially reduce the customer’s assessed borrowing capacity compared with leasing and weighs against Model B in the consumer market.
Other requirements include rules on form and content, the right of withdrawal under Article 16 CCA and the interest-rate ceiling under Article 14 CCA, which Article 8 CCA also applies to covered leases. Since 1 January 2026, the ceiling has been 10 per cent for cash loans and 12 per cent for overdraft credit. The applicable category and calculation for a particular product must be determined separately.
Article 7 CCA contains exemptions, including credit below CHF 500 or above CHF 80,000. Before offering hire purchase to individuals, a provider must therefore determine which CCA category applies. Importing the compliance framework for a lease without reviewing the transaction may be wrong.
12. Finance leases and credit-like hire purchase are subject to anti-money laundering rules
Under Article 2(3)(a) of the Anti-Money Laundering Act (AMLA), credit transactions, expressly including finance leases, constitute financial intermediation. Financial intermediaries acting professionally must generally affiliate with a recognised self-regulatory organisation (Article 14 AMLA) unless they are subject to the relevant prudential supervision.
Renaming “leasing” as “hire purchase” changes nothing in this respect. A credit-like hire purchase product must be assessed as a credit transaction for anti-money laundering purposes. For a leasing company already affiliated with a self-regulatory organisation, the main task is to incorporate the new product into its existing AML processes and the organisation’s rules.
13. VAT: Both leasing and sales are supplies of goods, but their tax treatment can differ
Under Article 3(d) of the VAT Act (VATA), a supply of goods includes both transferring the power to dispose economically of an asset and making it available for use. The sale and lease of a movable asset are therefore both supplies of goods for VAT purposes. Their tax consequences need not be identical.
Leasing: Lease payments are generally consideration for the taxable grant of use under Article 3(d) VATA. A financing element embedded only in the calculation of the payment does not thereby become a separate grant of credit. The treatment of separately agreed components depends on the particular contract structure.
Sale with separate financing: Under Article 21(2)(19)(a) VATA, the granting and arranging of credit are exempt from VAT without credit for input tax. If a separately identifiable credit is granted alongside the sale and the interest is shown separately, it must be assessed whether that interest is an exempt financing service rather than part of the taxable price of the goods.
The economic difference can be significant. But exempt financing services can restrict the finance provider’s input-tax deduction, and there is no option to tax services under Article 21(2)(19) VATA (Article 22(2)(a) VATA). The structure must therefore be assessed beyond its nominal VAT rate.
No blanket FTA rule follows under which a nominal purchase option always turns a lease into a sale from inception. Where there is an obligation to buy, automatic transfer of title or a nominal option, the VAT characterisation must be established from the actual rights and obligations. A written ruling under Article 69 VATA is advisable for the particular standardised product.
The acquisition chain under Model B also affects VAT. If the finance provider buys from the supplier and resells to the customer, there are two supplies. If the supplier sells directly to the customer and assigns the claim to the finance provider, the latter may provide only a financing service.
14. The timing and place of VAT can differ too
In a sale, the power to dispose is granted on completion, bringing the supply to an end. A lease makes an asset available for use over time and is an ongoing supply.
The tax claim arises in accordance with Articles 39 and 40 VATA, taking account of the accounting method, invoices, instalment invoices and payments. It would therefore be wrong to say that the full VAT on every hire purchase transaction is always due on day one. Equally, monthly invoicing cannot by itself turn a substantive instalment sale into a lease.
For cross-border transactions, classification also affects the place of supply under Article 7 VATA and the treatment of import VAT.
Article 69 VATA expressly gives a taxable person the right to submit a specifically described set of facts to the FTA in writing and obtain a ruling on the VAT consequences. The ruling binds the applicant and the FTA for those facts. A product launch warrants an application enclosing the model contract, payment schedule, invoicing arrangements and mechanics of title transfer.
15. Accounting concerns both customer and finance provider
The accounting standards treat leasing differently on both sides of the contract:
| Standard | Customer (lessee or buyer) | Finance provider (lessor or seller) |
|---|---|---|
| Swiss CO | No general recognition duty based on the IFRS 16 model; accounting follows the general CO principles, with disclosure of certain lease obligations. Recognition on purchase depends on the specific allocation of the asset. | The leased asset and receivables are accounted for under general CO principles and the transaction’s economic substance; Model B generally produces a purchase-price receivable. |
| Swiss GAAP FER 13 | Under a finance lease, the asset is recognised and a liability recorded; operating lease obligations are disclosed. | FER 13 addresses presentation by the lessee. The lessor’s accounting must be assessed separately under the applicable FER principles. |
| IFRS 16 | Generally a right-of-use asset and a lease liability, subject to exceptions for short-term and low-value leases. | Finance leases remain distinct from operating leases: the former are presented as a receivable, the latter as the underlying asset. |
Under Article 959c(2)(6) CO, obligations arising from purchase-like leases and other lease commitments must be disclosed if they cannot expire or be terminated within twelve months of the reporting date.
