The Federal Supreme Court confirms the restrictive tax treatment of debt push-down structures.
In the recently published judgment 9C_606/2025, the Federal Supreme Court upheld the denial of interest deductions at the level of the operating company following a leveraged buyout and a subsequent merger.
In the specific case, the major part of the loan was used to finance the acquisition of the target company. As a result of the merger, the debt was transferred to the operating company. The Federal Supreme Court held that this financing did not serve the business purpose of the operating company, and therefore the loan lacked commercial justification. Consequently, the debt interest was not tax-deductible.
For the Federal Supreme Court, it was irrelevant that the interest was commercially justified and tax deductible at the level of the acquisition company prior to the merger. In its view, the only factor relevant for tax deductibility was whether he debt interest was related to the business activity of the operating company in the relevant tax period.
The judgment underscores once again how difficult it is in practice to achieve a tax-efficient debt push-down.
The Federal Supreme Court’s press release and the ruling can be found here: 9C_606_2025_2026_02_24_t