Open contributions, share premiums and additional shareholder payments may form capital contribution reserves where made directly by equity holders, booked and separately disclosed.
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ESTV Kreisschreiben Nr. 29c · Editorial explanation
Capital Contribution Reserves: ESTV Circular 29c
An editorial explanation of the official practice in the 23 December 2022 file. Current application also requires review of later ESTV notices, case law and legislation in force.
Key takeaways
Key takeaways
This material explains the official publication without reproducing it and is not an official translation or individual advice. Current legislation, cantonal practice and the facts must be checked before application.
A qualifying repayment of confirmed reserves is treated like repayment of nominal capital, but only where classification and accounting requirements are met.
Listed companies face special distribution and partial-liquidation rules that limit free choice of the reserve used for a payment.
Restructurings, treasury-share transactions, capital-currency changes and a capital band each have specific rules.
Changes in reserves must be reflected and reported to the FTA on time; current application must be checked against later official notices and case law.
01
Recognition and separate accounting
The circular links capital contribution reserves to contributions, share premiums and additional payments made directly by equity holders after 31 December 1996. They must be recorded in the recipient company's or cooperative's commercial balance sheet and disclosed separately within statutory or free capital reserves. Foreign reserves, functional foreign currency, restructuring contributions and benefits between sister companies have specific rules; not every form of economic support automatically creates a recognised reserve.
02
Repayments and listed-company rules
Where the statutory conditions are met, repayment of recognised reserves to a private equity holder is treated like repayment of nominal capital rather than an ordinary dividend. Swiss-listed companies, however, are subject to distribution and partial-liquidation rules coordinating payments from contribution reserves with other reserves, with exceptions for specified foreign reserves and qualifying corporate recipients. Using the wrong reserve can cause a tax adjustment even where sufficient reserves exist.
03
Corporate transactions and FTA reporting
Mergers, conversions, demergers, hive-downs, intragroup transfers, treasury-share transactions and a capital band can change the amount or character of contribution reserves. The circular requires separate annual-report presentation and reporting of changes for withholding-tax purposes, with timing and forms depending on the event. In practice, a contribution ledger should connect bank evidence, corporate approvals, accounting entries, treasury-share history and FTA forms. Later tax-authority notices and Federal Supreme Court decisions may refine individual parts of the circular.
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Official source
This material explains the official publication without reproducing it and is not an official translation or individual advice. Current legislation, cantonal practice and the facts must be checked before application.
ESTV Kreisschreiben Nr. 29c
www.estv.admin.ch · 2022-12-23 · PDF · 37
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