Switzerland: A Multinational Survey Of The Treatment Of Income And Gains Of Individuals Who Change Residence – Switzerland Chapter

Overview of Swiss tax system

Tax residence in Switzerland. Individuals are residents for tax purposes in Switzerland when they have their tax domicile or tax residence in Switzerland.3 An individual has a tax domicile in Switzerland if he resides in Switzerland with the intention of settling or has a special statutory domicile pursuant to federal law.4 A tax residence in Switzerland is regarded as existing when an individual—regardless of temporary interruption—stays for at least 30 days while being employed or, without employment, at least 90 days in Switzerland.5

Basic taxation principles in Switzerland. Switzerland imposes tax on resident individuals on their worldwide income on federal, cantonal, and communal level.6 The tax base for residents only partially includes capital gains:

  • Capital gains on the sale of movable assets held in the individual's private wealth are generally tax exempt at the federal and cantonal levels.7 Exceptions apply in indirect partial liquidation and transformation situations (see below).
  • Capital gains on the sale of real estate, including participations in real estate through other classes of assets (e.g., shares in a real estate company), are subject to real estate capital gains tax at the cantonal level;8 however, at the federal level, they are tax exempt for individuals.9

Commercial investments. Nevertheless, when selling real estate, securities, works of art, and other investment options, a private capital gain will, according to legislation and practice, be tax exempt only as long as the investment is not considered commercial and does not qualify as a self-employment activity. The mere management of private assets is not considered a self-employment activity. To assess whether an activity is considered commercial, the tax authorities and courts usually take into account, among others, the following criteria: nexus to taxpayer's professional activity; borrowing of capital; frequency of transactions; systematic approach to investing; and reinvestment of gains.10

According to Federal Supreme Court case law, the fulfillment of one criterion can lead to the conclusion that an activity is considered commercial.11 If an activity is considered commercial, direct federal taxes, cantonal taxes, and social security contributions are due on the capital gain as well as on the income from the self-employment. If an activity is considered a business activity, VAT may be due.12

Indirect partial liquidation and transformation. The "indirect partial liquidation" (indirekte teilliquidation) and transformation (transponierung) are further (codified) exceptions to the general tax exemption of capital gains realized by individuals on privately held movable assets. The indirect partial liquidation concerns the sale of shares held privately by one or more Swiss resident individuals to a Swiss or foreign resident purchaser and, to the purchaser, the shares will be business property (i.e., a change from private assets to business assets), when the shares that such individuals are selling represent in the aggregate a participation of at least 20% in the share capital or nominal capital of the target company.13 If, within five years of the sale, the target company makes a distribution of "non-operating substance"(funded from cash or other non-operating assets of the target company) already existing at the moment of the sale of shares and available for distribution according to the last commercial balance sheet of the target company prior to the sale of shares, the private Swiss sellers may be taxed on a deemed dividend from the target company provided that the private sellers have "co-operated" with such distribution of substance to the purchaser of the shares. According to Swiss tax law, the "co-operation" of the sellers is assumed as a fact when the sellers knew or must have known that "substance" would be taken out of the target company (and would not be put back in) to refinance payment of the purchase price of the shares.14 In practice, however, tax authorities generally stipulate the seller's knowledge in a distribution within the five-year period.

Similar to the indirect partial liquidation, transformation is a special rule according to which capital gains from the sale of shares might be recharacterized into taxable dividend income (for tax purposes). The transformation concerns certain sales of shares by private individuals to a "self-controlled" legal entity, which are not recognized as "genuine sales." A transformation is assumed when one or more Swiss resident individuals sell a participation of, in the aggregate, at least 5% in a corporate legal entity into the business property of a partnership or corporate entity in which the sellers, after the transaction, hold (in the aggregate) a participation of at least 50%. Accordingly, the difference between the share sale proceeds and the sum of attributable nominal share value and distributable retained earnings and reserves (excluding recognized reserves from capital contributions) are taxed on the sale of the shares as dividend income.15 However, if the seller (individually) held a participation of at least 10% in the target enterprise, the deemed dividends are only taxed in the amount of 60%.16

Capital gains tax on real estate. The real estate capital gains tax is levied as a special capital gains tax at the cantonal level (grundstückgewinnsteuer (real estate capital gains tax or RECGT)). While some cantons levy this special tax only on capital gains realized on real estate held as private property ("dualistic" system, also known as St. Gallen system), other cantons levy RECGT on all capital gains on real estate situated in their territory ("monistic" system, also known as Zurcher system), irrespective of whether the real estate sold was held as business or private property. Under the "monistic" system, real estate capital gains are split into two parts:

  • Any gain from the recapture of previous depreciation is exempt from RECGT and is included in taxable profit for regular income tax purposes.
  • Any gain pertaining to realized value appreciation is subject to RECGT and is, thus, carved out from taxable profit for regular income tax purposes.

