Taxes on income or profits

Tax consequences for the vendor

The legal status of the vendor is relevant for tax purposes:

  • vendor is a natural person
  • vendor is a legal person.

Vendor is a natural person

Vendors will be natural persons (sole trader) or partnerships (general partnership, limited partnership) acting in their own right.

The profit earned from an asset deal will be liable to tax:

  • direct federal tax
  • cantonal income tax.

Finally, profits are then subject to AHV/IV/EO social security charges, since these insurers consider such profits as income from earnings.

Replacement of assets

Whilst under the terms of the new tax legislation (Articles 30 and 64 of the Swiss Federal Law on the Direct Federal Tax or Articles 8(4) and 24(4) of the Federal Law on the Harmonisation of Direct Canton and Municipal Taxes), investment assets may be sold and the proceeds reinvested to procure a replacement investment asset necessary for the business, this is not of practical significance, since it is not possible to procure an entire business on a replacement basis.

Business succession

Nowadays, many entrepreneurs deal with the issue of succession sooner and are quick to change their partnerships, which have increased in size compared to their initial post-formation stage, into capital companies order to

  • avoid liability to tax upon liquidation;
  • conclude the five-year sale retention period in the new corporate form and thereafter to complete the business succession (sale, MBO, etc.); see the following box.

Transformation of a business into a capital company?

  • A sole trader or partner cannot avoid liability to pay the above tax by transforming the sole tradership or partnership into a capital company:
    • five-year sale retention period
      • the breach of this retention period will result in supplementary taxation and in the tax consequences which would have obtained had the business transformation never occurred.
    • transformations to legal status must therefore be planed sufficiently in advance.

Vendor is a legal person

The profit earned from the asset deal:

  • amounts to the difference between the net proceeds of the sale and the book value for tax purposes of the assets sold;
  • is taxed along with other income
  • if the assets sold include equity interests, is subject to the investment reduction (which must be claimed).

If the assets sold include real estate, any capital gains earned are subject to taxation:

  • direct federal tax
  • cantonal taxes: the tax consequences differ from canton to canton, depending upon whether or not the canton applies a special tax on capital gains from real estate

Tax consequences for the investor


As a matter of principle asset deals do not have any tax implications for the investor.

Tax advantages of asset deals

  • possibility of depreciation allowances (more beneficial than for share deal)
    • allocation of the (full) purchase price to the assets acquired up to actual market value
    • capitalisation of any surplus purchase price as goodwill
    • amortisation of assets and goodwill at the relevant amortisation rates
  • leveraged financing
    • deduction of interest from income of the business acquired through the asset.


If the contractual parties are legal persons then:

  • procedural rights and obligations and tax liability are transferred to the investor (known as “tax succession”, see Article 54(3) of the Swiss Federal Law on the Direct Federal Tax), provided that the vendor is liquidated;
  • tax succession requires the investor to adopt precautionary measures (clarification as to whether the divesting legal entity is to be liquidated and securing of the likely amounts of federal taxes).
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