What is the value of my family holding company (continued – mixed holding company)?

The taxpayer is a shareholder of a company. This company is an operating company that is also the holding company of three other companies (mixed holding company). The taxpayer has lent a significant sum to the company, a loan that is fully subordinated. The three subsidiaries pay dividends to the company.

For the estimation of the company's share value,
The tax authorities value subsidiaries to release latent reserves on holdings (2x capitalised «profit generation» + 1x asset value).
▶️ correct their value in the balance sheet
To determine the effective value of the deferred loan to the balance sheet liability (and an element of the taxpayer's assets).
This corrected balance sheet for the value of shareholdings and the loan actually due serves as the basis for determining the intrinsic value of the mixed holding company.
2️⃣ The tax authorities calculate the yield value of the mixed holding company, taking into account the dividends distributed by the subsidiaries («profit distribution»).

The taxpayer complains that the tax authorities calculate the value of subsidiaries at approximately twice their value to determine the value of the holding company.

The cantonal judges (lower instance) reject the taxpayer's appeal on the grounds that the relevant tax circular does not allow for the assumption that dividends should not be taken into account in the holding company’s yield value. The initial valuation of the subsidiaries allows for the valuation of the subordinated loan, while the inclusion of dividends allows for the valuation of the holding company.

The cantonal judges (higher instance) validate the reasoning of the lower instance judges. They conclude that the circular contains no omission concerning mixed holding companies, which must consequently be considered as commercial companies, therefore with a profit determining the yield value including dividends from participations.

Federal judges say
▶️ that the notion of the LHID rateable value has no specific scope, leaves considerable latitude to the cantons and therefore the TF's cognisance is limited to constitutional complaints of arbitrariness (cons. 5.1)
▶️ that the cantonal judges did not act arbitrarily (para. 5.2 et seq.).

The ruling is in French. This is a Genevan case.

Federal Tribunal, judgment 9C_376/2025, of 4 September 2025