Tax Treatment of Private Loan Sales in Switzerland

1. Facts

Individual B, a resident of Switzerland, holds in his private assets a loan receivable against a Swiss corporation (debtor).

Terms of the receivable:

Nominal value: CHF 100,000

Interest rate: 4% p.a.

Maturity: 30 June 2029 (repayment at nominal value of CHF 100,000)

In 2025, B sells the receivable to Individual A (also a Swiss resident) for CHF 20,000.

Background: At the time of the sale, the debtor corporation was in severe financial distress.

In 2029, the debtor corporation recovers financially and repays the loan in full (CHF 100,000) to A.

Question: How is the difference of CHF 80,000 (nominal value CHF 100,000 less sales price CHF 20,000) to be treated for income tax purposes in the hands of B?

2. Legal Basis

Swiss Federal Income Tax Act (DBG) Art. 16 para. 3: Capital gains on movable private assets are tax-exempt.

DBG Art. 20 para. 1 lit. a: Taxable income includes returns from movable capital assets, in particular interest on receivables.

The same principles apply under the Federal Harmonization Act (StHG) and cantonal tax laws.

3. Analysis

3.1 Sale of the receivable (2025)

The sale of a private receivable qualifies as a disposal of private assets.

The sales proceeds of CHF 20,000 are not taxable.

The difference between nominal value (CHF 100,000) and sales price (CHF 20,000) represents a capital loss of CHF 80,000.

Capital losses on private assets are tax-irrelevant and cannot be deducted.

3.2 Interest accrued until the sale

Any interest accrued up to the time of the sale but not yet paid would be taxable as income from movable capital assets in the hands of B.

Insofar as the purchase price does not contain an explicit interest element, the transaction qualifies as a pure capital sale.

3.3 Repayment in 2029

The repayment of CHF 100,000 in 2029 concerns only purchaser A.

A realizes a capital gain of CHF 80,000 (repayment CHF 100,000 less purchase price CHF 20,000).

This gain is tax-exempt for A as a private capital gain (DBG Art. 16 para. 3).

B is no longer involved in the repayment event in 2029.

4. Conclusion

For B, no taxable capital gain arises upon the sale in 2025.

The sales proceeds of CHF 20,000 are tax-neutral.

The capital loss of CHF 80,000 is not deductible for tax purposes.

The later repayment in 2029 concerns only A; no taxable event arises for B.

Final conclusion: For Individual B, no income tax is levied on the CHF 80,000.