Model B may also change the accounting for a leasing company. Under IFRS 16, however, a lessor already recognises a receivable for a finance lease; moving to Model B does not necessarily create a receivable for the first time. Swiss GAAP FER 13 expressly governs presentation by the lessee. The lessor’s accounting requires a separate assessment of the applicable principles and the contract.
16. Direct tax does not follow the product’s name
There is no federal rule saying that a hire purchase asset must always be recognised by the finance provider or always by the customer.
For legal entities, Article 58 of the Direct Federal Tax Act (DFTA) generally starts from the balance of the statutory profit and loss account, subject to tax adjustments. The relevant accounts are the statutory individual financial statements; IFRS or Swiss GAAP FER consolidated accounts do not automatically determine taxable profit. For sole proprietors, the provisions on self-employment apply (Articles 18 and 27 et seq. DFTA).
Cantonal practice varies. The current TaxInfo guidance of the Canton of Bern, “Tax treatment of lease agreements for business operations”, distinguishes according to the actual accounting treatment. In exceptional cases, it provides for partial recognition of lease payments as advance payments where the contract term is substantially shorter than the asset’s economic life and a purchase option at a price far below market value exists at the end.
On the finance provider’s side, Model B changes the tax base: depreciation of the asset falls away and interest income is taxed. The customer, conversely, must determine whether to recognise and depreciate the asset or expense the instalments.
Where transfer of title is assured and the price is almost fully amortised, a product-specific discussion with the competent cantonal tax authority is therefore advisable, ideally through a written ruling.
17. Two fundamentally different product models
There are two possible structures for a Swiss hire purchase product. As discussed in Section 9, a nominal purchase option increases the risk of recharacterisation.
| Feature | Model A: Finance lease with a possibility to buy | Model B: Instalment sale with reservation of title |
|---|---|---|
| Acquisition chain | Finance provider buys from supplier; supplier delivers directly to customer. | Finance provider first acquires the asset and then sells it subject to reservation of title. If the supplier sells and assigns the claim, the security transfer and registration must be structured separately. |
| Ownership during term | Finance provider is the legal owner. | Finance provider retains ownership only if the reservation of title is validly registered. |
| End of contract | Genuine economic choice between return and purchase; realistic residual value. | Title passes after the final instalment. |
| Security | Lessor’s ownership; eCode 178 for vehicles. | Entry in the register at the customer’s registered office, updated if that office moves; eCode 178. |
| Recovery after default | Governed by the contract. | Subject to repayment under Article 716 CC. |
| Customer’s bankruptcy | Recovery of the asset, provided the transaction is not recharacterised as a sale. | Recovery only if the registration was effective before bankruptcy proceedings began. |
| CCA for consumers | Lease assessed under Article 29 CCA. | Deferred payment assessed under Article 28 CCA, with the 36-month assumption. |
| VAT | Entire lease payment generally taxable. | Price of goods taxable; separately stated interest may be exempt. |
| Finance provider’s accounting under Swiss CO | Case-specific assessment under general CO principles. | Generally a purchase-price receivable; precise entries require assessment. |
If the supplier’s claim for the purchase price is assigned, the transfer of the reservation of title must also be agreed and documented. BGE 82 IV 182 discusses an assignment accompanied by transfer of the reservation of title; under Article 4bis of the Registration Ordinance, the assignment may be noted in the register. An assignment of the claim alone should not simply be assumed to transfer title to the finance provider.
Model A broadly corresponds to the finance lease described in BGE 118 II 150 and 4A_404/2008. Model B is legally possible, but substantially more demanding administratively and in insolvency.
Conclusion
Hire purchase is possible in Switzerland. The decisive issue is the ownership structure actually created, not the name given to the contract.
Under a genuine finance lease, the leasing company acquires the asset from the supplier and remains its legal owner. It can generally recover the asset in the lessee’s bankruptcy, as BGE 118 II 150 illustrates. Recovery presupposes an effective ownership position. Depending on the contract, a nominal purchase option can indicate that a sale was intended from the outset.
