Share valuation under Circular No. 28
As at: · fastview ag, Suhr
Professionally responsible: Marco Zanetti and Reto Ackermann, fiduciaries and auditors, fastview ag
Shares and GmbH capital contributions without a stock exchange price are valued for wealth tax under Circular No. 28 of the Swiss Tax Conference (SSK). The practitioners’ method combines capitalised earnings value and net asset value into a company value, from which the tax value per share follows. This page explains the formula, capitalisation rate, flat-rate deduction and cantonal differences and shows how nunia prepares the valuation sheet.
In brief
- Basic formula for trading, industrial and service companies: company value = (2 × capitalised earnings value + net asset value) / 3 (margin no. 34).
- The capitalised earnings value capitalises the adjusted profits at a rate that the FTA publishes each year in its price list; for the valuation year 2025 it is 10.00 %.
- Holding companies, real estate companies and companies in the start-up phase are valued at net asset value.
- Minority holdings up to 50 % without controlling influence and without an adequate dividend receive a flat-rate deduction of 30 %.
When the valuation is needed
- Wealth tax: anyone holding shares or capital contributions of an unlisted company declares them in the list of securities at the tax value as at the end of the tax period. The company submits its financial statements for this purpose; the cantonal tax administration determines the tax value.
- Succession, gifts and division of estates: the tax value is a common starting point, for example for the family council or gift tax. For a purchase price between third parties it does not replace a business valuation – see “Limits” below.
- Employee participation: for employee shares of unlisted companies, a formula is often defined and agreed with the tax administration. The value under Circular No. 28 can be a reference point for this, but is not automatically authoritative; individual cantons provide their own discounts for employee participations.
The practitioners’ method: capitalised earnings value and net asset value
Capitalised earnings value (margin nos. 7–10, 35): the starting point is the net profit per the income statement, adjusted for one-off and extraordinary items, expenses not recognised for tax purposes and similar corrections (margin no. 9). The circular knows two models:
- Model 1: profits of the years n and n-1, the last year weighted twice: (2 × Rn + Rn-1) / 3.
- Model 2: profits of the years n, n-1 and n-2, each weighted once: (Rn + Rn-1 + Rn-2) / 3.
The average is capitalised at the capitalisation rate: E = average profit × 100 / capitalisation rate. A negative capitalised earnings value is set to zero. Each canton defines a standard model; the company may switch and is then bound to its choice for five years (margin no. 7).
Net asset value (margin nos. 11–31): equity per the balance sheet at carrying amounts, plus hidden reserves, for example on real estate, securities or investments, less deferred taxes of 15 % on these reserves (margin no. 31). No deferred taxes are deducted on investments qualifying for the participation deduction.
Company value (margin no. 34): U = (2 × E + S) / 3. The tax value per share is the company value divided by the number of shares (margin no. 52).
Net asset value only: pure holding, asset management and financing companies (margin no. 38), real estate companies (margin no. 42), companies in the start-up phase (margin no. 32) and in liquidation (margin no. 48) are valued at net asset value. For owner-dependent companies whose earnings depend substantially on the work of the shareholders, the company may apply to weight capitalised earnings value and net asset value once each; the flat-rate deduction then does not apply.
Worked example with sample figures
| Step | Calculation | Result |
|---|---|---|
| Adjusted profits | year n: CHF 120'000, year n-1: CHF 90'000 | |
| Average under model 1 | (2 × 120'000 + 90'000) / 3 | CHF 110'000 |
| Capitalised earnings value, rate 10.00 % | 110'000 × 100 / 10 | CHF 1'100'000 |
| Net asset value | Equity and hidden reserves after deferred taxes | CHF 800'000 |
| Company value | (2 × 1'100'000 + 800'000) / 3 | CHF 1'000'000 |
| Tax value per share | 1'000'000 / 1'000 shares | CHF 1'000 |
| with 30 % flat-rate deduction | for a minority without an adequate dividend | CHF 700 |
Capitalisation rate and threshold yield
The Federal Tax Administration (FTA) publishes the capitalisation rate for the valuation year in its price list, usually at the beginning of the following year (margin no. 10). The threshold yield for the “adequate dividend” in the flat-rate deduction is given in the SSK commentary (margin no. 63). The values of recent years:
| Valuation year | Capitalisation rate | Threshold yield |
|---|---|---|
| 2021 | 9.50 % | 1.80 % |
| 2022 | 8.50 % | 1.90 % |
| 2023 | 7.75 % | 3.50 % |
| 2024 | 8.75 % | 2.60 % |
| 2025 | 10.00 % | 2.20 % |
A higher rate lowers the capitalised earnings value: for the same profit, the capitalised earnings value for 2025 is around 12.5 % lower than for 2024 (8.75 / 10.00).
