Corporate Restructuring in Switzerland: Legal and Tax Aspects

The Federal Law of October 3, 2003, on merger, spin-off, transformation, and asset transfer (LFus), provides a regulatory framework governing the legal and tax implications of corporate restructuring in Switzerland. This law, along with tax circular 5a, covers various aspects ranging from civil law to tax consequences on income, profit tax, advance tax, and stamp duties.

Procedures and Taxation:

LFus addresses merger, spin-off, transformation, and asset transfer within various legal forms of enterprises. These procedures may impact income from independent gainful activity, profit tax, advance tax, and stamp duties. The tax implications often depend on how these operations are conducted and the structural choices made.

Legal Foundations:

Civil Law: LFus regulates the merger of various forms of companies, transformation of legal form, spin-off of businesses, and asset transfers. It also applies to cross-border operations and mergers between different legal forms.

Direct Federal Tax:

Income from Independent Gainful Activity: Latent reserves can be realized during restructuring, but certain conditions must be met for tax neutrality. Transferred latent reserves must remain linked to the operation and be subject to Swiss taxation.

Profit Tax: Cases of realizing latent reserves for legal entities are governed by LFus. Tax neutrality depends on maintaining the link between reserves and operations.

Withholding Tax: Compensatory payments, free shares, etc., may be subject to advance tax when related to restructuring, with exceptions. The transfer of headquarters abroad is treated as a liquidation.

Stamp Duties:

Issue Stamp Duty: Certain participation rights created or increased during mergers or transformations are exempt from issue stamp duty.

Negotiation Stamp Duty: It may apply in certain cases of transfer of taxable documents during restructuring.

Value Added Tax (VAT):

Restructuring, asset transfers, and other operations are subject to VAT. A declaration procedure may be applied, requiring a meticulous assessment of tax implications.

Contact Us to Begin Your Initial Consultation: We would be delighted to get to know you and define the next steps for restructuring your company in Switzerland. Fill out our contact form or call us at +41(0)22 566 82 44.