I have a Swiss Limited Company (SA).
Basically the only asset other than cash in the bank is an apartment block which is on the accounts as CHF 580,000. There is a loan of CHF 102,000 on the property.

Balance Sheet as at 31 Dec 2009 is as follows:

FIXED ASSETS
Building & Land CHF 640,000
CURRENT ASSETS
Cash in Bank CHF 10,000
CURRENT LIABILITIES
Loan On Building CHF 102,000
Share Holder Loan CHF 60,000

Net Assets CHF 488,000

Share Capital CHF 100,000
Share Reserve CHF 20,000
Profit & Loss CHF 368,000

CHF 488,000

I have somebody interested in buying the apartment block with land.
I need to know the tax implications if I sell the apartment block with land on its own at say CHF 2,000,000.

Questions:

(1) Am I correct in assuming that the company would make a Capital Gain of (2,000,000 - 580,000) CHF 1,420,000 and would have to pay Corporation tax on this? Are thee any tapering reliefs/indexation etc for time on the basis that the building was put on the balance sheet in early 70's

(2) I have taxable losses brought forward of about CHF 32,000 on the Company Tax Return. I do not understand how this has come about as the accumulated P&L states CHF 368,000. How could this arise?

(3) Could I offset the CHF 32,000 losses brought forward, against the CHF 1,420,000 for tax?

(4) How do I find out the Corporation Taxes on this profit (Federal, Canton Ticino and Comune Tax).

Or should I consider selling the 100% share capital of the company (which includes the land and building obviously) where I would then pay personal capital gains on the shares?

I can not answear with certainty the other points so I will not try BUT

Personal capital gains sounds better I think if you want to sell the company that is.

That is if the counterparty wants to buy your company of course and not just the house (because of liability issues), I guess though in the sale & parchase agreement you can have a provision that you protect them from any liability that will arise if you are sure you managed your company well.

I hope I helped a tiny bit

In theory yes, BUT tax authorities thought of that before you... Sale of sares of a company that holds mainly real estate is assimilated to the sale of the real estate itself and therefore, subject to real estate capital gain tax. Nevertheless, as this is a cantonal regulation, this highly depends on where the individual is resident, where the company is registered and where the real estate is located. In some cantons, sale of shares in a so-called "real estate company" are also subject to the real estate transfer tax...

IANAA and you'd be best to ask for professional advice off-forum, but...

1. You say the apartment block is on the accounts at 580k yet the accounts show the block + land at 640K. And then you say you're selling the apartment block with land on it's own. A bit more information is needed here to get the figures correct. Does the 640k include additional land? Is the 580K the original purchase price? Has depreciation been deducted and claimed in the tax returns in previous years?

2. Hard to determine without looking at previous years' accounts and without knowing more about the swiss tax system.

3 and 4. That great source of information, Wikipedia, states: "There is no capital gains tax in Switzerland for residents. Corporate capital gains are taxed as ordinary income. Capital gains tax is charged to individuals on the sale property if sold within 10 years of purchase."

Considering the sum involved, it would appear wise to seek qualified professional Swiss advice, especially if there is a possibility of the real estate transaction can be transferred to the individual and the ownership is more than 10 years.

Thank you for your opinions.

With regard to your opinions, I purcahsed the company with the property as opposed to just the property for the following reasons which may be of interest to some of you:

(1) The company was owned by an Italian citizen and Italian resident, though the shares were held by nominee Swiss shareholders and directors/adminitrators
(2) I would have had to pay substancially more for the property than buying the company with the property (because of Capital Gains/CT issues)
(3) There was already a mortgage in the property that would mean there would be no need to organise a mortgage
(4) Legal costs were less for share transfer ("legalisation of shares") than stamp duty and notary fees on property purchase.

Obviously I did Due Diligence on the company and obtained sworn avidavits/guarantees from the shareholders and administraors/directors that there were no unknow liabilities/contingent liabilities which i would be able to give on the sale of a company.

What I am interested in knowing is the CT payable on a profit of say CHF1.4 Million on a Swiss Company based in Ticino in Mendrisio.
i.e. The tax rates for the Federation, Canton and Comune and how they are calculated?

Nearly totally wrong... may I slightyl modify your last sentence and rephrase it this way?
"[...] it would appear wise to seek qualified professional Swiss advice, especially if you are looking for tax information on Switzerland and cantonal tax practice on Wikipedia."

Sorry, couldn't resist...

Syt
Swiss certified tax expert, still more expensive, but better than Wikipedia...

I really cannot see what would be so difficult on calculating the corporation tax on a profit with a standard template/calculation as you would do in the UK.
I understood in Switzerland that you calculate the tax, take it off to get the net figure and then workk out the CT on that (some weird thing like that).

It probably makes more sense to go and see my friendly Inspector of Taxes in Mendrisio to get the answer.

The answer is all in the last line, all the rest is possible, probable, maybe or could be.

Go and see a tax accountant

As I used to work for them and they appear to have an office in Lugano, you could try here:
http://www.pwc.ch/de/dyn_output.html...tionpageid=866

Although there may well be cheaper options...

As the asset the company is selling is property, won't Grundstuckgeweinsteuer - the special tax on profit on selling property- apply before any other taxes??

What did the friendly "Inspector of Taxes" in Mendrisio say?

TBH, you need to pay a tax advisor if the above can't give you the answer and with the possible tax liablity you are talking about paying the advsisor will be more than worth it. Plus you can charge it as an expense to the company.

Good luck!

The company does not make a trading profit because I pay myself a salary to eliminate the profit.
However, you have a good point here whether the profit on the sale is treated as a Trading Profit or a Capital Gain. In the Uk, this would not make a difference because Corporation Tax is the same on a Trading profit as Capital Gain.

The rates of Corporation tax would be a start for Federal, Cantonal (Ticino) and Comune (80% of Cantonal for Personal Tax). Where do I find these rates please?

Hi,

You give your location as London & Ticino, there is a good chance that you could be liable to UK capital gains taxes, It's not clear that you have really brocken ties with the UK assuming you have ever been a UK resident.

A company is a separate legal entity.
The company is a Swiss company and resident in Switzerland.
The property is owned by the Swiss company and the property is in Switzerland.
Therefore any gain on the sale of the property whether it is Capital Gains or Income is subject only to Swiss Tax.

Though I am in both Switzerland; and the UK from time to time; I am officially resident in Switzerland for tax purposes. All my income officially is earned and declared in Switzerland.