On 1st July 2004, the Federal Act on Mergers (LFus – loi fédérale sur la fusion) entered into force. This Act governs and regulates operations of corporate reorganisation and restructuration in Switzerland from a commercial law stance.

LFus concerns 4 types of operation:

  • Company merger
  • Business transformation (change in legal form)
  • Asset transfer
  • Company demerger

These operations may be subject to tax neutrality – without taxation of hidden reserves – provided that the conditions laid out in Article 61 of the Loi fédérale sur l’impôt fédéral direct (LIFD) are met:

  1. Following restructuration, the legal person must remain liable to Swiss tax;
  2. All business elements are taken at their last determining value for corporate tax;
  3. In the context of a demerger (division or separation of a legal entity), certain additional criteria must be met:
  • The transfer must concern one or more activities or distinct parts of the activity/activities;
  • The legal entities in existence following the demerger must continue in the activities or in a distinct part of the activities.
  1. In the context of a transfer to a subsidiary, two further conditions must be met in addition to criteria 1-3 above:
  • The legal entity which transfers must not sell the subsidiary participation rights within the following five years;
  • The subsidiary must not sell the assets received at the time of transfer.

The restructuration procedures provided for by the LFus legislation are complex and the application of conditions for tax neutrality is often subject to intricate tax and legal subtleties and nuances.

We recommend that you collaborate with our team of legal and tax advisors, who will take care of your file in full, both from a tax and a business viewpoint.

For further information regarding the legal nature of corporate restructuration, see https://www.fiduciaire-bonnefous.com/fr/reorganisation-d-entreprise.

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