Federal Supreme Court, 17.06.2026, 9C_463/2025, 9C_464/2025
Facts
A.A. (the appellant) was a long-term employee and senior executive at C. AG from 1991 to 2020. D. was the sole shareholder of the company. On December 20, 2001, D. and A.A. entered into an inheritance agreement (Erbvertrag) and a share purchase agreement. The agreement stipulated that in the absence of direct descendants or other heirs capable of managing the company, A.A. would receive all shares of the company still held by D. at the time of her death as a legacy (Vermächtnis). In 2009, an attempt to transfer the shares during D.'s lifetime was considered. In this context, a tax ruling request was submitted to the Aargau tax authorities, proposing to treat the transaction as employee participation taxable as income. The authorities accepted, but the transaction never took place, primarily due to D. being placed under guardianship in 2004. (A)
D. passed away on December 27, 2016, and A.A. received 795 registered shares of the company in execution of the legacy. The Canton of Zurich levied inheritance tax on this acquisition, a decision that became final. Subsequently, the tax commission of the municipality of U. (Canton of Aargau) classified the value of these shares (CHF 8,252,770) as income from gainful employment for the 2016 tax period and taxed it as such. The lower cantonal courts upheld this assessment. Upon appeal by the taxpayer, the Administrative Court of the Canton of Aargau overturned these decisions, ruling that the legacy was not taxable income. The Aargau Cantonal Tax Office and the municipality of U. are appealing this judgment to the Federal Supreme Court. (B, C)
Legal Analysis
The Federal Supreme Court reiterates that the concept of income for direct tax purposes is harmonized and must be interpreted uniformly under federal and cantonal law (Art. 7 para. 1 LHID). According to the general clause, all income, whether one-time or periodic, is taxable unless a legal exception applies. (4.1)
A major exception concerns capital acquisitions resulting from an inheritance, a legacy, a gift, or the liquidation of a matrimonial property regime, which are exempt from income tax (Art. 7 para. 4 let. c LHID; Art. 33 para. 1 let. a StG/AG). A legacy, within the meaning ofArt. 484 para. 1 CC, is a transfer of assets made by the deceased to a beneficiary without appointing them as an heir. Like a gift, a legacy is characterized by its gratuitous nature, i.e., the absence of consideration. (4.2)
Case law has clarified that transfers from third parties, even those closely linked to an employment relationship, do not necessarily constitute taxable income. An economic causal link is required: the transfer must be a consequence of the gainful activity. However, even in the presence of such a link, classification as income is not automatic. Tips or collections among colleagues for a departure, while work-related, are generally considered gratuities. A transfer may be classified as a gift (or legacy) even if it originates from the employer (or its economic owner), provided that its character as remuneration is secondary. (4.3)
The fact that the allocation comes from the sole shareholder rather than the employing company is not decisive, as the shareholder can be considered the "economic employer." Similarly, the absence of a legal obligation to pay the benefit does not preclude its classification as income, much like long-service awards that reward loyalty rather than the work performance itself, and which are therefore not gratuitous gifts. (4.4)
Application to the specific case
The point of contention is whether the primary cause of the bequest of shares lies in A.A.________'s employment relationship or in D.________'s estate planning. The Federal Supreme Court considers that the lower court's assessment—that the underlying reason for the allocation was to ensure the company's continuity in the absence of suitable heirs—is a matter of fact-finding and is binding on the Federal Supreme Court, unless it is manifestly inaccurate or arbitrary. (4.5)
The Federal Supreme Court finds that the lower court's assessment is not arbitrary. Firstly, the transfer of an entire business to an employee as a reward for their services would be an exceptional situation. Although such a prospect is motivating, this does not mean that the employee's motivation was the cause of the transfer. (4.5.1)
Secondly, the 2001 inheritance agreement explicitly mentions the "lack of direct descendants or other heirs capable of management" as the reason for designating A.A.. If the primary goal had been to reward work performance, the presence of other heirs would have been irrelevant. Furthermore, the 15-year time horizon between the conclusion of the agreement and D.'s death, as well as the absence of any condition linking the bequest to A.A.________'s continued activity in the company, argue against classifying it as remuneration. (4.5.2)
Finally, the 2009 draft ruling, which was not implemented, does not call into question the interpretation of the inheritance agreement concluded eight years earlier. The fact that A.A.________'s strong performance made him eligible to succeed to the business is not enough to transform the bequest into taxable income. The gratuitous nature of the allocation is inherent to a bequest and does not prove that its cause lies in the employment relationship. (4.5.3)
In conclusion, the lower court ruled without arbitrariness that the allocation of shares was primarily intended to settle the company's succession and not to remunerate A.A.________'s work. The classification as a bequest is therefore correct, and this acquisition is consequently exempt from income tax. (4.6)
Outcome
The Federal Supreme Court joins the two proceedings. It declares the appeal by the municipality of U.________ (9C_464/2025) inadmissible, due to a lack of standing under Aargau cantonal law. It dismisses the appeal by the Aargau Cantonal Tax Office (9C_463/2025). Court costs and legal fees are charged to the Canton of Aargau and the municipality of U.________. (1, 2, 3, 4, 5)