THE REQUALIFICATION OF LOANS GRANTED BY A COMPANY TO ITS SHAREHOLDER

With sentence no. 2C_678 / 2020 of November 16, 2021, the Swiss Federal Court (TF) ruled on the objection raised by the competent Tax Authority to a loan granted by a company to its shareholder, which was deemed a simulated loan.

According to the TF, to ascertain that a loan represents a performance that can be valued in money, it is necessary to take into consideration the set of circumstances of the specific case, which contributed to the conclusion of the loan agreement between the company and its shareholder. In particular, for the TF it is necessary to find a series of clues including: if the loan itself was granted on non-market conditions, if it is extraneous to the corporate purpose or if the company resources (assets and hidden reserves) appear to be insufficient to cover the risk, if no guarantee is provided and if there is no obligation to repay, if the interest is not actually paid but added to the credit. According to the TF there is a clear indication of simulation when a company grants a loan to its shareholder who is in a difficult financial situation, so it is likely that it will not be able to meet the obligations deriving from the loan, i.e. the payment of interest and depreciation.

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