Flat-rate deduction for minorities
Anyone holding a stake of at most 50 % without controlling influence does not have access to the value in the way a majority does. The circular therefore grants a flat-rate deduction of 30 % (margin nos. 61–64) if the holding does not yield an adequate dividend, i.e. if the average dividend of the years n and n-1 is below the threshold yield. Holdings of spouses and registered partners are added together. There is no deduction, among other cases, in the start-up phase, in liquidation, for cooperatives with voting rights per head, for tenant-shareholders of a real estate company and for owner-dependent valuation (margin no. 64).
Cantonal differences
The circular is a recommendation of the cantons; practice differs in details. The most important differences:
- Standard model: most cantons use model 1; Geneva, Neuchâtel, Obwalden, St. Gallen, Thurgau, Vaud and Zug use model 2 (as at 31.12.2024).
- Weighting: Lucerne weights capitalised earnings value and net asset value once each if the capitalised earnings value is at least four times the net asset value; Thurgau applies the mean value method; Appenzell Innerrhoden applies a discount of 20 % on the company value.
- Flat-rate deduction: St. Gallen grants it even where there is an adequate dividend.
- Reductions: several cantons reduce the wealth tax value of holdings – Aargau, for example, by 50 % for unlisted shares, Valais from 2026 to 50 % for holdings of 10 % or more. The canton of residence of the shareholder is decisive, not the registered office of the company.
- Real estate: whether deferred taxes are deducted on hidden reserves of real estate depends on the cantonal repartition factor; under the circular only if it is at most 150 %.
Limits of the method
The value under Circular No. 28 is a tax value, not a market price. The formula looks at past profits and carrying amounts; it knows nothing of planning, synergies or the buyer’s financing structure. If there are sales between independent third parties or financing rounds, their price may be decisive instead of the formula. For a purchase, sale, succession or merger, a business valuation is needed, for example using the DCF or capitalised earnings method; nunia offers it as a separate module alongside the share valuation. And: the authoritative tax value is always determined by the tax administration.
How nunia prepares the share valuation
- Data from the file: nunia takes over net profits and equity from the import of the financial statements, editable. nunia reads the canton from the master data, the number and nominal value of the shares from the commercial register, Zefix or the share register.
- Cantonal practice: for all 26 cantons, the standard model, deviations from the basic formula, reductions and notes with source are stored.
- Rate retrieval: nunia retrieves the capitalisation rate annually from the FTA price list and the threshold yield from the SSK commentary; if a value is missing, the stored table applies and nunia shows the source.
- Corrections and reserves: corrections under margin no. 9 per year, hidden reserves per item with or without deferred taxes.
- Flat-rate deduction per person: record quota, votes, dividends and joint assessment; nunia gives reasons for each person as to whether the deduction applies.
- Valuation sheet (PDF): formula, margin numbers, values per share with and without deduction and cantonal reduction per canton of residence, as an enclosure to the tax return or for the client.
What nunia takes care of
- Take over profits and equity from the financial statements
- Retrieve rate and threshold yield annually
- Apply the standard model and rules of the canton
- Check and give reasons for the flat-rate deduction per person
- Generate the valuation sheet as PDF
What you decide
- which corrections and hidden reserves apply
- type of company and choice of model
- whether to apply for owner-dependent valuation
- submission to the tax administration
Sources
- Swiss Tax Conference, Circular No. 28: Guidelines on the valuation of securities without a market value for wealth tax purposes, commentary 2025 (margin numbers)
- Federal Tax Administration, price list (ICTax), capitalisation rate per valuation year
- Cantonal directives and tax manuals, stored per canton in nunia with reference
Read on and watch
Frequently asked questions
What is Circular No. 28?
The guidelines of the Swiss Tax Conference on the valuation of securities without a market value for wealth tax purposes. They define how shares and capital contributions of unlisted companies are valued from capitalised earnings value and net asset value.
What is the formula of the practitioners’ method?
Company value = (2 × capitalised earnings value + net asset value) / 3 (margin no. 34). The capitalised earnings value is the average of the adjusted profits, capitalised at the FTA rate; the net asset value is equity plus hidden reserves less 15 % deferred taxes.
How high is the capitalisation rate?
For the valuation year 2025 it is 10.00 %, for 2024 8.75 %. The FTA publishes it every year in its price list.
Who receives the 30 % flat-rate deduction?
Shareholders with at most 50 % without controlling influence whose holding does not yield an adequate dividend, i.e. below the threshold yield (margin nos. 61–63). Holdings of spouses are added together.
Does the valuation apply equally in all cantons?
No. The cantons choose the standard model and differ in details, for example in weighting, the flat-rate deduction or reductions for holdings. nunia has stored the rules of all 26 cantons with source.
Is the tax value a fair purchase price?
No. It is a schematic value for wealth tax based on past profits and carrying amounts. For a purchase, sale or succession a business valuation is needed, for example using the DCF method.
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