For RECGT purposes, the taxable capital gain broadly corresponds to the net proceeds from the sale or exchange of the property, minus the original acquisition cost base and any further, value-adding investments made into the property.

In the cantons applying the dualistic system, all realized capital gains on real estate assets belonging to the business property of individual or corporate taxpayers are exempt from RECGT. Such business gains are fully included in taxable net income for regular individual or corporate income tax purposes, as relevant.

In the context of corporate reorganizations, as e.g., mergers, demergers, and similar transactions, real estate transfers are generally exempt from RECGT or eligible for a tax deferral. The same applies to gratuitous transfers by death and transfers in settlement of a deceased person's estate. Further, Swiss tax law provides for a tax deferral of real estate capital gains from a sale of owner-occupied residential property if the disposal proceeds are reinvested in another accommodation in Switzerland.17

Besides actual sales or exchanges of real estate, RECGT also applies to gains on "economic real estate transfers" (transfers of the economic power to dispose of real estate). Such economic transfers include in particular the sale of a majority interest in a "real estate company" that owns real estate in the respective situs canton. A company is regarded as a real estate company if the main focus of its activity is exploitation of the value of its real estate assets by means including leasing, selling, and developing.18 Besides RECGT, real estate transactions typically trigger registration fees, notary fees, and, in some cantons, real estate transfer tax.

Treatment of new and temporary residents

Taxation of expatriates. At both the federal and cantonal levels, special (i.e., additional) deductions are available for certain expatriates working in Switzerland on a temporary assignment.19 The special deductions as well as the concept of "expatriate" and key criteria to be treated as expatriate are in a federal ordinance ("Expatriate Ordinance"), which has been revised slightly as of tax year 2016. The deductions include housing, travelling, and private school tuition fees.20 Under the Expatriate Ordinance, expatriates are defined as senior employees and specialists with special professional qualifications whom their foreign employer sends to Switzerland temporarily (up to five years).21 Absent a secondment by a foreign employer, foreign executives or specialists under a temporary employment contract with a Swiss employer for up to five years will be eligible for "expatriate" taxation if their temporary employment in Switzerland is based on a transfer by an international group, and the previous foreign employer guarantees contractually re-employment of the individual abroad after the Swiss assignment.22 As of January 1, 2016, to be deemed an expatriate according to the Expatriate Ordinance, the temporary posting is also decisive for specialists.23 The definition of "expatriate" under the revised Ordinance is narrower than under the old Ordinance. Employees qualifying as expatriates as of January 9, 2015, will maintain expat status until the end of their assignment but with the new, more restrictive rules applied.24 Further, expatriates and foreign specialist coming to work in Switzerland temporarily (generally up to five years) may be exempt from the Swiss social security system under certain conditions and if they have obtained a certificate of coverage or similar document from their home state. If so, they are typically also exempt from Swiss pension plan contribution liabilities.25

Lump-sum taxation. Under certain preconditions, foreign citizens relocating to Switzerland may apply for the lump-sum (forfait) taxation regime, which provides for a simplified calculation base to determine taxable income and wealth. While the regime has been abolished in some cantons (Zurich, Basel-City, Basel-Landschaft, Appenzell-Ausserrhoden, and Schaffhausen), it remains available at the federal level26 and in the majority of the cantons. Only individuals who (1) are not Swiss citizens; (2) are subject to unlimited taxation in Switzerland for the first time or after an absence of at least ten years; and (3) do not exercise any employment activity in Switzerland are eligible for the lump-sum taxation.27

As of 2016, married couples must fulfill these requirements individually.28 While legislation requires that no gainful activity be performed abroad or in Switzerland, cantonal practice varies. However, the administration of one's own assets is generally not considered gainful activity and permitted under the lump-sum regime.29

Under the lump-sum taxation regime, an individual's taxable income is essentially calculated on the basis of the annual living costs that the taxpayer and his family incurred in Switzerland and abroad. The regime is a simple and transparent procedure for tax assessment that estimates living expenses pragmatically and does not require details on worldwide income and wealth.30

