Confirmation of the tax authority's offsetting for the tax years 2007-2009

Facts

[X. AG] , domiciled in [U.] , holds a participation in [Y. AG] . In the 1993 financial year, it made a value adjustment of the participation in the amount of CHF 25 million, and a further adjustment of CHF 20 million in 1995. In the tax years 2007 to 2009, the tax authority of the Canton of Zug offset CHF 5 million in 2007, CHF 15 million in 2008 and CHF 25 million in 2009, as it considered the value adjustment no longer commercially justified. [X. AG] filed a complaint against this, which the Administrative Court of the Canton of Zug upheld and referred the matter back to the tax authority.

Considerations

The Federal Supreme Court upheld the complaint of the Federal Tax Administration:

• The value adjustment in 1993 and 1995 is to be qualified as a temporary value adjustment and not as a final write-off. The tax authorities are not obliged to make the qualification at the time the value adjustment is made, but can do so in subsequent years if the qualification has legal consequences.
• The…