Overview of the Swiss Federal Supreme Court’s tax law decisions published between October 19 and October 25, 2026:
- Judgment of September 15, 2026 (9C_666/2025): State and Municipal Taxes 2016–2021 (Thurgau); Denial of the deduction of bankruptcy losses totaling CHF 1,862,900 from taxable assets; The appellants claimed debts arising from the bankruptcy of the wife’s sole proprietorship, including CHF 102,079 in the form of bankruptcy loss certificates and a remaining debt of CHF 1,760,821. The Federal Supreme Court held that debts are deductible only if their repayment can reasonably be expected. Although the wife had acknowledged the debts evidenced by bankruptcy loss certificates—which thereby served as provisional titles for the lifting of the stay of enforcement within the meaning of Art. 82 of the Swiss Debt Enforcement and Bankruptcy Act (SchKG)—this was insufficient. This was because there was insufficient evidence that the debtor could acquire new assets and that the creditors would, in such a case, assert their claims in the future. There was also a lack of corresponding evidence regarding the remaining debt. The taxpayer’s appeal was dismissed.
- Judgment of August 27, 2026 (9C_494/2025, 9C_495/2025): Value-Added Tax 2021–2022; Input Tax Adjustment for a Mixed Holding Company; The Federal Tax Administration (FTA) had allocated the input tax related to equity investments of a holding company with holdings totaling approximately CHF 1.5 billion to Pool C and adjusted it using a turnover-based allocation formula, resulting in an input tax deduction rate of only about 0.2%. The Federal Supreme Court (BGer) upheld the Federal Administrative Court’s (BVGer) ruling that this key was inappropriate. The acquisition, holding, and disposal of equity interests constitute a business activity entitling the taxpayer to input tax deduction; such activities must not be excluded when determining the adjustment key, especially since they generally do not generate revenue from services. The FTA must therefore determine a new adjustment formula. The Federal Supreme Court does not address the taxpayer’s appeal regarding the direct allocation to Pool A, as this is an interim decision and the taxpayer may raise her objections to the FTA’s new decision again. Dismissal of the FTA’s appeal; refusal to hear the taxpayer’s appeal.
- Judgment of September 10, 2026 (9C_232/2026): 2022 Issuance Tax ; Tax Base in Shell Company Transactions; All shares of a de facto liquidated Geneva-based holding company with significant carried-forward losses were sold, and it was undisputed that this constituted a shell company transaction. The sole point of contention was whether the issuance tax should be levied on the lower net asset value rather than on the par value of all existing equity interests if the capital is immediately reduced in the following year by an amount equal to the losses. The Federal Supreme Court held that the wording is clear, that the minimum assessment based on par value serves to simplify tax collection, and that a shell transaction is a codified tax avoidance provision that does not distinguish based on the intent of the parties involved. There is no room for the taxpayer to exercise a choice. The taxpayers’ appeal was dismissed.
- Judgment of September 21, 2026 (9C_422/2025): State and municipal taxes and direct federal tax for 2019 and 2022 (Schwyz); lump-sum withdrawals; The taxpayer had made a total of three lump-sum withdrawals from his pension fund in 2016, 2019, and 2022. The Schwyz Tax Administration combined the last two lump-sum withdrawals, as only two such withdrawals were permitted. The Federal Supreme Court notes that the substantive arguments in the appeal are virtually identical to those presented before the lower court. In the absence of substantiated grounds, the arguments need not be addressed further. Furthermore, the taxpayer failed to provide evidence that, according to the practice of the Federal Tax Administration (ESTV), three lump-sum withdrawals should be permitted. In particular, it is not sufficient to demonstrate that this practice exists in individual cantons. The taxpayer’s appeal is dismissed.
- Judgment of September 25, 2026 (9C_119/2026): State and municipal taxes of the Canton of Thurgau for 2022 and direct federal taxes; A married couple residing in the Canton of Thurgau replaced a damaged retaining wall at their vacation home in Ticino and claimed the costs of approximately CHF 175,800 as property maintenance expenses. While the Canton of Ticino allowed the deduction, the Thurgau Tax Administration classified the costs as non-deductible capital expenditures because the wall was completely demolished and rebuilt. The Federal Supreme Court upheld the more recent case law, according to which the complete replacement of a building component does not automatically constitute a tax-disadvantageous reconstruction. Rather, a functional and objectively technical approach is decisive. Since the retaining wall served as a necessary component of the slope stabilization, its replacement could not automatically be classified as a value-enhancing investment. Instead, it must be examined on a case-by-case basis which expenses are of a value-preserving or value-enhancing nature. The Federal Supreme Court upheld the Thurgau Administrative Court’s decision to remand the case to the Thurgau Tax Administration for further clarification of the facts and dismissed the appeal filed by the Thurgau Tax Administration.
- Judgment of September 15, 2026 (9C_577/2025): Federal Direct Tax and State and Municipal Taxes 2018 (Vaud); Preferential Taxation of Agricultural and Forestry Properties; A farmer sold a parcel of land that had been used for agricultural purposes until the transfer of ownership to a railroad company for CHF 1.2 million for the purpose of constructing a depot; the 2016 purchase agreement was subject to the condition precedent of planning approval by the Federal Office of Transportation (BAV), and the transfer of ownership took place in 2018. The issue in dispute was whether the capital gain of approximately CHF 1.1 million should remain tax-exempt as a gain from agricultural property for federal direct tax purposes and be subject to cantonal real estate gains tax, or whether it should be treated as income from self-employment. The Federal Supreme Court held that, with the FOT’s legally binding approval of the plan in 2017, the parcel definitively lost its objective suitability as agricultural land within the meaning of the Federal Act on Property (BGBB), thereby rendering the tax exemption inapplicable as of the date of sale. The fact that the land continued to be farmed and the approval granted by the Land Rights Commission are irrelevant, and the gain was not realized until 2018 because the condition was still uncertain in 2016. The taxpayer’s appeal is dismissed.
Non-occurrence / write-off:
Decisions are listed chronologically by publication date.
