Facts

The Company, a Swiss public limited company whose corporate purpose includes participating in industrial, commercial and financial enterprises in Switzerland and abroad, is subject to the securities transfer stamp duty as a securities dealer due to its balance sheet.

Between 1 July 2011 and 30 June 2016, the Federal Tax Administration (FTA) identified two transactions subject to the securities transfer stamp duty, totalling CHF 2,752,472.25:

  • Transaction A: Acquisition, at market value, of 14.9 % of the share capital of B. SAS from C. The Company already held 25 % of B. SAS and indirectly the entire share capital of C. The stamp duty claimed amounted to CHF 886,825.55.
  • Transaction B: Granting of employee shares to group employees under two share incentive plans (Restricted Stock Unit and Performance Share Unit plans). The stamp duty claimed amounted to CHF 1,627,768.65.

The Company contested both transactions and paid the amount under reserve on 21 April 2017. By decision of 6 July 2017, confirmed on appeal on 28 May 2019, the FTA maintained the total amount of CHF 2,752,472.25, plus default interest of CHF 324,192.60.

The Company appealed to the Federal Administrative Court, which, by judgment A-3279/2019 of 16 January 2023, exempted Transaction A from the stamp duty but confirmed the taxation of Transaction B. The amount due was reduced to CHF 1,865,646.70.

Against this judgment, the Company (appeal 9C_168/2023) and the FTA (appeal 9C_176/2023) filed a public law appeal with the Federal Supreme Court.

Considerations

The Federal Supreme Court examined two main issues: the exemption of Transaction A under Art. 14 para. 1 TSOA. j StA and the taxation of Transaction B under Art. 13 para. 1 StA.

1. Exemption of Transaction A (intra-group transfer)
Art. 14 para. 1 TSOA. j StA exempts transfers of participations of at least 20 % of the share capital in the context of restructurings within the meaning of Art. 61 para. 3 DFTA. The Company transferred an indirect participation of 39.9 % (25 % + 14.9 %) in B. SAS, which meets the 20 % threshold. The Federal Supreme Court confirmed that this transaction constituted a restructuring within the meaning of Art. 61 para. 3 DFTA, even though it involved a foreign company. The exemption applies regardless of the place of residence of the companies concerned, in accordance with the legislator's intention when introducing Art. 14 para. 1 TSOA. j StA. The preparatory works show that the exemption aims to avoid double taxation of intra-group transfers, whether national or international.

2. Taxation of Transaction B (employee shares)
Art. 13 para. 1 StA taxes the onerous transfer of securities where one of the parties is a securities dealer. The Company transferred shares to its employees under incentive plans without financial consideration. The Federal Administrative Court had considered these transfers to be onerous because they were linked to past employment services. The Federal Supreme Court rejected this interpretation, emphasising that the onerous nature requires consideration in money or in kind, distinct from the employment service itself. Free-of-charge employee shares do not constitute a commercial securities transaction but are remuneration in kind. Their allocation does not fall within the scope of…