Shareholder loans in Switzerland: lending to or borrowing from your company

Shareholder current accounts: who owes money to whom?

A Swiss LLC (Sàrl/GmbH) or corporation (SA/AG) has its own assets. Even if you own all its shares, its money belongs to the company. A shareholder current account records advances, repayments and certain expenses paid by one party on behalf of the other. These balances are also referred to as shareholder loans.

Suppose you transfer CHF 30,000 from your personal account to help the company pay its suppliers. If this payment is a loan, the company receives cash and recognises a CHF 30,000 debt to you. If it subsequently repays CHF 10,000, it still owes you CHF 20,000.

The reverse transaction is different. If the company pays a CHF 5,000 personal invoice that you must repay, it has a CHF 5,000 receivable from you. The payment does not become a business expense simply because it passes through the company's bank account.

The words “debit” and “credit” therefore describe the balance in the company's accounts. To avoid ambiguity, always start with a simple statement: “the company owes me…” or “I owe the company…”.

Lending to your company: distinguish the loan from share capital

When forming an LLC, you might pay CHF 20,000 to fund its share capital, then advance a further CHF 30,000 as a loan. The company receives CHF 50,000 in total, but the two amounts serve different purposes.

The CHF 20,000 of share capital finances the company in exchange for your shares. The CHF 30,000 loan is a debt that it must repay on the agreed terms. A simple current-account entry does not allow you to move an amount freely between these categories.

Can you recover the money you lent?

Yes, where there is a genuine debt and repayment is due under the agreement. The company must nevertheless be able to meet its other obligations. Financial difficulties, over-indebtedness or a subordination agreement may restrict repayment.

Repayment of principal is not, in itself, an expense for the company or income for the shareholder. It settles an existing debt. Interest is treated differently: it may be a deductible expense for the company, subject to tax rules, and taxable income for a shareholder who holds the receivable as a private asset (Article 20(1)(a) of the Federal Direct Tax Act, LIFD).

Can you lend to your company interest-free?

In principle, yes, where a Swiss tax-resident individual shareholder grants the loan from their private assets. They may agree a 0% rate from the outset. This benefits the company by sparing it an interest expense. As a general rule, the tax authorities do not attribute purely hypothetical interest income to the shareholder; nor can the company deduct interest it does not owe.

The arm's length principle compares a transaction with the terms that independent parties would have agreed. However, it does not create a general tax obligation to charge interest on every private shareholder loan. FTA circular letter 218 distinguishes the two directions: a minimum rate when the company lends to the shareholder, to avoid granting them a benefit; and a maximum rate when the company pays the shareholder interest, to avoid an excessive expense. That maximum is not interest that a private shareholder is required to charge.

The agreement should expressly state that the loan is interest-free. Under civil law, Article 313(2) of the Code of Obligations (CO) provides for interest on commercial loans even without an agreement. Simply leaving the contract silent is therefore not a reliable way to agree an interest-free loan.

This answer does not automatically apply to every lender. If the loan comes from another company, forms part of business assets or involves a taxpayer abroad, the treatment must be assessed for both lender and borrower. The FTA specifically recalls the arm's length requirements for intragroup loans. Arrangements constituting abusive tax avoidance also remain subject to challenge.

Finally, a loan agreed to be interest-free from the outset must be distinguished from a later waiver of interest already due or credited: that waiver requires its own tax analysis. Charging no interest does not remove the obligation to declare the receivable as part of private wealth or to check the company's hidden equity position.

Where the loan bears interest, two checks remain necessary: the amount of debt recognised for tax purposes and the rate applied. A rate that follows the FTA schedule does not automatically make all interest deductible.

Hidden equity: why part of the loan may raise a tax issue

For a company, debt and equity do not receive the same tax treatment. Interest on debt may reduce taxable profit. A dividend, by contrast, is an appropriation of profit after that profit has been calculated. The tax authorities therefore need to determine how much of the financing genuinely represents debt in economic terms.

Hidden equity is the portion of debt owed to a shareholder or related party that is treated as equity for tax purposes. The loan may be fully disclosed in the accounts: the issue concerns how the company is financed in relation to its assets.

How is the amount determined?

FTA circular no. 6a of 10 October 2024 assesses the company's debt capacity using the fair market value of its assets. The authorities start from accounting or tax values unless higher market values can be demonstrated. Each asset category has an allowable debt percentage. These percentages differ, for example, between cash, receivables and machinery.

This capacity is then compared with all debts, including bank borrowing. However, the excess that may be reclassified must come directly or indirectly from shareholders or related parties. Independent financing without their guarantee does not itself constitute hidden equity. Evidence that the financing is on arm's length terms may still be provided.

Example: machinery financed almost entirely by loans

Consider an operating company whose only assets are machines worth CHF 200,000. They are financed by CHF 20,000 of share capital, an independent bank loan of CHF 80,000 and a shareholder loan of CHF 100,000. For simplicity, these values remain stable and no additional market-based justification is provided.

For movable tangible fixed assets, the circular allows a debt capacity of 50%. In this example, the calculation is:

The excess CHF 80,000 is hidden equity in this example. This shows why the analysis cannot be limited to comparing the shareholder loan with the CHF 20,000 share capital: the asset mix and other debts matter too.

