Share for Share Merger / Swiss Tax Consequences

Preliminary remarks

In a share-for-share transaction (also called "quasi-merger"), there is no real merger of two or more companies, but a controlling shareholder relation between the involved companies. The shareholders of A AG typically exchange their shares against shares of B AG and/or cash consideration. B AG hence will be new shareholder of A AG. The share-for-share is not regulated by the Merger Act. It is however a merger form of great practical importance for public takeovers. 


Checklist – Tax consequences of a quasi-Merger

                  Taxes for  

Types of taxes

Acquiring share corporation B AG

Acquired A AG

Shareholder A, individual, shares held as private assets (private investors)

Shareholder A, individual, shares held as business assets or corporate shareholders not qualified for participation relief

Shareholder A, legal entity qualified for participation relief

Income taxes (FITA/CCITHA)- Provided tax value is maintained (for public corporations shares at net asset value), no taxable revaluation of the shares 

- Contribution of shares a capital contribution and not taxed (Art. 60 lit. a FITA)

- Compensatory cash payments to A shareholders on A investment possible

- Use of non-settled own B shares leads at most to taxable income 

- At the cantonal level, the holding privilege regime might apply
- Generally not affected, unless there is a previously de facto liquidated company (shell) - Provided that the taxable value of earnings is maintained (for public corporations assets are capitalized at their maximum value), tax liability in Switzerland persists. 

Nominal value increase and compensatory payments are exempted (Art. 16 para. 3 FITA)

- To check transposition and indirect partial liquidation

- For absorption of A AG by B AG within five years, same tax consequences as for a statutory merger
- Provided that taxable value of A shares is maintained, no tax consequences (Art. 19 para. 1 lit. c FITA or Art. 61 para. 1 lit. c FITA and Art. 24 para. 3 lit. c CCITHA)

- Compensatory payments and severance payments are regarded as taxable income from assets (possibly neutralized by simultaneous amortization), possible partial taxation 

- Provided taxable value of A shares is maintained, no tax consequences

Compensatory payments and severance payments regarded as taxable income possibly benefiting from participation relief according to Art. 69 f. FITA)
Real estate capital gains tax/Real estate transfer tax   - Provided A AG is a real estate company, check whether a transfer of economical ownership occurs (Art. 12 para. 2 lit. a CCITHA and Art. 103 FusG)- Provided A AG is a real estate company, check whether a transfer of economical ownership occurs (Art. 12 paras. 2 and 4 lit. a CCITHA and art. 103 FusG)- Provided A AG is a real estate company, to check a transfer of economical ownership (Art. 12 paras. 2 and 4 lit. a CCITHA and Art. 103 FusG)
Withholding tax (WHTA)
- For shell companies to check withholding tax consequences

 - Increase in nominal value and compensatory cash payments are not subject to withholding tax  

Caution: Absorption of AG by B AG within five years might lead to withholding tax consequences
Stamp tax (STA) (Stamp issuance tax/Stamp transfer tax)Stamp issuance tax: Increase of share capital by issuance of new B shares pursuant to Art. 6 para. 1 lit. abis STA basically tax-exempt if acquiring B AG after exchange holds, at least 50% of the voting rights of A AG and a maximum of 50% of the real value of the acquired A AG is credited to A shareholders as a loan or paid in cash (the use of a company's own shares is regarded as a cash payment) 

Stamp transfer tax: For securities dealers, the issuance of new B shares is tax-exempt according to Art. 14 para. 1 lit. a STA;
capital contribution of A shares pursuant to A
rt. 13 para. 1 lit. b STA exempt. 

Compensatory cash payments according to Art. 14 para. 1 lit. i STA do not lead to any tax consequences
- For shell companies, to check the stamp duty consequences   
Value added tax (VAT)- Check input VAT adjustment because of capital increase