Swiss Federal Supreme Court, 10.04.2026, 9C_216/2025
Facts
A.________ (the appellant), the sole shareholder and director of the Swiss company B.________ AG, received a current account loan from the latter. The balance of this loan increased continuously over several years. On December 16, 2021, the appellant relocated his domicile to Germany.
For the 2021 tax period, the tax administration of the Canton of Solothurn reclassified the appellant's entire debt to his company, amounting to CHF 791,752 at the end of the year, as a constructive dividend. It determined that the loan was simulated, did not comply with the arm's length principle, and that there was no genuine intention of repayment. Consequently, this amount was added to the appellant's taxable income, subject to partial dividend taxation.
In May 2023, the appellant sold a portion of his shares in B.________ AG to C.________ GmbH, a German company of which he is also the manager. The sale price was settled, in part, by the purchasing company assuming the debt of CHF 791,752.
The Cantonal Tax Court of Solothurn upheld the tax administration's decision, leading the appellant to appeal to the Federal Supreme Court.
Legal Analysis
The Federal Supreme Court reiterates that constructive dividends derived from equity interests are taxable as income underArt. 20 para. 1 let. c of the Federal Direct Tax Act (FDTA). Such a benefit, often referred to as a hidden profit distribution, is recognized when four cumulative conditions are met:
- The company provides a benefit without receiving an equivalent consideration.
- The shareholder (or a related party) derives an advantage from it.
- The company would not have granted this advantage to a third party under identical conditions (the arm's length principle or "Drittvergleich").
- The unusual nature of the benefit was recognizable to the company's governing bodies.
Regarding shareholder loans specifically, they are classified as constructive dividends if they are granted under conditions that would not have been offered to an independent third party. The Federal Supreme Court has developed several criteria to assess this situation, including:
- The absence of a written agreement (especially when required by law, such as for self-dealing contracts underArt. 718b CO).
- Uncertainty regarding the borrower's solvency and ability to repay.
- The absence of collateral or the provision of ineffective guarantees.
- Non-payment of interest, which is simply added to the principal.
- A concentration risk ("Klumpenrisiko") for the company, where the loan represents a disproportionate share of its assets or equity.
Finally, the Federal Supreme Court emphasizes the importance of the principle of tax periodicity (or annuality). A constructive dividend must be taxed in the fiscal period in which it is "realized," meaning at the moment it becomes evident, based on sufficient indicators, that the intent or ability to repay the loan has ceased to exist.
Application to the specific case
The Federal Supreme Court examines the various indicators of a sham transaction and confirms the lower court's analysis on the merits. It finds that the loan does not withstand comparison with the terms a third party would have required:
- Contract: A written contract was only drawn up belatedly (in 2021 at the earliest), even though the loan had existed for years. Furthermore, under Art. 718b of the Swiss Code of Obligations, a written contract was mandatory from the outset for a transaction between the company and its sole director.
- Solvency: The appellant's ability to repay was uncertain, particularly due to their assets held abroad.
- Guarantees: The only guarantee provided was a surety from the appellant's son, who is domiciled in Germany. The effectiveness of this guarantee was questionable, both in terms of formal validity and the guarantor's solvency, as well as the difficulties of potential enforcement abroad.
- Concentration risk: The loan represented 86% of B.________ AG's total assets and 150% of its equity at the end of 2021, posing a major risk to the company.
- Repayment: The "repayment" made in 2023 was not a payment but a debt assumption by another company controlled by the appellant, which does not demonstrate a genuine intention to repay in 2021.
The Federal Supreme Court therefore concludes that the loan as a whole must be classified as a sham and constitutes a constructive dividend.
However, the Federal Supreme Court addresses the issue of the tax period. It notes that the loan already existed at the end of 2018 for an amount of CHF 303,503 ("base loan"). For the years 2019 and 2020, the tax authorities had already reclassified the annual increases in the loan, but not this base amount. The Federal Supreme Court considers that the indicators of a sham (lack of contract, risk to the company, etc.) already existed for this base amount well before 2021. The tax authorities provide no new evidence specific to 2021 that would justify considering that it was only at that moment that the lack of intent to repay the "base loan" became manifest. The appellant's departure for Germany is not a sufficient indicator on its own.
Consequently, under the principle of periodicity, the "base loan" of CHF 303,503 could not be taxed for the 2021 fiscal period, as it should have been considered realized in an earlier period. Only the increase in the loan that occurred during 2021, i.e., CHF 488,249 (CHF 791,752 ./. CHF 303,503), can be taxed for this period.
Outcome
The Federal Supreme Court partially allows the appeal. It sets aside the judgment of the Solothurn Cantonal Tax Court. The case is remanded to the cantonal tax authorities to establish a new tax assessment for the 2021 period, recognizing only the amount of CHF 488,249 as a constructive dividend for both direct federal tax and cantonal and municipal taxes. Legal costs are divided between the appellant and the tax authority.
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