Taxable income is computed on one of the following four categories. The category producing the highest amount will be used as the tax basis (according to a tax ruling):

  • Worldwide living expenses, which include rent of an apartment in Switzerland or costs of privately owned real estate as well as expenses for furnishing, travel, housekeepers, insurance, and donations.
  • Seven times rental costs/value, i.e., seven times the annual rent when property is rented and seven times the rental value when property is owned.
  • Control calculation, which includes all income from sources in Switzerland (e.g., real estate or bank accounts in Switzerland) and treaty protected income.
  • The minimum tax basis for federal tax purposes must be at least CHF 400,000, whereby the minimum tax basis for cantonal tax purposes varies between the cantons.

To determine the final tax burden, the regular federal, cantonal, and communal tax rates apply (to the special lump-sum tax basis).31 The different calculations of the taxable income must be made for each tax year.

Social security contributions in the amount of (currently) up to CHF 23,900 per person will be due each year in most cases. Besides the taxation of the income, it is advisable to discuss the taxation of wealth structures (as trusts, for example) with the competent tax authorities prior to relocating to Switzerland (and request a respective ruling).

Do new or temporary residents receive a fair market value adjustment to tax basis or comparable adjustment, e.g., pro rata allocation of gain to pre- and post-residence periods?

An individual becomes subject to unlimited tax liability in Switzerland by moving to and taking up residence in Switzerland. Accordingly, he will be subject to worldwide income taxation in Switzerland at the federal level (Art. 6(1) DBG) and wealth taxes at the cantonal and communal levels (Art. 2(1)(a) StHG).32 Further, he will have the obligation to submit a tax return annually (Art. 124 DBG).

As capital gains on the sale of movable assets held in the individual's private wealth are generally tax exempt and, typically, no tax basis exists, the question of fair market value adjustments to tax basis or comparable adjustments usually does not arise from a Swiss perspective. Movable assets in private wealth will be declared at fair market value in the Swiss tax return. In respect of immovable property, step-ups/adjustments such as pro rata allocation of gain to pre- and post-residence periods are not granted on relocation to Switzerland. Accordingly, RECGT will be imposed on the entire gain from a sale of real estate on sale in Switzerland (Switzerland imposes tax only on real estate located in Switzerland; gains from the sale of real estate located abroad are taken into account only for determination of the applicable tax rate).

However, self-employed individuals who will be subject to unlimited tax liability in Switzerland on relocation and hold assets as business property might receive a step-up/fair market value adjustment to tax basis or comparable adjustment. The availability and extent of such adjustments should be discussed and negotiated with the competent tax authorities prior to relocation to Switzerland.

When individuals are not subject to taxation for an entire tax period in Switzerland, Swiss tax law provides for pro rata allocation of gains and income. In principle, only the income effectively earned/received during the actual tax residency and liability in Switzerland will be taxed. Recurring income such as income from employment, however, will be annualized to determine the tax rate within the progressive rate system applied in Switzerland. On the contrary, non-recurring/extraordinary income, e.g., bonuses, will not be annualized in the context of the determination of the applicable tax rate. The same principles apply to deductions.

Are there any special rules where tax is imposed or tax cost is adjusted when no actual sale occurs?

Capital gains tax imposed on gifts. In general, the transfer of an asset as a gift is not regarded as a realization of profit in Switzerland. Accordingly, no capital gains tax is levied on a transfer of a movable asset as a gift. In the case of immovable property, a deferral of the real estate capital gains tax is usually granted.

However, most cantons levy a gift tax on the fair market value of the respective asset—the Confederation is not empowered to levy gift tax. Except for the cantons of Schwyz and (generally) Lucerne, all cantons levy gift taxes. Cantonal gift taxes are due if the donor resides in the respective canton and, for immovable property, if the property is located in the canton concerned.33 Regarding transfer tax, there is no difference between an inter vivos gift and property that passes mortis causae. In general, gift tax liability arises when a gift is made and the donee is liable. Some cantons (e.g., Zurich34) impose joint tax liability on the donee and the donor.

Rollover of gains on corporate organization, contribution, or reorganization transactions. Swiss tax law provides for certain exemptions or relief from income/corporate income tax and further taxes (e.g., withholding taxes and stamp duties) for corporate organization, contribution, or reorganization transactions.35 Accordingly, transfers of participations and other business assets to other group companies held by a common direct or indirect Swiss parent company are possible on a tax-neutral basis. Depending on the type of transaction and the asset transferred, a restriction period may be imposed on a subsequent sale of specific shares or assets.

