Switzerland: Business restructurings may result in exit taxes

Small changes in a taxpayer’s operating or business model can potentially result in an exit tax

Business restructurings may result in exit taxes

Even small changes in a taxpayer’s operating or business model can potentially trigger an exit tax liability in Switzerland, including:

  • A full restructuring, transferring the whole business from one jurisdiction to another
  • The relocation of employees across the organization
  • The relocation of an asset, such as tangible assets, IP, agreements or clientele
  • The transfer of an activity, through termination or substantial renegotiation of existing arrangements

To determine whether something of value has been transferred in connection with any restructuring (i.e., an asset (tangible or intangible) or an entire or a part of a business function) and would require compensation, it is essential to understand the restructuring and the changes in the internal processes and responsibilities by evaluating the function, asset and risk profile of the parties before and after the restructuring. In addition, compensation may be required as a result of conversion costs such as closure and restructuring costs, termination costs, and/or the loss of future earnings, such as with a shift in customer contracts.

Local tax specifics also need to be considered—such as the implication of any stamp duties, value added tax (VAT), registration tax, and withholding tax. There may also be registration or reporting requirements (i.e., DAC 6).

Read a February 2022 report prepared by the KPMG member firm in Switzerland

 

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