Deductibility of Cantonal Inheritance Taxes as Commercially Justified Expenses for the Purposes of Profit Tax

Facts

Company A. AG received real estate from the estate of its deceased shareholder. It recorded an extraordinary profit of CHF 50,001,998 and set aside a provision for inheritance taxes of CHF 18,062,674. In its 2012 tax return, it deducted the gross amount of the inheritance, resulting in a loss of CHF 18,016,205. For 2013, it deducted this carried-forward loss from the declared profit. The tax authorities refused the deduction of the inheritance taxes, considering that these taxes were not commercially justified expenses within the meaning of Art. 59(1)(a) DFTA.

Considerations

The Federal Tribunal considers that Art. 59(1)(a) DFTA generally provides for the deductibility of all national taxes, except for express exceptions provided by law or compelling reasons justifying an interpretation contrary to the text. No such exception applies to the inheritance taxes mentioned in Art. 60(c) DFTA. These must therefore be considered as…