Stamp tax exemption (over-indebtedness) – the elimination of losses in the accounts is indeed necessary

In a ruling proposed for publication (9C_610/2022 of September 7, 2023), the Federal Supreme Court confirmed the Federal tax administration’s (FTA) interpretation of the conditions for the 10 million exemption in the event of recapitalization of an over-indebted company (art. 6 para. 1 let. k. LT), and more specifically of the one relating to the elimination of losses (circular 32, ch. 3.3.2 b): in the present case, an over-indebted company had received additional funding from its shareholder, which was initially booked as a capital contribution and therefore not offset against the loss on the balance sheet (the offset took place over two years after the additional funding was made). The company claimed exemption from stamp tax on the first CHF 10 million contributed and requested relief of the duty on the remainder. The FTA refused both the exemption and the relief on the grounds that the losses remained in the balance sheet. The company won the case before the Federal Administrative Court, but the Federal Court ruled in favor of the FTA on its appeal (only the exemption on the CHF 10 million was still at issue before the Federal Court, as the appeal against the relief was not open): it considered that the terminology “elimination” of losses used in the law could not be understood otherwise than the elimination of the losses from the accounts. The TF also specified that this elimination had to take place at the time of the additional payment, so that offsetting the contributions against the losses more than two years after this payment did not allow the company to benefit from the exemption.