Depreciation on loans: when is it permitted for tax purposes?

Companies that grant loans or receivables must check whether they are still recoverable. If there are doubts about repayment, the question arises as to whether and when a write-down is necessary.

According to a recent judgement by the Federal Supreme Court, a company may decide for itself when to make a write-off if there is still reasonable hope that the receivable is recoverable.

The court has ruled that

• Write-downs do not necessarily have to be recognised at the first sign of doubt.
• If a company reasonably assumes that a receivable is still recoverable, it may write it off at a later date.
• The impression must not be created that write-offs are arbitrarily postponed in order to gain tax advantages.

Practical tip:

• Document any doubts at an early stage, e.g. in the accounts or in the notes, and record why you still consider a receivable to be recoverable.
• Write-downs should be comprehensible, justified and plausible.
• If the receivable is sold or is clearly irrecoverable: write it off at this point in time at the latest. (Source: BGE 9C_455/2024 of 28 March 2025)