Tax Penalties Of Restructuring Of Pension Fund Belongings – Tax Authorities – Switzerland

Tax Penalties Of Restructuring Of Pension Fund Belongings – Tax Authorities – Switzerland


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1. Introduction

Numerous federal authorized legal guidelines encourage saving within the type of
occupational pension plans. On this context, not solely the paying-in
professionals profit from tax benefits, but in addition the pension
funds which don’t pay taxes on their income. Till now, the tax
penalties of pension fund restructurings had been largely unclear.
Many transactions needed to be secured prematurely with the tax
authorities via rulings. Now, the Federal Supreme Courtroom has
supplied readability in a single space.

2C_380/2021 OF FEBRUARY 28, 2022)


The aim of Pension Fund A is to supply occupational pension
advantages. The aim of Zurich Funding Basis is the
collective funding and administration of belongings solely serving
the aim of offering occupational pension advantages and is
solely open to tax-exempt occupational pension establishments
domiciled in Switzerland. Each the fund and the inspiration are
exempt from revenue tax. Pension Fund A transferred a number of
properties to the Zurich Funding Basis and in return
acquired no-par and irrevocable claims to the Funding Group I
(so-called “actual property asset swap”). In easy phrases,
Pension Fund A transferred its actual property right into a vessel containing
additional actual property and acquired a sure proportion of the return
on all belongings from this vessel as a substitute of the return on the
beforehand held actual property. The transaction transformed earlier
direct actual property holdings into oblique actual property investments.
The supposed financial objective was a extra environment friendly administration of
the actual property in addition to securing a broader diversification of

Except the tax administration of the Metropolis of
Zurich, all cantons concerned had confirmed the tax neutrality of
these transactions in rulings. The tax administration of the Metropolis
of Zurich, nonetheless, assessed actual property acquire taxes for the
properties positioned in Zurich.


Pursuant to the Tax Harmonization Act relevant all through
Switzerland, the cantons will not be allowed to tax actual property beneficial properties
within the case of tax-neutral reorganizations (tax deferral). Within the
case of demergers, it’s nonetheless all the time mandatory that a number of
operations are transferred, whereby after the demerger the prevailing
authorized entities every proceed to conduct an operation. If belongings are
transferred with out staff, this so-called “working
requirement” is usually not met. Subsequently, restructurings
of actual property belongings are usually related to difficulties
from a tax standpoint.

The Federal Act on Occupational Pension Plans supplies that
income from the sale of a property by a pension fund could also be taxed.
Nevertheless, within the case of mergers and splits of pension funds, no
taxes on income could also be levied. Within the current case, the Federal
Supreme Courtroom thought of the query whether or not the contemplated
transaction constituted a sale topic to revenue tax or somewhat a
tax-neutral restructuring. It discovered that the idea of
restructuring underneath the Federal Legislation on Occupational Pension Plans
was to be understood extra broadly than underneath the Tax Harmonization
Act. The primary act, in distinction to the second talked about act, did
not presuppose an working requirement. Subsequently, pension funds
would have the ability to spin off belongings to different pension funds in a
tax-neutral method, supplied that the transferred belongings continued
to serve the pension scheme of the workers affiliated with the
establishment in query on the buying firm.

Within the current case, the Federal Supreme Courtroom discovered the
switch of the actual property towards issuance of the entitlements to
Funding Group I to represent a tax-neutral break up. The workers
affiliated with Pension Fund A would not profit instantly
from the return on the actual property in query, however accomplish that
not directly, as they might profit from the returns on the opposite
investments in Funding Group I. The workers would due to this fact
proceed to profit from the return on the actual property in query.
Subsequently, the pension objective can be maintained. Thus, the
Canton of Zurich shouldn’t be allowed to tax the actual property


On the whole, most cantons levy an actual property switch tax on the
switch of actual property. The Federal Legislation on Occupational Pension
Plans holds that pension funds are solely exempt from revenue tax in
the case of restructurings. There is no such thing as a point out of actual property
switch tax. The Federal Supreme Courtroom not too long ago dominated in one other
judgment in regards to the Canton of Fribourg, that the cantons might
levy the actual property switch tax within the case of restructurings of
contractual funding funds (judgment Federal Supreme Courtroom
2C_624/2021 of March 28, 2022). The very best court docket right here depends on a
formalistic strategy, as the actual property switch tax is triggered
upon the change of the particular land register entry, and doesn’t
contemplate the financial circumstances. It additionally explicitly talked about
that the switch tax is just not a tax on income however a tax on authorized

The info talked about above occurred within the Canton of Zurich,
which doesn’t present for a switch tax. If the info had
occurred within the Canton of Fribourg, there would have been a 3%
switch tax on the worth of the property. It’s extremely uncertain
whether or not this taxation is definitely according to the federal
legislator’s intention to deal with beneficially the taxation of
occupational pension plans.


The aforementioned ruling on actual property beneficial properties taxes for actual
property asset swaps is to be welcomed. Nevertheless, not all difficulties
in reference to the restructuring of pension fund belongings have
been eradicated. The ruling of the Federal Supreme Courtroom concerning
actual property switch taxes demonstrates the uncertainties and
factors out that warning continues to be required with regard to actual
property taxes in reference to restructurings.

Initially Printed 16 Could 2022

The content material of this text is meant to supply a common
information to the subject material. Specialist recommendation ought to be sought
about your particular circumstances.

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