Thierry De Mitri's workshop at the ISIS seminar on November 6, 2024, entitled "Selected issues in real estate funds".
Note: This language version is an automatically generated translation. The text may therefore contain linguistic and terminological errors.
view in original language (French)The real estate fund known as Immo Real Estate Fund, headquartered in Geneva, is managed by Immo Management SA, headquartered in Geneva. As a contractual fund, it directly owns investment properties in the cantons of Geneva, Vaud, and Fribourg.
For organizational and economic reasons, it has been decided to change the fund manager and to entrust the management of the real estate portfolio held by Immo Real Estate Fund to a fund manager headquartered in the canton of Vaud named Profond Management SA.
However, before proceeding with this change in fund management service provider, we wish to analyze the tax implications of this transfer, as some argue that the change in fund management could trigger taxation in the form of transfer taxes (or registration fees in the canton of Geneva).
The real estate investment fund named Pro Invest Real Estate, headquartered in Zurich, owns real estate in the canton of Geneva. As part of the intercantonal allocation of taxable items, the fund reports the properties at their book value in its tax return. Thus, the properties are reported at a value of CHF 219,000,000 in the canton of Geneva, thereby generating a share of taxable equity in the canton of Geneva of approximately CHF 152,000,000 out of a total of CHF 348,000,000.
In subsequent years, the method for the intercantonal allocation of taxable items was applied according to the same scheme. However, the Canton of Geneva determined that the values relevant for capital tax were derived from tax values rather than book values, thereby resulting in an increase in the taxable bases in the Canton of Geneva as follows:
A similar adjustment was made for the 2014 and 2015 tax periods, resulting in an increase of several tens of millions in the tax base each time.
Simon, a resident of the Canton of Vaud, is a shareholder of a real estate company named Immo Valio SA, headquartered in the Canton of Vaud. The company owns real estate located in the cantons of Fribourg, Vaud, and Geneva. Simon is approached by a real estate SICAV headquartered in Geneva that is interested in purchasing part of Immo Valio SA’s real estate portfolio, specifically the following properties:
However, the real estate SICAV does not wish to pay for all the properties with cash, but intends to proceed via an asset swap and a partial cash payment, which will allow it to cover any tax costs associated with this transaction.
Immo Valio SA therefore receives shares worth CHF 10,000,000. The value of the shares issued by the real estate SICAV in connection with the purchase of the properties amounted to CHF 200, for a total of 50,000 shares.
The contractually organized investment fund named Swiss German Real Estate is headquartered in the canton of Zurich. It is a mixed REIT.
It owns three recently acquired real estate companies in the canton of Vaud, which hold three rental properties located in Morges. These three real estate companies, named SI Rue du Marché 7, SI Rue du Marché 9, and SI Rue du Marché 11, are in fact contiguous properties.
The real estate fund therefore wishes to merge them to simplify the structure and reduce costs.
Each of the properties owned by the SI companies has the following tax assessments:
In addition, the Swiss German Real Estate REIT also owns four properties in Lausanne, with a combined tax assessment of CHF 30,000,000.
