The case

In 2012, A Ltid (taxpayer) inherited real estate from the estate of their deceased shareholder, which was posted as extraordinary income and subsequently listed in the general reserves or statutory retained earnings over the period of several years.

Source: Judgement of 21 March 2025 (9C_690/2023) – intended for publication: Withholding tax 2016 – 2018 – Link

The commentary

In its ruling of 30 November 2017 (2C_1135, 2C_1136/2016), the Federal Supreme Court (FSC) qualified the inheritance of (approx. CHF 50 million minus approx. CHF 18 million = approx. CHF 32 million) as a capital contribution pursuant to Art. 60 lit. c DBG. Around CHF 50 million were listed as a ‘reserve from capital contributions’ (KER) for the first time in the 2016 annual financial statements and in April 2017, the AGM of the taxpayer decided to distribute CHF 1.08 million from the capital contribution reserves (KER). Form 103 was submitted in May 2017 and the withholding tax amounting to CHF 378,000 was paid with reservation as the capital contribution reserves had not yet been reported and authorised. In the 2017 annual financial statements, the ‘statutory capital reserves’ were reduced to the net capital increase minus the distributions made. In February 2018, the capital contribution of 2012 (approx. CHF 32 million) and the repayment in 2017 (CHF 1.08 million) were reported on form 170.

The FTA requires that the change in capital contribution reserves be reported within 30 days. According to the FSC, the deadline is not a deadline for realisation, which means that the deadline is in fact ‘voluntary’. The considerations regarding the recognition of capital contributions are also interesting. Both the FTA and the Federal Administrative Court FAC failed with their ‘narrow’ approach according to the FSC. Partial approval of the appeal.

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