2025

Oliver Jäggi

Remo Küttel

Current problems of taxation of stock corporations and shareholders (2025)

Oliver Jäggi

Remo Küttel

Case 1: Refurbishment

1. facts of the case

1.1 Case 1A: Waiver of receivables with recognition directly in equity

X AG has a genuine balance sheet deficit and is in need of restructuring. Y AG (shareholder of X AG) waives an existing loan to X AG in order to restructure X AG. The debt waiver is recognized directly in equity at X AG.

Question

How is the debt waiver to be treated for profit tax purposes at X AG and Y AG?

1.2 Case 1B: Debt waiver with recognition in the income statement

Question

How is the debt waiver to be treated for profit tax purposes at X AG and Y AG?

1.3 Case 1C: Receivables subsidy

X AG has a genuine balance sheet deficit and is in need of restructuring. Y AG (shareholder of X AG) makes a contribution in kind to X AG in order to restructure X AG: Y AG contributes an existing receivable from X AG to X AG with a contribution in kind and the receivable is lost. The receivables contribution is recognized in X. AG with no effect on income.

Question

How is the receivables subsidy to be treated for profit tax purposes at X AG and Y AG?

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Case 2: Own shares

1. facts of the case

1.1 Case 2A: Reissue of treasury shares with recognition in equity (ruling BGer 9C_135/2023 of June 6, 2024)

The. A AG is a holding company based in Zurich. It holds the shares of the A Group. The shares of A AG are listed on the stock exchange. During an audit, the Zurich cantonal tax office discovers that A AG reported shares used for an employee participation program, which it had repurchased in 2011 and 2012, as a negative item in equity. As part of the allocation of these shares to employees, there was a positive difference between the allocation value and the acquisition costs of CHF 65,082,950, which was offset by A AG against the negative item in equity and credited to the statutory capital reserve with no effect on income. The cantonal tax office offsets the difference between the acquisition cost and the allocation value of the shares used for the employee share ownership program, which is not recognized in the income statement, against the taxable net profit.

Question

How is the difference between the issue price and the acquisition cost of A AG to be treated for income tax purposes according to Federal Supreme Court case law?

1.2 Case 2B: Reissue of treasury shares with recognition in profit or loss

A AG recognizes the positive difference between acquisition cost and allocation value in profit or loss.

Option 1: When the treasury shares are reissued, there is a negative difference between the issue price and the acquisition cost, and A AG recognizes the loss in profit or loss.

Question

How is the profit or loss recognized in the income statement of A AG from the reissue of treasury shares to be treated for income tax purposes?

1.3 Case 2C: Repurchase of own shares - tax consequences for the selling company

X AG holds 5% of the shares in A AG with a book value of CHF 1 million and sells them to A AG at a market value of CHF 1.5 million.

Question

How is the book profit at X AG of CHF 0.5 million from the repurchase of treasury shares to be treated for profit tax purposes?

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Case 3: Functional currency (in foreign currency)

1. facts of the case

X AG keeps its books in USD and its accounts in CHF. Its (simplified) balance sheet as at 31.12.2024 and income statement 2024 are as follows:

Questions

What is the legal basis for the accounting and reporting currency to be used?
X AG keeps its books in the functional currency USD (accounting in CHF, AK in CHF). What does it have to bear in mind when preparing its tax return?
X AG continues to keep its books in the functional currency USD and would like to change its accounting and the AK from CHF to USD. What is the procedure under commercial law and what are the tax consequences?
Variant: X AG keeps its books in CHF and would now like to convert its bookkeeping, accounting and AK to USD. What is the procedure under commercial law and what are the tax consequences?

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Case 4: Provisions for vacation not taken

1. facts of the case (according to BGer 9C_192/2024 of July 03, 2024)

A SA, based in Geneva, provides auditing, tax consulting, management consulting and fiduciary services. In its 2021 tax return, it declared a net profit taxable in the canton of Geneva of CHF 78,123 and a net profit taxable in Switzerland of CHF 153,216. The attached balance sheet also showed short-term provisions amounting to CHF 2.04 million. The Geneva tax authorities contacted A SA and requested more detailed information on these provisions. Among other things, the company recorded a provision for vacations in the amount of CHF 250,000 at
. The Geneva tax authorities refused to allow this provision as a deduction, as it was tantamount to a provision for future expenses.

Questions

Is the creation of a provision for staff vacation entitlements permissible under commercial law?
Is the formation of such a provision permissible under tax law?

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Case 5: Transposition

1. facts of the case (according to BGer 9C_679/2021 of April 20, 2023)

From 1993, A and two partners established C AG, which was active in investment advice and asset management. Over time, the founding partners gradually sold a total of 37,868 of a total of 50,000 shares to Bank D. The bank's stake thus amounted to 75.74%, with the founding partners remaining minority partners in the company. Bank D. announced in 2012 that it was planning to divest its holding in C AG as part of a realignment of its activities. A wanted to regain control of C AG and sought a management buy-out. The transaction necessary for this was carried out via E AG, which was wholly controlled by him at the time. E AG bought the shares in C AG including 4203 shares from A (8.4%) and sold the shares on in the short term. The sale of the 8.4% shares from A to E AG was assessed by the Zurich tax office as a transposition.

Question

Is the offense of transposition fulfilled?

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Case 6: Withholding tax - liability of the company

1. facts of the case

1.1 Case 6A: Change from ordinary taxation to withholding tax

A has a residence permit and is married to C, who has a permanent residence permit. A and C separate in January 2025. A is employed by X AG based in Switzerland, works until the end of September 025 and then moves abroad.

Question

What does X AG have to consider with regard to withholding tax?

1.2 Case 6B: Bonus payment after moving abroad

A has Swiss citizenship and is an employee of X AG based in Switzerland. He moves abroad in December 2024 and will receive a bonus payment for his work at X AG after his departure abroad in 2025.

Question

What does X AG have to consider with regard to withholding tax?

1.3 Case 6C: Fee to a board member domiciled abroad

A, domiciled in the UK, is a member of the Board of Directors of X AG, domiciled in Switzerland. A holds 100% of a service company Y Ltd. in the UK. Y Ltd. charges X AG the board of directors' fee for A and other advisory services provided by A.

Question

Is the remuneration paid by X AG to Y Ltd. subject to withholding tax?

1.1 Case 6D: Employee participation by members of the Board of Directors residing abroad

A, resident in the UK, receives 200 shares in X AG at a nominal value of CHF 100 and a market value of CHF 1,000 per share as a director of X AG domiciled in Switzerland.

Question

Is the acquisition of shares in X AG subject to withholding tax?

1.2 Case 6E: De facto employer

X AG, based in Switzerland, is founded by the German parent company Y AG and is in the start-up phase. X AG does not yet have enough qualified personnel. The parent company Y AG therefore makes its employee A available to X AG for a transitional period of 12 months. There is an employment contract between Y AG and its employee A under German law. A spends one day a week in Switzerland and is integrated into the organization of X AG. Y AG in Germany charges the wage costs for A to X AG on a pro rata basis.