A corporate reorganization may include the following tax-neutral transactions:

  • Legal mergers.
  • Demergers.
  • Quasi-merger/share-for-share exchanges.
  • Hive-downs.

Other tax-free exchanges of property or rollover of gains. According to Art. 30 DBG, the capital gain (respectively the hidden reserves) on the replacement of noncurrent assets that are necessary for business purposes can be rolled over if the newly purchased asset is likewise necessary for business purposes, is located within Switzerland, and has the same or a similar function as the replaced assets.36 Further, Swiss tax law provides, inter alia, for a tax deferral of real estate capital gains from a sale of owner-occupied residential property if the disposal proceeds are reinvested in another accommodation located in Switzerland.37

Basis (tax cost) adjustments on death or other non-sale transactions. There is no inheritance tax imposed at the federal level. However, most of the cantons and some municipalities impose inheritance and gift taxes according to cantonal and (when applicable) communal laws. Generally, the fair market value of the respective good is used as tax basis for inheritance tax purposes and will define the tax value for ongoing taxation purposes of the successor. Transfers to the spouse, descendants, and recognized charities are tax exempt in most cantons.

Is a distribution by a company in liquidation taxed as a dividend, capital gain, or any combination? Liquidation surpluses are taxed as income from movable property unless the payment constitutes a repayment of existing capital contributions (nominal paid-up share capital and recognized capital contribution reserves).38 As dividends, liquidation surpluses may benefit from partial taxation relief. They are taxable at the federal level only in the amount of 60% if the respective participation rights constitute at least 10% of the share capital or nominal capital of a corporation or cooperative.39 Cantonal tax laws provide for similar tax relief.40

Liquidation surpluses that a Swiss entity pays to its shareholders are generally41 subject to the 35% withholding tax.42 Whereas Swiss recipients can claim a refund of the withholding tax, non-Swiss recipients may reclaim the withholding tax only based on a double tax treaty between Switzerland and the recipient's country of residence.As for income tax purposes, the taxable surplus for withholding tax purposes corresponds to the net proceeds, minus the nominal paid-up share capital and the recognized capital contribution reserves.43

How does Switzerland tax a pre-residence sale of property when part of the proceeds of sale are received before and part after the individual becomes a resident?

As the taxation of pre-residence sale of property when part of the proceeds of sale are received after the individual becomes a resident depends on the particular facts and circumstances of each case, it is recommended to discuss such situations and the respective tax consequences with the competent tax authority in advance. If an individual was entitled to the entire proceeds before he became a resident of Switzerland, it might be arguable that the part of the proceeds that he received as a resident of Switzerland will also be allocated to his previous residence state.

When immovable property is sold, Switzerland taxes only the gain from the sale of immovable property located in Switzerland; gains from the sale of real estate located abroad are tax exempt based on Swiss domestic law and most Swiss tax treaties and are taken into account only in determining the tax rate applicable.

How does Switzerland treat a distribution from a foreign trust to a resident beneficiary of property that has increased in value while the property was held by the trust?

Is the beneficiary treated as having income or gain from the distribution? Because Switzerland does not have its own trust legislation, it ratified the Hague Convention on the Law Applicable to Trusts and on Their Recognition in 2007. In addition, the Swiss Tax Conference and Federal Tax Administration issued a Circular Letter dealing with the taxation of trusts in Switzerland.44 In practice, the qualification (and thus the taxation) of a trust is agreed with the competent Swiss tax authorities based on tax rulings. Hence, it is recommended to request the respective tax rulings regarding income, wealth, and inheritance and gift tax consequences, as well as with respect to the possibility of withholding tax refunds from the competent tax authorities in advance, i.e., before moving to Switzerland. The taxation of a trust depends on the qualification of the trust:45

  • If a foreign trust is qualified as revocable, it is typically treated as transparent for Swiss tax purposes and a distribution to a resident beneficiary is qualified as a gift from the settlor to the beneficiary and thus subject to gift tax (according to cantonal tax law).
  • If the foreign trust is qualified as an irrevocable fixed interest trust, the beneficiary of the trust is treated as a usufructuary. Hence, the trust assets are allocated to the beneficiary for Swiss wealth tax purposes and the beneficiary will generally be subject to income tax on the trust's income irrespective of whether that income is distributed to the beneficiary or accumulated by the trust. Accordingly, if the beneficiary holds the property as a "private" asset, distribution of the property will be tax free (if it is movable property).46
  • A foreign trust might be qualified as an irrevocable discretionary trust. Accordingly, distributions to the beneficiary are qualified as taxable income at the level of the beneficiary whereby distributions of trust capital are generally tax free.

