Intra-Group Transfer of Assets

Preliminary remarks

Switzerland has no tax law dealing especially with groups of companies, and therefore there is no independent tax code on this topic. However, in the context of the 1 July 2004 revision of the taxable restrucuring legislation a partial tax regime for groups of companies was introduced. Thus, certain intra-group Transactions apart from conversions, mergers and demergers may be tax-neutral. The group transfer has no counterpart in the corporate Merger Act. This is a tax law concept (see Reich, DBG-Kommentar, Art. 61 N 177). In the context of an intra-group transfer of assets, under Art. 61 para. 3 FITA and according Art. 24 para. 3quater CCITHA, the following assets may be transferred:
  • Directly or indirectly held share investments of at least 20% of the nominal or authorized capital of another corporation or cooperative;
  • Enterprises or individual business units;
  • Fixed operating assets.
Asset transfers to a parent company ("upward") as well as to a sister company (sideways) fall under Art. 61 para. 3 FITA, and Art. 24 para. 3quater CCITHA respectively. Transfer of assets from a parent company to a subsidiary is not covered by Art. 61 para. 3 FITA or Art. 24 para. 3quater CCITHA because it is a spin-off and falls under Art. 61 para. 1 lit. d FITA and accordingly Art. 24 para. 3 lit d CCITHA



Graphic representation of the process 





Checklist - Tax consequences of an intra-group transfer of assets

Taxes for

Types of taxes

Transferor company 

Transferee company

Income taxes (FITA/CCITHA) - Tax-deferral (Art. 61 para. 3 FITA; Art. 24 para. 3quater CCITHA), provided that:
  • Tax liability in Switzerland is maintained (i.e. only transfers between domestic corporations and cooperative are possibly tax-neutral)
  • Acquisition of taxable value of earnings
  • Transfer of enterprises/individual business units, fixed operating assets and investments of at least 20% held directly or indirectly; if items of fixed operating assets are transferred, the continuation of the enterprise or of individual business units is required
  • Uniform management
  • During a restricted period of 5 years, the transferred assets must not be sold and the management shall not be abandoned
- Consequences of the violation of the waiting period:
- Definitive tax-exemption after the end of the 5-year waiting period

 - Taxable value of earnings of the transferring company group are taken over

- Provided that no tax avoidance is present (e.g. cessation of business operations), the losses of an enterprise/business units may be taken over

- Consequences of the violation of waiting period: 


Real estate capital gains tax/Real estate transfer tax- In case of transfer of real properties, which are located in monist cantons levying tax on earnings from real estate, tax on earnings from real estate and property transfer tax possible

- However, tax-deferral (Art. 12 para. 4 lit. 4 CCITHA) as well as tax-exemption according to Art. 103 in connection with Art. 111 FusG

 
Withholding tax (WHTA) - In accordance with Art. 5 para. 1 lit. a WHTA, tax-exempt to the extent hidden reserves in the transferor company migrate and restructuring under Art. 61 FITA  occurs

- In case of violation of the waiting period, withholding tax is due. Interest on the withholding tax is governed by Art. 16 WHTA
 
Stamp tax (STA) (Stamp issuance duty/Stamp transfer duty)- Stamp transfer duty:  tax-exemption pursuant to Art. 14 para. 1 lit. j STA in case of restructuring under FITA as well as a transfer of investment of at least 20%
 - Stamp income duty: tax-exempt pursuant to Art. 6 para. 1 lit abis STA    

- Recovery of stamp duty in case of violation of the waiting period
 Value added tax (VAT)- As far as there is a transfer within a VAT-group (Art. 13 VAT Act): Non-taxable inter-group sales (Art. 13 VAT Act)

- Otherwise, to check applicable reporting procedures 

 - Change in use: consider private use (Art. 31 VAT Act) / Investment de-taxation (Art. 32 VAT Act

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