§ 75 Tax Act (StG) - Restructurings

1. Hidden reserves of a legal entity are not taxed during reorganizations, particularly in the case of mergers, demergers, or conversions, provided that the tax liability in Switzerland continues and the values relevant for profit tax are adopted

a. in the conversion into a partnership or another legal entity,

b. in the demerger of a legal entity, provided that one or more businesses or parts of businesses are transferred and to the extent that the legal entities existing after the demerger continue to operate a business or part of a business,

c. in the exchange of participation or membership rights in the context of reorganizations or merger-like combinations,

d. in the transfer of businesses or parts of businesses, as well as assets of operating fixed assets, to a domestic subsidiary; a subsidiary is defined as a corporation or cooperative in which the transferring corporation or cooperative holds at least 20 percent of the capital or nominal capital.

2. In the case of a transfer to a subsidiary pursuant to paragraph 1d, the transferred hidden reserves are subsequently taxed according to the procedure under §§ 174-178, to the extent that the transferred assets or participation or membership rights in the subsidiary are sold within five years following the reorganization; in such cases, the subsidiary may claim the corresponding hidden reserves taxed as profit.

3. Among domestic corporations and cooperatives, which are consolidated under the unified management of a corporation or cooperative through majority voting or other means based on the overall image of actual circumstances, directly or indirectly held participations of at least 20 percent of the capital or nominal capital of another corporation or cooperative, businesses or part businesses, as well as assets of operating fixed assets, may be transferred at the values previously relevant for profit tax. The transfer to a subsidiary pursuant to paragraph 1d remains reserved.

4. If, in the event of a transfer pursuant to paragraph 3, the transferred assets are sold within the following five years, or if the unified management is abandoned during this period, the transferred hidden reserves are subsequently taxed according to the procedure under §§ 174-178. In such cases, the privileged legal entity may claim the corresponding hidden reserves taxed as profit. Domestic corporations and cooperatives consolidated under unified management at the time of the breach of the holding period are jointly and severally liable for the additional tax.

5. If the takeover of the assets and liabilities of a corporation or cooperative, whose participation rights belong to the acquiring corporation or cooperative, results in a book loss on the participation, this cannot be deducted for tax purposes; any possible book gain on the participation is taxed.

6. If a corporation or cooperative transfers a participation to a foreign group company, the taxation on the difference between the value for profit tax purposes and the market value of the participation is deferred. The tax deferral ceases if the transferred participation is sold to third parties outside the group, if the company whose participation rights were transferred significantly sells its assets and liabilities, or if it is liquidated.

← § 74 StG Tax Act (StG) - Types of Taxes § 76 StG →