Tax pitfalls in corporate restructuring

Case 1: Sale of a hotel property to 30% daughter

1. facts of the case

Ms Margaux, who resides in the Canton of Berne, is the sole shareholder of Angélus Ltd. Angélus AG runs a hotel business in the canton of Berne, which was badly affected by the Corona crisis and suffered a loss of CHF 10 million in 2020. In order to raise new money, it wants to bring an independent investor, Mr. Lafite, on board. However, he only wants to take a share in the real estate, but not in the hotel business. Therefore, in 2021, the hotel property is to be transferred to a pure real estate company, the Beychevelle AG, in which the investor will hold a 70% stake. The hotel business will be continued by Angélus AG.

The property has an income tax value of CHF 18 million and a market value of CHF 40 million. A mortgage of CHF 16 million is still owed on the property. The investment costs of the property amount to CHF 30 million (depreciation of CHF 12 million was made on the property).

The following approach is planned:

Step 1: Angélus S.A. and Mr. Lafite found Beychevelle S.A. (Angélus S.A. holds 30%, Mr. Lafite 70%) with a capital of CHF 100'000.

Step 2: Mr. Lafite makes a contribution of CHF 20 million to Beychevelle Ltd.

Step 3: Angélus AG sells the hotel property to Beychevelle AG for CHF 12 million. Beychevelle AG also takes over the mortgage debt of CHF 16 million. Angélus AG pays Beychevelle AG a rent of CHF 3 million p.a. (in line with the market) in future.

The balance sheet of Beychevelle AG is subsequently as follows (in TCHF):

Question 2

What are the tax consequences of this approach?

3. variant 1

The hotel business has developed very well since the Corona crisis, so that Angélus Ltd. can buy back 40% of the shares in Beychevelle Ltd. from Mr. Lafite in 2024 for CHF 12 million (based on a valuation of Beychevelle Ltd. at CHF 30 million) (Mr. Lafite subsequently still holds 30%).

4. variant 2

The hotel business continues to develop very well after the buyback, so that Angélus AG can buy back the remaining 30% of the shares in Beychevelle AG from Mr. Lafite in 2027 for CHF 11 million (based on a valuation of Beychevelle AG at CHF 33 million) (Mr. Lafite subsequently no longer holds any shares).

5. variant 3

After Angélus AG is again 100% owner of Beychevelle AG in 2027, Mrs Margaux sells the shares of Angélus AG to Mr Palmer. (Sub-variant: Would it make a difference if Angélus AG were a pure holding company and the hotel operations had already been spun off into a subsidiary in 2021)?

6. variant 4

In the basic facts, Angélus SA sells a further 20% of Beychevelle SA to Mr. Lafite in 2022.

7. variant 5

Case 2: Quasi-merger of a real estate company

1. facts of the case

Mr. Pommard holds 100% of the shares in Meursault AG, which exclusively owns real estate in the Canton of Berne, as part of his private assets. He sells the shares of Meursault AG to Chambertin AG and in return receives a 20% share in Chambertin AG, for which the latter carries out a capital increase.

The target structure is as follows:

How should this process be assessed from a property gains tax perspective?

Case 3: Asymmetric demerger of a real estate company

1. facts of the case

Pfalz AG holds real estate worth around CHF 100 million. It is owned 50% each by Mr. Rebholz and Mr. Knipser.

Since the two shareholders have different ideas about the future of the company, they want to split up. For this purpose, real estate worth CHF 50 million is to be transferred to Forst AG and the shares of Forst AG are to be distributed to Mr. Knipser. In return, Mr. Knipser will transfer his 50% shares in Pfalz AG to Mr. Rebholz.

Question 2

Is there a tax-neutral demerger?

What would be the consequences if either Pfalz AG or Forst AG were to sell the properties they hold after one year?

Does it make a difference whether the demerger (under the old law) is done in two stages or under Art. 29 FusG (in one stage) and Forst AG is spun off from Pfalz AG?

Case 4: Distribution of a subsidiary

1. facts of the case

A holding company (Malans AG) held by a natural person (Mr. Davaz) has two operating subsidiaries: Gantenbein AG and Studach AG.

Malans AG distributes Gantenbein AG to Mr. Davaz, who subsequently sells it to Mr. Fromm.

Question 2

How is the distribution taxed in the case of Mr. Davaz?

Would there be alternative options that would be more efficient from a tax point of view?