SWITZERLAND Trends and Developments Contributed by: René Matteotti, Manuel Ulrich, Gregor Steiner and Natalja Ezzaini, Tax Partner AG
Employee share schemes (case 9C_13/2025 from 1 May 2025) Background In May 2025, an interesting ruling was handed down concerning the international allocation of taxing rights in relation to employee share schemes involving a change of residence. The ruling was based on the following facts: A worked for Group B from 1 Novem - ber 2009 to 15 August 2018. Due to a restructur - ing within the company, she was made redundant, with her employment contract ending on 15 August 2018. During this period, she worked in Spain from 1 November 2009 to 31 August 2016 and in Switzerland from 1 October 2016 to 15 August 2018. Despite the termination of her employment, she retained her rights under various employee share schemes operated by B. In the 2020 tax year, she received income total - ling CHF91,111 from the exercise/realisation of these employee share rights, on which a withholding tax of CHF28,699.80 was levied. Specifically, the vesting period of the employee shareholdings is in dispute, as is the scope of Swiss taxing rights in relation to these shareholdings from the perspective of domestic law and treaty law. Cantonal court decision (first instance) In application of the provision of Article 17d DBG, the cantonal court of first instance correctly found that the employee shareholdings in question are subject to (withholding) tax at the time of their exercise. How - ever, this does not yet clarify the question of the refer - ence period to be used for determining proportional taxation. Federal Supreme Court decision The Federal Supreme Court concluded that the lower court had not arbitrarily determined that the vesting period for the employee share options allocated to A ended on 16 August 2018. It was therefore able to conclude that the benefits acquired by A up to that point could be taxed in Switzerland in proportion to the working hours performed in Switzerland since the acquisition of the shares in question. The fact that Spain, as the country of residence, attributes income differently from Switzerland, as the source country, does not allow the assumption that the latter state has misapplied Article 15 of the CH-ES DTA.
Hidden profit distributions The issue of hidden profit distributions is a recurring subject of judicial debate, mostly in connection with complex corporate structures, as demonstrated by two judgments from March 2025 and December 2025. Court case 1 (case 9C_465/2024 and 9C_466/2024 from 21 March 2025) In the judgment of March 2025, the taxpayer husband is the sole shareholder of various companies. Malta- based I.H. Ltd., a subsidiary of the Maltese parent company H.H. Ltd. held by him, granted a loan worth millions to the Swiss company C. AG, which he holds directly. C. AG, for its part, also granted a loan to the German company F. GmbH, held directly by the tax - payer husband. Applying the triangle theory, the lower court attributed the latter to the taxpayer spouse as income from movable assets (hidden distribution of profits). Since the cantonal tax administration had already attributed the Maltese companies to the tax - able spouses for wealth tax purposes in the 2014 tax period (transparent treatment), the question arose before the Federal Supreme Court as to whether it was appropriate, on the one hand, to attribute the assets of the Maltese company I.H. Ltd. – including the loan claim against C. AG – to the taxable couple for tax purposes, whilst at the same time holding the taxable spouses accountable under Article 20, para - graph 3 DBG (in relation to the hidden distribution of profits) on the grounds that the funds transferred to The Federal Supreme Court did not examine this question in depth, as it was clear from the annual accounts of C. AG that the monetary benefit provid - ed by C. AG to its German sister company had not involved any actual repayment or reduction of the loan claim, nor any withdrawal of the capital contribution. Furthermore, the Federal Supreme Court upheld the set-off of further monetary benefits against the tax - payer husband in his capacity as a shareholder of the companies concerned. Court case 2 (9C_521/2025 from 17 December 2025) C. AG did not originate from them. Federal Supreme Court decision The subject of the legal dispute in the judgment handed down in December 2025 is the fees for the
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