Added value compensation and rural land rights

1. added value compensation: zoning (without farmers' land rights)

Case

Hans Müller is the owner of a plot of land in the Zurich municipality of A. This parcel is located in a non-building zone. Municipality A submits the amended building and zoning regulations to the building department of the Canton of Zurich. The building department approves the new utilization plan and on April 1, 2021, both the positive decision of the building department and the zoning plan amendment thus approved are published. The 30-day period for appeals expires unused. Finally, on 5 August 2021, Hans Müller sells his plot of land to Immobilien AG for CHF 500,000 by means of a publicly notarised purchase agreement. According to the contract, ownership in the land register will be transferred to Immobilien AG on 1 September 2021.

The following data are known from the plot:

• Property size: 1'000 square meters
• Land value in the non-building zone: CHF 10 / square metre
• Land value in the industrial and commercial zone: CHF 410 / square meter

Questions

1. How is the added value measured?
2. How high is the value added tax?
3. Who is liable to pay the tax?
4. Who sets the added value levy?
5. When is the value-added tax due and who sets it?

2. added value compensation: zoning

2.1 Case 1

Greta Meier is the owner of a plot of land in the Zurich municipality of Z. This plot is located in the residential zone W2. On February 1, 2021, the municipal assembly of the municipality of Z decides to change its building and zone regulations. On the one hand, it introduces the municipal added value compensation and sets the added value levy at 40% and the open space at 1,200 square metres. On the other hand, Greta Meier's plot of land is newly allocated to residential zone W4. The new BZO comes into force on 1 June. On 5 July 2021, Greta Meier submits a building application for a replacement building. On September 27, the building permit is issued, which becomes legally binding after the 30-day period for appeal has expired. Finally, the building permit is issued on December 13, 2021.

The following data are known from the plot:

• Property size: 1'000 square meters
• Land value building zone W2: CHF 800 / square meter
• Land value building zone W4: CHF 1400 / square meter

Question:

Is an added value tax due?

2.2 Case 2

Greta Meier is the owner of a plot of land in the Zurich municipality of Z. This plot is located in the residential zone W2. On February 1, 2021, the municipal assembly of the municipality of Z decides on an amendment to its building and zoning regulations (BZO). On the one hand, it introduces the municipal added value compensation and sets the added value levy at 40% and the open space at 1,200 square metres. Municipality Z submits the amended BZO to the building authorities of the Canton of Zurich. Since the amended BZO only contains the changes proposed in the model provisions of the canton, the amendment can be approved within 30 days. The 30-day appeal period expires unused. Once the period for appeal has expired, the amended BZO comes into force on 1 April 2021. At the next municipal assembly on 15 May 2021, the BZO will again undergo a partial revision. As part of a planning measure, Greta Meier's plot of land will be reallocated to residential zone W4.
On July 27, 2021, both the positive decision of the construction management and the zoning plan amendment approved as a result will be published. The 30-day appeal period expires unused. On September 5, 2021, Greta Meier submits a building application for a replacement building. On November 13, 2021, the building permit is issued, which becomes legally binding after the 30-day period for appeal expires. Finally, the building permit is issued on February 7, 2022.

Questions

1. How is the added value measured?
2. How high is the value added tax?
3. Who is liable to pay the tax?
4. Who sets the added value levy?
5. When is the value-added tax due and who sets it?
6. What would change if Greta Meier did not build over the plot, but sold it on September 5, 2021 (commitment and disposal transaction on the same day)?

3. donation

Case

Ruedi Zimmerli has benefited from a zoning of his plot in the municipality of F. in the canton of Zurich. The canton sets the value-added tax payable by Ruedi Zimmerli at CHF 150,000 and orders the note in the land register. As part of his succession planning, Ruedi Zimmerli donates the parcel to his daughter Vroni.

Questions

1. What is the effect of the gift on the value added tax?
2. Ruedi Zimmerli donates the plot with a market value of CHF 1,000,000 to his daughter Vroni. However, Vroni must also take over the mortgage of CHF 300,000 on the land. What effect does this transfer have on the surplus value levy?
3. If the parcel of land were located in the canton of Aargau, how would the initial situation in Question 1 be assessed?

4. the real estate investor

Case

Messrs. Meier, Huber and Müller hold adjacent plots of land in the municipality of V. in the canton of Zurich, each with an area of 1,000 square metres. The building and zoning regulations of the municipality V. provide for the compensation of added value (tax rate 40%, open space 1'200 square meters). On 1 March 2021, all three plots will be converted from an industrial and commercial zone into a residential zone W4. This rezoning will come into force on 1 June 2021. Since all three plots can benefit from the open space and the presumed added value per plot is clearly lower than CHF 250,000, Municipality V will not issue any decrees. Nothing is noted in the land register either. Immo Invest AG has held preliminary talks with Messrs. Meier, Huber and Müller individually regarding the purchase of the property. It is planning to realise a total development on these three plots. Immo Invest AG will purchase the three plots individually on July 15, 2021, and the public notarization of the purchase contracts and the entries in the land register will be made on the same day. The purchase contracts do not mention the value-added tax.

Questions

1. Immo Invest AG asks you whether it has to pay a surplus value tax and whether it can pass on any surplus value tax to the three Mr. Meier, Mr. Huber and Mr. Müller.
2. In contrast to the land situation, Immo Invest AG acquires the three properties as early as 14 February 2021 (public certification and entry in the land register). Does this change anything in the value added tax?