Swiss Social Security Contributions on Dividends: Federal Supreme Court Confirms Risks in Holding Structures
In its judgment 9C_532/2025 of 25 June 2026, the Swiss Federal Supreme Court upheld the reclassification of dividends as remuneration subject to social security contributions in a structure involving an intermediary holding company. The decision demonstrates that the use of a holding structure does not, in itself, protect against additional Swiss social security contribution assessments.
The judgment is particularly relevant to owner-managed companies whose shareholders are also actively involved in the business and receive dividends in addition to their salaries.
When Can Dividends Become Subject to AHV Contributions?
As a general rule, dividends are investment income and are not subject to Swiss social security contributions. However, under Articles 4 and 5 of the Swiss Federal Act on Old-Age and Survivors‘ Insurance (AHVG) and the case law of the Federal Supreme Court, the economic substance of a payment is decisive.
Under the proportionality assessment established by case law, the reclassification of dividends as remuneration subject to AHV contributions generally requires two cumulative conditions:
- Inadequately low salary: Remuneration for the work actually performed is clearly below a comparable market salary.
- Manifestly excessive dividend: The distribution exceeds 10% of the relevant share value.
Where both conditions are met, the compensation authorities may reclassify part of the dividends as remuneration subject to social security contributions.
Exceeding the 10% threshold alone therefore does not automatically result in additional AHV contributions.
What Did the Federal Supreme Court Decide?
In the case under review, a physician held an interest in his operating company through a holding company that he controlled entirely.
In 2021 and 2022, the operating company distributed dividends of CHF 582’000.00 and CHF 650’000.00, respectively, to the holding company. At the same time, the physician received an annual salary of CHF 86’040.00.
The competent compensation office reclassified part of the dividends as remuneration subject to AHV contributions. Following the objection proceedings, additional assessable remuneration totalling CHF 197’390.00 remained for the two financial years.
The Federal Supreme Court upheld the lower court’s assessment and dismissed the company’s appeal.
What Is the Significance of the Holding Structure?
The Federal Supreme Court confirmed that, in exceptional circumstances, an intermediary holding company may be disregarded as a separate legal entity for social security purposes.
In the case under review, the following circumstances were particularly relevant:
- The holding company was entirely controlled by the shareholder working in the operating company.
- The holding company’s income consisted almost exclusively of investment income from the operating company.
- No substantial independent business activity of the holding company had been demonstrated.
- Significant funds were transferred to the beneficial shareholder through dividends and loans.
- No sufficiently plausible independent economic reasons for the chosen structure could be demonstrated.
The Federal Supreme Court considered that the conditions for exceptionally disregarding the holding company’s separate legal personality were met in this particular case.
What Does This Mean for Business Owners and SMEs?
The judgment does not mean that dividends paid to holding companies are generally subject to AHV contributions or that holding structures are inherently abusive.
The decisive factors remain the actual economic circumstances, the appropriateness of the remuneration and the documented business reasons for the chosen corporate structure.
Particular attention should be paid to the following aspects where shareholders are actively involved in the business:
- Salary benchmarking: Remuneration should be assessed in light of the individual’s role, responsibilities, employment level and comparable market salaries.
- Dividend policy: Distributions should be evaluated in relation to the company’s value and the work performed by the shareholder.
- Holding structure: Economic reasons such as investment management, financing, risk segregation or succession planning should be properly documented.
- Supporting documentation: Employment contracts, actual employment levels, salary benchmarks, ownership structures and intragroup financing arrangements should be consistently documented.
Recommended Actions
Owner-managed companies and corporate groups should review their existing salary and dividend policies, particularly where substantial distributions are combined with comparatively low management salaries.
For holding structures, it is also advisable to document the economic functions of the holding company and the intragroup financing arrangements.
An early review can help avoid subsequent AHV contribution assessments, including interest on late payments.
The official communications and statutory provisions issued by the Swiss federal authorities shall prevail.
Sources:
https://sozialversicherungen.admin.ch/de/d/6944