Beyond the horizon: changes in value after the reporting date

The balance sheet date is considered non-negotiable, just like the valuation date. Accrual-based profit determination requires that all changes in value up to and including the balance sheet date of the past period be charged to that period. The case decided by the Federal Supreme Court on September 4, 2025 (9C_98/2025) shows that, at least when it comes to the question of the sustainability of changes in value, developments after the balance sheet date may also be relevant.

From market price to book value

As part of a family office, A AG held shares in a listed company. These shares were initially valued at the respective stock market price on the balance sheet date as part of the mark-to-market valuation, and changes in value were recognized in the income statement. This valuation method was changed in 2013/14. From this point on, the lower of cost or market principle was applied, with the book value or, if lower, the stock market price being used. Even when stock market prices rose, there was no revaluation above the book value.

From book value to market price

The tax office did not recognize this and set a higher stock market price based on Art. 62 para. 4 DBG. The performance of the share between the balance sheet date and the date of assessment was also taken into account.

Art. 62 para. 4 DBG stipulates that “value adjustments and write-downs … shall be added to taxable profit if they are no longer justified.” In the opinion of the Federal Supreme Court, the provision “therefore contains a tax revaluation requirement, in that the tax authority is authorized to value the participation in question itself, with tax implications up to a maximum of the cost price. The provision is unusual in that it treats depreciation and value adjustments on qualified holdings equally and removes the definitive nature of the former. Since the revaluation has the effect of increasing taxes in the tax balance sheet, the tax authority bears the burden of proof that a sustained recovery in value has occurred” (E.3.1).

Value clarification until assessment?

Among other things, it was disputed whether the tax office should have taken into account the share price performance after the balance sheet date, namely up to the date of assessment, when valuing the share at the higher stock market price. The taxpayer herself argued that the weighted average price of the share – the weighted equity and the capitalized dividend – would lead to lower values on the balance sheet date.

The Federal Supreme Court rejected these concerns. On the one hand, it is not unreasonable to value a shareholding in a listed company at its stock market price. Furthermore, it was “not objectionable that the tax authority … took into account the performance up to the time of assessment. This clearly does not constitute a violation of the principle of determinative significance, which was deliberately waived by the legislature in the provision of Art. 62 para. 4 DBG” (E.5.2.).

Objectification of the possibilities of knowledge

The Federal Supreme Court’s ruling is largely well-founded. It seems reasonable that shares in a listed company should be valued at their stock market price. The assessment that the permanence of an impairment should be determined on the basis of a longer period and developments after the balance sheet date is also understandable.

However, it seems problematic to end this period only with the assessment. If, for example, the actual or legal date of preparation or approval of the annual financial statements were used as a basis, this would make the valuation and taxation more objective. On the other hand, taxpayers would then have the opportunity to also perform valuations in accordance with commercial law and avoid surprises in the assessment.

One further note: the ruling concerns accounting in accordance with the Swiss Code of Obligations and tax-related deviations from it. For the purposes of company valuation, the rule remains that only developments apparent on the valuation date are to be taken into account.