Under hire purchase or a financed sale, by contrast, the original contract provides for title to pass to the customer. Anyone seeking to secure title until payment in full must comply with Articles 715 and 716 CC. That includes registration, updating the entry when the customer’s registered office changes, and recognising the limits of protection against third parties acting in good faith.
For a leasing company, “full amortisation plus automatic transfer of title after the last instalment” is therefore not simply a variant of a finance lease. It entails a shift to a sale subject to reservation of title. A CHF 1 purchase option may put the classification, and therefore the right to recover the asset, at risk; it does not automatically eliminate the lessor’s ownership.
Other consequences also differ. For consumers, hire purchase is more likely to fall under the stricter rules for consumer credit. For VAT, separately agreed financing may be treated differently from a financing element embedded in a lease payment. Accounting and direct-tax consequences depend on the applicable standard and the transaction’s specific classification.
Before introducing a business-to-business hire purchase product, a written assessment should cover four areas:
- Ownership, acquisition chain and enforceability in bankruptcy, including Articles 715 to 717 CC.
- Contract classification, residual-value policy and default mechanics under Article 716 CC.
- Statutory and tax accounting for both finance provider and customer, coordinated with the cantonal tax authority.
- A binding VAT ruling from the FTA under Article 69 VATA.
Reform of security interests in movable property under Motion 22.4254 could substantially change the current system. A product designed today should be capable of adaptation to a future register.
Sources
Legislation and ordinances
- Swiss Civil Code, SR 210, especially Articles 3, 714–717 and 933 CC: Fedlex
- Ordinance on the Registration of Reservations of Title, SR 211.413.1, especially Articles 3, 4 and 4bis: Fedlex
- Code of Obligations, SR 220, especially Articles 18, 216, 216a and 959c CO: Fedlex
- Debt Enforcement and Bankruptcy Act, SR 281.1, especially Article 242 DEBA: Fedlex
- Consumer Credit Act, SR 221.214.1, especially Articles 1, 3, 7, 8, 14, 16, 28 and 29 CCA
- Direct Federal Tax Act, SR 642.11, especially Articles 18, 27 et seq. and 58 DFTA
- VAT Act, SR 641.20, especially Articles 3(d), 7, 21(2)(19), 22, 39, 40 and 69 VATA: Fedlex
- VAT Ordinance, SR 641.201, especially Article 2
- Anti-Money Laundering Act, SR 955.0, especially Articles 2 and 14 AMLA: Fedlex
Case law
- BGE 118 II 150 of 30 April 1992, lessor’s ownership and recovery in bankruptcy: Federal Supreme Court
- Judgments 4A_398/2018 and 4A_400/2018 of 25 February 2019, consideration 3.1: Federal Supreme Court
- BGE 119 II 236, finance provider’s failure to acquire title when entering an existing purchase: Federal Supreme Court
- Judgment 4A_404/2008 of 18 December 2008, finance lease as an innominate contract: Federal Supreme Court
- BGE 132 III 549 of 30 June 2006, real estate leasing and public deed for a purchase option: Federal Supreme Court
- BGE 106 II 320, registration location for legal entities: Federal Supreme Court
- BGE 96 II 161, effect of registration after a change of residence: Federal Supreme Court
- BGE 85 II 580, reservation of title and entrusted possession: Federal Supreme Court
- BGE 82 IV 182, assignment of the purchase-price claim and transfer of the reservation of title: Federal Supreme Court
Authorities, practice and standards
- Swiss Tax Conference, Circular No. 29 of 27 June 2007, and FTA, Circular No. 19 of 6 February 2008, leases of commercial or industrial real estate: FTA with appendix
- Tax Administration of the Canton of Bern, Tax treatment of lease agreements for business operations
- Federal Office of Justice, Consumer Credit Act and the 2026 interest-rate ceiling
- FINMA, anti-money laundering treatment of credit and leasing transactions: FINMA
- Swiss GAAP FER 13 Leases: FER Foundation
- IFRS 16 Leases, especially paragraphs 61–67: IFRS Foundation
- Motion 22.4254, revision of the law on security interests in movable property: Curia Vista
- Swiss Leasing Association, progress on the movable-property register: SLA
As at 28 September 2026. Older decisions made under the since-repealed instalment-sale rules are used only for property-law principles that remain relevant. Specific products require an assessment of their contracts, registration procedure, accounting and tax treatment on their own facts.