Hidden equity and over-indebtedness are different concepts. In our example, assets of CHF 200,000 cover debts of CHF 180,000. On these figures, the company is therefore not over-indebted, even though part of its financing is treated as equity for tax purposes.

What are the consequences for interest and taxes?

Article 65 LIFD provides for interest attributable to hidden equity to be added back to taxable profit. Suppose the CHF 100,000 loan bears interest at 3.5%, the 2026 FTA ceiling used for this operating-loan example. The company records CHF 3,500 of interest, while the amount allowed on the CHF 20,000 of debt recognised for tax purposes is CHF 700. The add-back is therefore CHF 2,800.

The calculation must follow section 3.1 of the circular: where a lower rate is paid, the interest actually incurred may be deducted up to the ceiling calculated by applying the maximum rate to the allowable debt. This ceiling never permits a deduction for additional interest that has not been recorded. You should therefore not mechanically apply the hidden-equity percentage to the interest recorded.

Interest added back on this basis is also subject to withholding tax as a constructive distribution, under section 3.2 of the circular. The amount treated as equity also increases the cantonal capital tax base, in accordance with Article 29a of the Federal Tax Harmonisation Act (LHID). These tax consequences do not, by themselves, require the loan to be legally converted into share capital.

Repayment of the loan remains a separate matter. Section 3.3 of circular 6a states that repayment of debt classified as hidden equity for tax purposes is not a constructive distribution and is not subject to withholding tax or income tax for a shareholder who holds the receivable as a private asset.

Borrowing from your company: a genuine loan and capital to protect

When the company lends to you, it exchanges cash for a receivable. For this arrangement to be defensible, it must be able to expect genuine repayment, on terms it would have accepted from an independent person in a comparable situation.

The first question is therefore practical: what income or assets will you use to repay? You must then set an amount compatible with that capacity, a maturity date, an appropriate interest rate and, depending on the risk, security. The company must also retain the cash needed for its business.

What Article 680 CO prohibits

For an SA/AG, Article 680(2) CO prohibits shareholders from demanding the return of their contributions. For an LLC, Article 793(2) CO provides that paid-up contributions cannot be returned. These rules protect the company's capital and, through it, its creditors.

This does not mean the capital must remain blocked in a bank account after incorporation. The company can use it for its business: buying equipment, financing inventory or paying expenses. However, you cannot take back your contribution for private use simply by renaming it a “loan”.

Repaying share capital requires the procedures provided by company law, including a formal capital reduction where available. Repayment of a genuine loan you previously granted to the company, discussed above, follows a different logic.

Example: taking back the CHF 20,000 paid at incorporation

You form an LLC with CHF 20,000 of share capital. Shortly afterwards, it transfers those same CHF 20,000 to you for personal expenses and records a “loan to shareholder”. If you have neither the means nor a serious prospect of repaying, the receivable on the balance sheet does not genuinely replace the cash that left the company. The transaction may constitute a prohibited return of capital.

Conversely, a loan with credible repayment prospects is not prohibited merely because the borrower is a shareholder. The risk, the transaction's terms, the company's interests and protection of its capital still need to be assessed. An available bank balance does not answer all these questions.

Federal Supreme Court decision ATF 140 III 533, consideration 4, illustrates these limits in the context of intragroup loans. Even where a receivable remains on the balance sheet, a loan on non-market terms may restrict the equity available for a dividend. The same resources cannot both finance such a loan and justify a further distribution.

When do the tax authorities challenge the loan itself?

Charging too little interest and granting a sham loan are two different problems. In the first case, the benefit may be the missing interest. In the second, if the circumstances show that repayment is not seriously intended, the loan principal itself may be treated as a concealed distribution of profit.

ATF 138 II 57, considerations 3 and 5, requires an assessment of all the circumstances. The absence of a contract or security is not, on its own, sufficient to establish a sham loan. However, repeated private withdrawals, debt that grows despite very weak solvency, or a decision to forgo repayment call for closer examination.

An improper transaction may also require restitution to the company and expose its governing bodies to liability. For an SA/AG, Articles 678 and 754 CO set out restitution and liability rules respectively. Articles 800 and 827 CO make these rules applicable by analogy to an LLC.

Which interest rates apply in 2026?

Once the loan and its financing have been assessed, you can determine the interest. The Federal Tax Administration (FTA) publishes tax-accepted rates each year. They provide benchmarks that make it easier to substantiate the rate in the situations covered, provided you use the correct table and assumptions.

The direction of the loan explains the difference: when the company lends to you, the tax authorities check that it is not forgoing sufficient remuneration. When you lend to the company, they check that it is not paying you excessive interest.

Real estate loans follow different limits and rates. Foreign-currency loans fall under FTA circular letter 219. If you use a different market-based rate, document the comparison, taking account of duration, creditworthiness, security and financing.

Example: a loan from the company to the shareholder

A company lends you CHF 80,000 for the whole of 2026. It uses its equity and incurs no interest on borrowed capital. At the 0.75% minimum, annual interest is 80,000 × 0.75% = CHF 600. This example assumes the loan itself is valid and genuinely repayable.

