Issue tax in the case of a quasi-merger: tax evasion through unusual capital increase

Facts

The [A. AG] (formerly [B.] International AG) increased its share capital in 2007 by issuing 786,286 bearer shares with a nominal value of CHF 10.-- each from CHF 9,350,000.-- by CHF 7,862,860.-- to CHF 17,212,860.--. The capital increase was made in the context of a quasi-merger, in which [A. AG] took over the shares of [D. SA] and [C. SA] S. The Federal Tax Administration (FTA) considered the capital increase to be tax evasion and levied an issue tax of CHF 53,776.55. [A. AG] lodged an objection, which was rejected by the FTA. The Federal Administrative Court overturned the objection decision and found that [A. AG] did not owe the issue tax.

The FTA appealed to the Federal Supreme Court and requested that the judgment of the Federal Administrative Court be overturned and the issue tax confirmed. [A. AG] requested that the appeal be dismissed.

Considerations

The Federal Supreme Court examined whether the capital increase of [A. AG] could be qualified as a quasi-merger and whether the conditions for tax evasion were met. It found that the capital increase was unusual, as it did not correspond to the market value of the shares taken over and the exchange ratio could not be plausibilized.

The court came to the conclusion that [A. AG] wanted to create as much nominal capital as possible through the capital increase in order to avoid the issue tax. It…