News on the taxation of corporate restructuring (2025)

Case 1: Debt Push Down

1. facts of the case

On February 15, 2025, a private equity fund acquired the domestic company X. AG through a domestic acquisition company Y. AG for CHF 100 million.

Y. AG will be financed with equity capital to the tune of CHF 30 million. The remaining CHF 70 million will be raised through a shareholder loan granted by the fund (CHF 20 million) and a third-party loan (guaranteed and secured by the fund), both of which bear interest at 8% per annum.

On June 15, 2025 (variant: June 15, 2027), Y. AG will absorb X. AG.

Question

• What are the tax consequences of absorption?

2. Variant 1: Reverse Merger

• Would the assessment change if X. AG were to absorb Y. AG (reverse merger)?

3. Variant 2: Equity to debt swap

On May 15, 2025, X. AG will declare a dividend of CHF 18.5 million, which it will settle through a debt assumption.

4. Variant 3: Profit Push Up

On May 15, 2025, X. AG will distribute a patent to Y. AG. This will generate license income from third parties and Y. AG of approximately CHF 5 million, which will be used to service Y. AG's interest.

5. Variant 4: Cascade acquisition

Among the assets of X. AG is an (operating) subsidiary (X2. AG; market value: CHF 70 million), which in turn holds an (operating) subsidiary X3. AG (market value: CHF 30 million).

Y. AG will now first acquire X3. AG for CHF 30 million, for which it will take out a loan of CHF 20 million and receive equity of CHF 10 million from the fund. X2. AG will distribute the proceeds to X. AG and its owner.

X3. AG then acquires X2. AG for CHF 40 million, for which it receives a loan of CHF 25 million and equity of CHF 15 million. Interest payments are paid from the operating income of X3. AG. X. AG distributes the proceeds to its owner.

X2. AG ultimately acquires X. AG for CHF 30 million, for which it receives a shareholder loan of CHF 20 million and equity of CHF 10 million. Interest payments will be paid from the operating income of X2. AG.

6. Option 5: Acquisition by operating company

X. AG will now be acquired not by the acquisition company of a private equity fund, but by an operating company (Y. AG) for CHF 100 million on February 15, 2025. Prior to the acquisition of X. AG, Y. AG generated a profit of CHF 5 million per year.

Y. AG is raising CHF 50 million in bank financing for the acquisition of X. AG, with an interest rate of 5% per annum.

On June 15, 2026, Y. AG absorbs X. AG.

In 2028, Y. AG's operations fall into crisis and are in the red (while X. AG's operations remain profitable).

7. Option 6: Acquisition of a real estate company

X. AG is a real estate company that was acquired by Y. AG on February 15, 2025, for CHF 100 million. The seller is a private individual.

On June 15, 2025, Y. AG absorbs X. AG.

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Case 2: Reversal in the case of a non-profit tax-neutral demerger

1. facts of the case

X., a resident of Switzerland, is the sole shareholder of X. AG. X. AG operates a commercial business (book value: CHF 500,000) and owns a property (book value: CHF 1 million; investment costs: CHF 3 million; market value: CHF 10 million; rental income: CHF 300,000; mortgage: CHF 6 million).

With a view to succession planning, X. AG will transfer the business to Y. AG, newly founded by X., on February 15, 2025, at a book value of CHF 500,000.

Question

• What are the tax consequences of transferring the business to Y. AG?

2. Option 1: Timely sale of X. AG

In 2029, X. encounters financial difficulties and sells X. AG for CHF 5 million (property value: CHF 12 million; mortgage: CHF 7 million).

3. Option 2: Pledging the shares

In order to eliminate the financial bottleneck, X. takes out a loan from a third party and secures it with the shares of X. AG by way of a security assignment.

4. Variant 3: Imminent death of X.

In 2028, X. dies unexpectedly. The estate administrator sells the shares of X. AG to a third party in 2029 and distributes the proceeds among the heirs.

5. Option 4: Timely donation

X. donates the shares of X. AG to his daughter Y. in 2026 (a gift during his lifetime requiring compensation).

6. Option 5: Moving to another canton

On November 15, 2025, X. moved to the canton of Graubünden. On June 15, 2027, he sold his shares in X. AG.

7. Option 6: Moving abroad

X. will move to Berlin (or Dubai) on November 15, 2025. On June 15, 2027, he will sell his shares in X. AG.

8. Option 7: Cessation of operations of Y. AG

The buyer of Y. AG will cease operations of Y. AG and liquidate it in 2026.

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Case 3: Transfer between group companies

1. facts of the case

Metall Holding AG is a Swiss company wholly owned by shareholder Petra Stebler. Metall Holding AG owns three wholly-owned subsidiaries: Gold AG, Silber AG, and Eisen AG. All three are operating companies.

Eisen AG owns 100% of Chrom AG, which is also operational. The book value, taxable value, and acquisition costs of Chrom AG amount to CHF 100,000.

Eisen AG intends to transfer all shares of Chrom AG to Metall Holding AG by way of a dividend distribution (dividend in kind). The dividend will be charged to Eisen AG's reserves at the amount of the book value.

Question

• Is this spin-off possible in a tax-neutral manner and does it violate the blocking period from the transfer in the basic case?

3. Option 2: Timely spin-off of Gold AG, Silver AG and Iron AG

In contrast to variant 1, Chrom AG will not be spun off, but the three holdings Gold AG, Silber AG and Eisen AG will be spun off from Metall Holding AG to NewMetall Holding AG.

Questions

• Does this spin-off violate the lock-up period arising from the transfer in the underlying case?
• Can the tax authorities waive the subsequent taxation if a blocking period is violated?

4. Option 3: Timely contribution in kind by Chrom AG to NewMetall
Holding AG

In contrast to variant 1, will Chrom AG be immediately contributed as a contribution in kind to NewMetall Holding AG after the stake in Eisen AG has been transferred to Metall Holding AG?

Question

• Does this spin-off violate the lock-up period resulting from the transfer of shareholdings within the group?

5. Option 4: Transfer and replacement of property

Silber AG owns property no. 300, which is leased to Gold AG. Gold AG has used this property entirely for business purposes for years. The market value of property no. 300 is CHF 800,000, with a book value of CHF 200,000.

Property No. 300 was transferred from Silber AG to Gold AG at book value by means of an asset transfer within the meaning of Art. 69 of the Merger Act.

Shortly thereafter, Gold AG sold the property to a third party. Gold AG subsequently acquired the replacement property no. 1400 from Silber AG for a book value of CHF 1,200,000 (market value CHF 2,200,000), which it would then use entirely for operational purposes.

Questions

• Can the transfer of property no. 300 be tax-neutral?
• Does the replacement purchase violate the lock-up period resulting from the corporate transfer?

6. Option 5: Sale to a foreign intermediate holding company

Metall Holding AG is a group company of Commodities plc, a company incorporated under the laws of Jersey with tax residence in Switzerland. Commodities plc holds 90% of Copper Ltd. through a UK intermediate holding company (UKCo). The remaining 10% of Copper Ltd. is held by Metall Holding AG.

It is intended that the 10% stake in Copper Ltd. will be sold to UKCo at a book value of CHF 20 million (fair value: CHF 40 million).

7. Variant 6: Foreign control

How would option 5 be assessed if Commodities plc. were also resident abroad for tax purposes?