If the balance changes, calculate interest on the relevant amounts and periods in accordance with the agreement. A CHF 80,000 loan granted in July does not generate the same annual interest as an identical loan granted in January.

What is a constructive distribution?

In this context, this means an economic benefit granted to a shareholder because of their ownership interest. For example, if the company forgoes the CHF 600 of interest above without an accepted justification, it grants the shareholder that benefit. In the other direction, paying excessive interest can also transfer part of the profit to them.

The consequences can accumulate: an adjustment to the company's taxable profit (Article 58 LIFD), taxable income for the shareholder (Article 20(1)(c) LIFD) and 35% withholding tax on the taxable benefit (Article 4(1)(b) and Article 13(1)(a) of the Federal Withholding Tax Act, LIA).

On a gross benefit of CHF 600, withholding tax amounts to CHF 210. The beneficiary must bear it under Article 14 LIA. If the company pays the tax without recovering it, that payment may itself increase the taxable benefit. A refund of withholding tax to the beneficiary then depends on the statutory conditions; it should not be assumed to be automatic.

The tax rate therefore addresses the remuneration of the loan. It does not replace an assessment of hidden equity, solvency or protection of capital contributions.

Accounting and repayment: keep every transaction identifiable

A current account may include many transactions. To remain clear, it must distinguish amounts advanced, amounts repaid and interest calculated. A business invoice paid by the shareholder on behalf of the company must also be linked to its supporting document.

Principal affects the balance sheet; interest affects profit and loss. Receivables from and liabilities to holders of ownership interests must be presented separately in the balance sheet or notes, in accordance with Article 959a(4) CO.

Can a dividend settle a personal debt to the company?

Set-off may be considered if the company can validly distribute a dividend and the resolution has been passed. In particular, the dividend must be based on distributable profit or reserves formed for that purpose under Article 675 CO, which applies by analogy to an LLC through Article 798 CO. Withholding tax must be dealt with and the amount actually available for set-off determined. An accounting entry does not, on its own, create an entitlement to a dividend.

Take the case of ordinary 35% withholding. You owe the company CHF 20,000, and a gross dividend of CHF 20,000 is validly approved. After CHF 7,000 withholding tax, your net dividend is CHF 13,000. Setting off that amount reduces your debt to CHF 7,000; the company must also pay the CHF 7,000 withholding tax to the FTA.

If withdrawals in fact remunerate your work or distribute profits, their treatment must reflect that reality. Our article on choosing between salary and dividends explains the differences. A later regularisation does not automatically make an initially improper loan valid.

Checks to make before the loan and at year-end

A useful agreement answers the questions you would ask an outside lender or borrower. Who is lending? How much, in which currency and for how long? How is interest calculated and when will it be paid? What are the repayment dates and any security arrangements?

If you represent the company and enter into a loan agreement with yourself, written form is required by Article 718b CO, subject to the exception for ordinary business transactions where the company's performance does not exceed CHF 1,000. The cross-reference in Article 814(4) CO also applies this rule to an LLC.

For a current account that changes regularly, also set an advance limit and provide for what happens if the balance reverses direction. The rate and checks may then need to change too. Document the company's decision and how conflicts of interest are handled; being both a shareholder and a director does not remove the duty to act in the company's interests.

Under subordination, a creditor agrees to rank behind other creditors. For subordination that allows notification of the court to be dispensed with under Article 725b(4)(1) CO, the agreement must, in particular, defer the claim and rank it behind all other creditors’ claims against the company to the extent of the shortfall in assets. It must also cover interest due throughout the period of over-indebtedness. A simple promise to wait is not enough. This mechanism does not itself turn debt into share capital or replace the tax review of the financing.

At year-end, reconcile the balance with bank statements and supporting documents. Recalculate interest for the relevant periods, review repayments made and update the assessment of repayment capacity. For a debt to a shareholder, also reassess hidden equity based on the assets and all debts.

Finally, have the balance confirmed and reconcile it with the shareholder's personal tax return. A balance that grows year after year calls for a clear explanation, especially where it finances private expenses.

My advice

Before making a private withdrawal, ask yourself what funds you will use to repay the company and by what date. If the answer remains vague, first agree the appropriate treatment with your accountant. Tracking principal, interest and repayments separately then makes it easier to see whether the loan is actually following the agreed plan.

Conclusion: start with the direction of the loan

A shareholder current account is a practical tool when every movement corresponds to an identifiable transaction. To lend to your company, distinguish the advance from share capital, then check the financing and interest. To borrow from it, start with your actual repayment capacity and the company's obligations.

This approach avoids expecting an interest rate or accounting entry to resolve an issue that is primarily economic and legal. A clear agreement, consistent repayments and an annual review give the current account its real value: tracking transactions without losing sight of who owns the money.

Further reading

• Salary or dividends in Switzerland: choosing how to pay yourself
• Share capital for a Swiss LLC or SA: amounts and use of funds
• Swiss dividends: distributions and taxation

Frequently asked questions