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An overview by Tax Partner AG, Taxand Switzerland
A recent judgment by the Swiss Federal Supreme Court has ruled against allowing interest deductions for an operating company following a leveraged buyout and merger. The Court found that most of the loan was used to acquire the target company, and following the merger, the debt was transferred to the operating company.
The Court determined that this financing did not serve the operating company’s business purpose, lacking commercial justification, therefore making the debt interest non-deductible. The decision highlights the difficulty of achieving a tax-efficient debt push-down.
Stephanie Eichenberger and Victoria Riep from our Swiss member firm, Tax Partner AG have provided further analysis on the implications of this decision. You can read the full article here.
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