Those who pay their taxes stay afloat

The company I work for has been trying to survive as best it can for several years in an increasingly competitive environment. The boss sometimes pays salaries a bit late, but on the whole we stick together and suppliers try to be understanding. I've seen bailiffs come in several times to make seizures, but recently we were informed that the company was going to be declared bankrupt by... the taxman! I can't believe this is happening.

Jean

Indeed, since 1^er From 1 January 2025, public authorities will be able to petition for the bankruptcy of a company or business entered in the Commercial Register if it fails to pay certain public-law debts such as tax or social security contributions.

Tax

Prior to this reform of the Federal Debt Collection and Bankruptcy Act (LP), such claims were the exception rather than the rule. Even when a company was normally subject to bankruptcy proceedings, the State was in principle obliged to take action by way of seizure to recover its unpaid taxes. In other words, the tax authorities could generally only seize certain assets of the debtor, such as a bank account, furniture or part of the income. In this way, the company could continue to exist and pursue its activities despite sometimes substantial tax arrears.

Since the amendment to the law came into force in 2025, public law creditors have had the same rights as other creditors when dealing with such companies. They can now file for bankruptcy directly if their debts are not settled. According to the Federal Statistical Office, this change contributed to a sharp rise in bankruptcies in Switzerland in 2025.

The difference between the two systems is significant. Seizure works a bit like a targeted levy. The debt-collection office identifies certain assets that can be seized and realises them in order to pay off the pursuing creditor. The company survives as best it can and often continues to operate.

Bankruptcy, on the other hand, is more like a general shutdown. Once it has been declared, all the company's assets that can be seized are liquidated for the benefit of all creditors. The assets are inventoried, realised and then distributed in accordance with the rules set out in the LP. In practice, bankruptcy very often leads to the disappearance of the company.

The main aim of this reform is to prevent certain companies from continuing to operate artificially for years on end, despite incurring considerable tax or social security debts. The legislator's idea is to clean up the economic fabric more quickly by getting rid of companies that are permanently insolvent, rather than keeping them on life support through a succession of one-off seizures.

Read Pascal Rytz's columns on Tribune de Genève