This article addresses the interpretation of the Swiss tax authorities with regard to the new statutory rules on indirect partial liquidations pursuant to Circular 14. This Circular was issued in response to an unfavourable Federal Tribunal ruling of 11 June 2004, which held that the potential scope of the indirect partial liquidation was not limited to the retained earnings of the target company as of the date of the sale of its shares, but could also extend to distributions by the target company to the acquiring company of profits earned only after the sale of the shares had occurred.