How is the beneficiary taxed when he later sells the distributed property and how would gain be calculated? Depending on the treatment of the trust structure, it may be recommended to pre-discuss the later sale of the property with the competent tax authorities, especially if the distribution of the property was subject to tax. If the individual holds the property as a "private" asset and the asset is movable property, a subsequent sale of the property will be tax free.47

Taxation of new resident on corporate distribution attributable to pre-residence profits.

As Switzerland follows the Reinvermogen-szuflusstheorie,48 the moment when the shareholder is entitled to the distribution respectively receives the distribution is decisive and not when the profits of the distributing company were accumulated. Hence, when moving to Switzerland, no tax will be imposed on the accumulated, undistributed profits in Switzerland; the profits accumulated before the shareholder became a resident of Switzerland are taxable only on distribution in Switzerland. However, depending on the tax system of the former residence state, the profits accumulated at the corporation level might be taxed on emigration of the individual, as the former resident state might, e.g., levy an exit tax on these undistributed profits.

Accordingly, normally, no special rules apply from a Swiss perspective in these cases. However, it is advisable to pre-discuss specific situations with the competent tax authorities and request a respective ruling. The rules regarding distributions constituting a repayment of existing capital contributions (nominal paid-up share capital and recognized capital contribution reserves) generally also apply in these cases and are thus tax free.49

If the participation rights giving entitlement to the distribution constitute at least 10% of the share capital or nominal capital of a corporation or cooperative, partial taxation relief on distribution or sale of the shares at the federal level (and similar cantonal tax relief) will be granted.50 Depending on the tax law of the former residence state, a more favorable outcome may result from distribution of the accumulated profits either before or after the individual moves to Switzerland, as the taxation right regarding the distribution will be allocated according to the applicable tax treaty (if a tax treaty between Switzerland and the former residence state is in place). In light of the Swiss lump-sum taxation regime, for example, it might be favorable to distribute the profits after the individual relocated to Switzerland. Thus, unfavourable tax treatment could be addressed.

Footnotes

1 28 JOIT 28 (March 2017)

2 28 JOIT 46 (April 2017).

3 Art. 3(1), Federal Direct Tax Act, Bundesgesetz uber die direkte Bundessteuer (DBG), December 14, 1990, SR 642.11. The text is available at www.admin.ch/opc/de/classified-compilation/19900329/index.html.

4 Art. 3(2) DBG.

5 Arts. 3(3)(a) and (b) DBG and Art. 3(1) Federal Law on the Harmonization of Direct Cantonal and Communal Taxes, Bundesgesetz uber die Harmonisierung der Direkten Steuern der Kantone und Gemeinden (StHG), December 14, 1990, SR 642.14.

6 Art. 6(1) DBG.

7 Art. 16(3) DBG.

8 Art. 2(1)(d) StHG.

9 Bader and Seiler, "Taxation of High-Net-Worth Individuals in Switzerland," 69 IBFD Bulletin for International Taxation No. 4/5 (2015), page 252.

10 See Eidgenossische Steuerverwaltung (ESTV), Kreisschreiben Nr. 36 "Gewerbsmassiger Wertschriftenhandel," July 27, 2012 (circular letter of the Federal Tax Administration (SFTA) No. 36, Professional Security Dealer).

11 BGer, June 9, 1999, StE 1999, para. B 23.1 no. 43.

12 Note 9, supra.

13 Arts. 20a(1)(a) and (2) DBG; Arts. 7a(1)(a) and (2) StHG.

14 Art. 20a(2) DBG.

15 Art. 20a(1)b DBG; Art. 7a(1)(b) StHG.

16 Art. 20(1bis) DBG.

17 Art. 12(3)(e) StHG.

18 See ESTV, Steuerinformationen, "Die Besteuerung der Grundst ckgewinne," July 1, 2015 (tax information of the SFTA, taxation of capital gains on real estate).

