Taxpayer v. Cantonal Tax Authority: Participation Exemption for Share Sale

The dispute concerned a taxpayer's challenge to the cantonal tax authority's reassessment of corporate income tax, which included the full taxation of capital gains realized from the sale of a majority stake in a subsidiary, contrary to the taxpayer's claim for an exemption based on participation relief for the sale of shares. The court ruled in favor of the tax authority, reasoning that the conditions for the participation relief under the relevant tax law were not met because the sale of the subsidiary did not constitute a transfer of a substantial holding (the required minimum holding percentage was not met at the time of the transaction or the required holding period was insufficient), thereby justifying the full taxation of the capital gain as ordinary business income.