Reorganisation and restructuring of companies

The Merger Act applies to 4 types of transactions.

• Company merger;
• Company conversion;
• Transfer of assets;
• Company demerger;

These transactions can be carried out on a tax-neutral basis, that is, without taxation of hidden reserves, provided that the conditions of Article 61 of the Federal Direct Tax Act (DFTA) are met:

1. Following the restructuring, the legal entity remains subject to tax in Switzerland.

2. To calculate profit tax, all business items are valued at their latest and determining value.

3. In the case of a demerger (division or separation of a legal entity), the following additional conditions must be met:

• The transfer must relate to one or more businesses or distinct parts of a business;
• The legal entities existing after the demerger continue to carry on a business or a distinct part of a business

4. In the case of a transfer to a subsidiary, two further conditions apply in addition to all those set out under points 1 to 3 above:

• The transferring legal entity must not sell the participation rights in the subsidiary during the 5 years following the transfer;
• The subsidiary must not sell the assets received in the transfer;

Implementing the restructuring procedures set out in the Merger Act can prove complex, requiring careful legal and tax reflection in order to apply the tax neutrality conditions.

We therefore strongly recommend that you call on our team of tax lawyers to handle your file in full. We take care of both the tax and the commercial aspects, with rigour and expertise.