19 See Arts. 1(1) and 2 of the Ordinance governing the deduction of specific professional costs for federal direct tax purposes of key employees and specialists temporarily working in Switzerland (Expatriate Ordinance, ExpaV), Verordnung uber den Abzug besonderer Berufskosten bei der direkten Bundessteuer von vorubergehend in der Schweiz tatigen leitenden Angestellten, Spezialisten und Spezialistinnen (Expatriates-Verordnung, ExpaV), December 12, 2000, SR 642.118.3. nung, ExpaV), December 12, 2000, SR 642.118.3.

20 Art. 2 ExpaV.

21 Arts. 1(2) and (2) ExpaV.

22 See Erlautender Bericht zur Revision der ExpaV, page 3 (available under www.news.admin.ch/message/index.html?lang=en&msg-id=55929.

23 Id. Art. 1(1).

24 Id. Art. 4a.

25 Whereby the concept of expatriates under Swiss social security law does not necessarily correspond to the definition of expatriates according to the ExpaV.

26 Art. 14 DBG; Art. 6 StHG.

27 See Art. 6(1) StHG; Art. 14(1) DBG. Same as individuals taxed ordinarily, individuals applying for the lump-sum taxation regime also need a residence permit. While the application for residence permits for EU/EFTA citizens is usually a mere formality, the granting of residence permits for non-EU/EFTA citizens normally depends on whether the application for the lump-sum taxation regime will be approved.

28 Art. 14(2) DBG, Art. 6(2) StHG.

29 Note 9, supra, page 254.

30 Id.

31 Id.

32 Wealth taxes are not imposed at federal level.

33 See e.g., section 2(1) Cantonal Gift and Inheritance Tax Law of the Canton of Zurich, Erbschaftsund Schenkungssteuergesetz (EschG), September 28, 1986, LS 632.1. As an exception, gift tax can also be due if the donor does not reside in Switzerland—the canton of Tessin imposes gift tax on donees residing in Tessin if the donor resides abroad.

34 Section 57(3) EschG.

35 See ESTV Kreisschreiben Nr. 5, "Umstrukturierungen," June 1, 2004, effective from July 1, 2004 (Circular Letter of the SFTA No. 5, Reorganizations); Arts. 19(1)(c) and 61(1)(c) DBG; Arts. 8(3)(c) and 24(3)(c) StHG; Art. 6(1)(abis) StG.

36 For the similar rule regarding corporations, see Art. 64 DBG.

37 Art. 12(3)(e) StHG.

38 Art. 20(1)(a) DBG; see www.swisstaxnetwork.ch/corporate-taxationbesteuerung-jur-personen/Tax-Consequences-of-Liquidation.

39 Art. 20(1bis) DBG; see also Arts. 18b, 58, 69 DBG; Arts. 24(1), 28(1), (1bis) StHG.

40 Art. 7(1) StHG; see, e.g., section 35(4) Tax Act of the Canton of Zurich, Steuergesetz des Kantons Zurich, June 8, 1997, LS 631.1.

41 Except when the notification procedure (Meldeverfahren) applies.

42 Art. 20(1) of the Ordinance on the Federal Withholding Tax, Verordnung uber die Verrechnungssteuer (Verrechnungssteuerverordnung, VStV), December 19, 1966, SR 642.211.

43 See ESTV, Kreisschreiben Nr. 29a, "Kapitaleinlageprinzip neues Rechnungslegungsrecht," September 9, 2015, effective as per September 9, 2015 (Circular Letter of the SFTA No. 29a, capital contribution principle).

44 Schweizerische Steuerkonferenz Kreisschreiben Nr. 30, "Besteuerung von Trusts," August 22, 2007 (Circular Letter of the Swiss Tax Conference No. 30, Taxation of Trusts).

45 In practice, the qualification (and thus the taxation) of a trust is agreed with the competent Swiss tax authorities based on a tax ruling.

46 See Art. 16(3) DBG.

47 Id.

48 According to the Reinvermogenszuflusstheorie, only income that the taxpayer realized is taxable.

49 Art. 20(1)(a) DBG; see www.swisstaxnetwork.ch/corporate-taxationbesteuerung-jur-personen/Tax-Consequences-of-Liquidation.

50 Art. 20(1bis) DBG; see also Arts. 18b, 58, 69 DBG; Arts. 24(1), 28(1), (1bis) StHG; Art. 7(1) StHG; see e.g., section 35(4) Tax Act of the Canton of Zurich.

Originally published by Journal of International Taxation, March 2017.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions