Swiss Federal Supreme Court, 25.02.2026, 9C_380/2025
Facts
A.A. and B.A. (the appellants) are taxpayers in the canton of Zurich. For the 2019 tax period, they declared the interest held by A.A., the sole shareholder, in a consulting firm for institutional investors (C. AG). They valued this interest solely at its net asset value, i.e., CHF 6,126,100.
The cantonal tax authority initially valued the company at CHF 37,340,000 by applying the standard practitioners' method (double weighting of the earnings value, single weighting of the net asset value). Following the taxpayers' objection, the authority partially accepted their arguments. Recognizing the highly personalized nature of the business, whose activity depends almost exclusively on the sole shareholder, it applied a modified practitioners' method, weighting the earnings value and the net asset value equally. The taxable wealth was reduced accordingly but remained significantly higher than the value declared by the appellants.
Subsequent cantonal appeals against this tax assessment were rejected, most recently by the Administrative Court of the canton of Zurich. The appellants then appealed to the Federal Supreme Court, requesting the annulment of the decision and the referral of the case to the tax authority for a new assessment based solely on the net asset value.
Legal Grounds
The Federal Supreme Court recalls that, according toArt. 14 para. 1 of the Federal Act on the Harmonization of Direct Taxes (HATA) and Zurich legislation, wealth is valued at its fair market value ("Verkehrswert"). The fair market value corresponds to the price that an independent buyer would be willing to pay under normal market conditions.
Cantons have broad discretion in determining valuation rules. The Federal Supreme Court reviews the application of cantonal law only in cases of arbitrariness.
For the valuation of unlisted securities, the canton of Zurich refers to Circular No. 28 of the Swiss Tax Conference (STC), a method that the Federal Supreme Court deems appropriate and reliable. This circular recommends the "practitioners' method," which consists of calculating a weighted average of the earnings value (weighted twice) and the net asset value (weighted once).
However, the circular provides for exceptions. In particular, when a company's earning capacity depends almost exclusively on the services of a single person (highly personalized or "personenbezogen"), it is possible to deviate from the standard method and simply weight the earnings value and the net asset value equally.
The Federal Supreme Court emphasizes that relying solely on the net asset value for personalized service companies would lead to systematic undervaluation, which would be contrary to the principle of taxation based on fair market value.
Application to the specific case
The appellants argue that their company's earning capacity is non-transferable because it is entirely linked to the person of the sole shareholder. They claim that there is no transferable client base or goodwill. In their view, the only objective value is the net asset value. They believe the method used by the authorities is arbitrary and violates the principle of equal treatment. They also complain of a violation of their right to be heard, as the previous instance refused to order an expert opinion to determine the actual fair market value.
The Federal Supreme Court rejects all of these arguments.
First, it notes that the tax authorities specifically took into account the highly personalized nature of the company by applying the modified practitioners' method (1:1 weighting), in accordance with the exceptions provided for in STC Circular No. 28. This approach is consistent with the Federal Supreme Court's established case law in similar cases (service companies, law firms, architectural offices). The appellants have not demonstrated how their situation is more "personalized" than these precedents.
Second, the Federal Supreme Court refutes the argument that the company has no goodwill. It is not unrealistic to consider that the shareholder's activity has helped build a reputation for the company, which possesses its own market value, independent of the person of its founder.
Third, arguments regarding significant profit fluctuations or the shareholder's health (such as sick leave occurring after the tax period in question) are irrelevant. The yield value calculation method, which is generally based on an average of previous years, already smooths out such fluctuations. Furthermore, any future decline in profits will be accounted for in the tax assessments of subsequent periods, but does not affect the 2019 assessment.
Fourth, the Federal Supreme Court finds that the refusal to order an expert opinion is not open to criticism. Tax valuation relies on a schematic and standardized approach to ensure equal treatment. The use of such methods is permissible even if the resulting value deviates to some extent from the "actual" market value. Therefore, there is neither a manifestly inaccurate finding of facts nor a violation of the right to be heard.
In conclusion, the valuation method adopted by the cantonal authorities is not arbitrary. It represents a correct application of recognized guidelines and relevant case law.
Outcome
The Federal Supreme Court dismisses the appeal. The court costs, amounting to CHF 6,500, are to be borne by the appellants, jointly and severally.
Silex Tax Newsletter published in collaboration with Anna Vladau, Attorney at Law
