Restructuring and recapitalization: A renewed tax framework under Circular 32a and opportunities to seize

In a constantly evolving economic environment, companies often need to adjust their financial structure to remain competitive. The recent Circular 32a, published in January 2025 by the Swiss Federal Tax Administration (FTA), marks a turning point in the Swiss tax framework, offering clearer solutions to support companies in difficulty or transformation. This reform brings new tax opportunities for companies looking to restructure or recapitalize while complying with the new rules aimed at restoring financial health in an optimal way.

Economic and Tax Context: A Fertile Ground for Strategic Reflection

A company’s resilience often hinges on its ability to adjust its financial structure when circumstances require. In Switzerland, tax law now offers clearer tools to support such transitions. Circular 32a from the FTA, published in 2025, is a significant step in modernizing the conditions for restructuring. Replacing the previous Circular 32 from 2010, it does not change the legislation but confirms the evolution of practice, shaped by recent decisions from the Federal Supreme Court, the Federal Administrative Court, and the reform of corporate law.

The stated goal is clear: to provide a consistent and workable tax framework for companies in difficulty or undergoing transformation, particularly in the areas of stamp duty, withholding tax (AFC practice confirmed by the circular), and corporate income tax.

Direct Taxes: Debt waivers with no impact on profit—a simplified lever!

A major advancement concerns the treatment of shareholder debt waivers (direct or indirect). Until recently, these operations could generate taxable income for the beneficiary company unless complex structures were used (such as debt-to-equity conversions). Now, when a waiver is recorded without impacting the income statement, it is explicitly excluded from the corporate income tax base. This principle applies regardless of whether the transaction is deemed to restore financial health. In other words, a financial restructuring can now be carried out in a tax-neutral way, provided relevant accounting criteria are met.

Indirect Taxes: Stamp Duty—A Mechanism to Optimize

a) Restructuring Tax -free Threshold

Article 6, paragraph 1, letter k of the Stamp Duty Act allows, under certain conditions, an exemption from issuance stamp duty up to CHF 10 million. This tax-free threshold applies to contributions made by shareholders to cover accounting losses. Circular 32a specifies that only certain reserves should be taken into account in calculating the deficit to be covered: retained earnings and voluntary reserves derived from profits (if any) must be offset. However, legal reserves and capital-derived reserves (whether subject to stamp duty or not) can be disregarded.

The circular also confirms that loss elimination must be recorded in accordance with commercial law principles. In practice, this means that the loss compensation must be formally decided, typically at the ordinary general meeting approving the financial statements for the relevant fiscal year. This point, validated by the Federal Supreme Court, is a mandatory condition for the allowance to apply.

b) Relief Request: An Alternative in Case of the Tax-free Threshold Exceedance

A relief request under Article 12 of the same law remains possible when the CHF 10 million tax-free threshold is insufficient or not invoked. This procedure is subject to a broader assessment by the FTA. The company must demonstrate that it is facing an actual deficit that cannot be offset by open or latent reserves of arbitrary nature and that the collection of the issuance stamp tax would have clearly severe consequences. However, the administration accepts that certain so-called "mandatory" latent reserves (arising from accounting legislation, notably for the revaluation of real estate or participations) may be disregarded.

Another fundamental criterion is the sustainability of the restructuring. Relief is granted only if, following the operation, the company is no longer economically overindebted. In other words, the company must no longer have negative equity after the restructuring. This means it is not just about eliminating accounting losses but truly restoring a sound and credible financial base.

We support you with tailored case-by-case analysis

The new circular opens up intriguing prospects for companies seeking recovery or capital reorganization. However, it also introduces formal and material requirements that require careful attention. Eligibility for exemption or relief depends on multiple factors: the nature of available reserves, the timing of book entries, the accounting treatment, and the documentation of the restructuring need.

In this context, a personalized and contextualized analysis is essential. Anticipating the tax implications of a recapitalization or restructuring is no longer optional, it is a strategic step. Companies have everything to gain by surrounding themselves with experienced advisors capable of balancing legal, accounting, and tax requirements to secure each operation.

Our multidisciplinary approach—combining tax, accounting, corporate law, and strategic advisory—enables us to build customized, secure, and effective solutions. Since each case is unique, we prioritize individualized analysis to maximize benefits while controlling risks.