Switzerland publishes draft practice on VAT succession for asset deals
International Tax Review is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Switzerland publishes draft practice on VAT succession for asset deals

Sponsored by

Sponsored_Firms_deloitte.png
The VAT succession leads to a full liability of the transferee for all VAT risks and opportunities.

Romy Müller and Matthias Höhn of Deloitte take a closer look at draft guidance issued by the Swiss tax authorities on VAT succession in the frame of an asset deal.

The Swiss Federal Tax Administration (SFTA) has reacted to the Federal Court decision dated February 21 2020 ruling out that there is a (partial) VAT succession for asset deals, and published its intended practice in a first draft.

The outlined practice implies a very strict and lean interpretation of the Federal Court case. According to this practice, a VAT succession in case of a transfer of a partial business only applies if the said transfer takes place between closely related parties.

According to a Federal Court decision (BGE 146 II 73 dated February 21 2020), a partial VAT succession according to Article 16 paragraph 2 Swiss VATL for a transfer of a business or an independent part thereof is established between transferor and transferee. Until this court decision, it was common ground that no VAT succession shall apply as long as the transferor continues to exist as regular taxpayer.

The VAT succession leads to a full liability of the transferee for all VAT risks and opportunities. As a consequence thereof, the transferee takes over full historical VAT ‘belongings’ deriving from the assets purchased for periods still open for assessment. It is important to note that joint liability between transferor and transferee according to Article 15 paragraph 1 Cap d Swiss VATL covers three years, whereas the usual VAT limitation period covers five years. Thus, the transferee will remain being solely responsible for two years.

The SFTA has published a first (not yet binding) draft of its intended practice to implement the Federal Court decision on VAT succession for asset deals.

Whereas the transfer of an entirety of a business always creates a VAT succession according to Article 16 paragraph 2 Swiss VATL, the anticipated practice suggests that for a transfer of an independent part of a business tax succession, this only applies in cases when a transfer happens between closely related parties (Article 3 Cap h Swiss VATL). As a consequence thereof, VAT succession seems to excluded in cases of a) a transfer between parties that do not qualify as closely related or b) the assets involved in the transfer do not qualify as independent part of a business.

In cases of assets deals, it is therefore crucial to evaluate the VAT risks in the frame of a due diligence exercise, both for the transferor and the transferee.

  Romy Müller
Director, Deloitte
E: romymueller@deloitte.ch

 

Matthias Höhn
Senior manager, Deloitte
E: mhoehn@deloitte.ch

more across site & bottom lb ros

More from across our site

Despite the relief, Brazil’s government has also presented a bill which seeks to re-impose a tax burden on companies’ payroll, one local tax specialist told ITR
Jeremy Brown arrives at the firm after a near 16-year career with Deloitte
PwC could elect a woman into the senior leadership position for the first time; in other news, KPMG Australia has extended its CEO’s term
The Senate report into PwC’s scandal is titled ‘The cover up worsens the crime’
Law firms that are conscious of their role in society are more likely to win work, according to a survey of over 23,000 in-house professionals
The firm’s tax business generated a quarter of HLB’s overall revenues in 2023
While successful pillar two implementation will require collaboration across all units, a combination of internal and external tax advice is at the centre of the effort
Binance has also been accused of manipulating foreign exchange rates via currency speculation and rate-fixing
Six individuals should have raised questions over information they received but did not breach professional standards, according to the firm
The partnership of KPMG UK has installed Holt for a second term as CEO and senior partner; in other news, a Baker McKenzie partner has sued the IRS
Gift this article