Workshop led by Britta Rehfisch and Ralf Imstepf as part of the ISIS seminar on September 12–13, 2022, titled “VAT Pitfalls in Real Estate Transactions.”
Note: This language version is an automatically generated translation. The text may therefore contain linguistic and terminological errors.
view in original language (German)Real Estate AG sells its commercial property—which it constructed in 2017 for CHF 10 million (excl. VAT) and has since leased under the full VAT exemption—to Invest AG for CHF 15 million (land value: CHF 3 million).
Real Estate AG sells the property as described in the base case to Hospital AG. To date, 50% of the property has been leased to hospital employees and the other 50% to a restaurant operator with an option to purchase. The purchaser wishes to continue the current use of the property. It settles taxes using flat-rate tax rates.
Group company A owns a property that it has used for its production activities to date but will no longer need in the future, as it is outsourcing production to third parties. It transfers this property to group company B at income tax values. The primary purpose of Group Company B is to hold, manage, and actively market real estate.
From a direct tax perspective, the requirements for a tax-neutral intra-group transfer of business fixed assets pursuant to Art. 61(3) DBG and Art. 24(3quarter) StHG are met.
Construction company A wishes to spin off its real estate holdings into a subsidiary, B, as part of its succession planning. To this end, the real estate (properties leased under an option agreement), two part-time employees for property management, receivables and liabilities arising from the real estate business, and business fixed assets (furniture, software) will be transferred to the subsidiary.
Hephaistos AG, which has been registered in the VAT register since 1995 and effectively files VAT returns, uses a building in Uster, in the canton of Zurich, for commercial purposes. On January 1, 2021, Hephaistos AG has the commercially used building demolished by Perses AG and begins partial development of the now vacant lot. Apartments are being built for rental to private individuals.
Perses AG issues an invoice to Hephaistos AG for the demolition, including VAT.
Xenios AG, which has been registered in the VAT register since 1995 and effectively files VAT returns, uses a hotel building in Ostermundigen in the canton of Bern for commercial purposes (hotel operations). On January 1, 2021, Xenios AG had the hotel building renovated by Janus AG; hotel operations were discontinued. After the renovation, the former hotel rooms were rented out as apartments to private individuals.
Janus AG issues an invoice to Xenios AG for the renovation, including value-added tax.
Hephaistos AG, which has been registered in the VAT register since 1995 and actually files VAT returns, uses a building in Brig in the canton of Valais for commercial purposes. On January 1, 2021, Hephaistos AG sells the commercially used building to Thetis AG. Thetis AG then commissions Perses AG to carry out the demolition. Subsequently, it begins development of the now vacant lot. Apartments are being built for rental to private individuals.
Perses AG issues an invoice to Thetis AG for the demolition, including value-added tax.
Hephaistos AG, which has been registered in the VAT register since 1995 and effectively files VAT returns, owns a building in Airolo, in the canton of Ticino, that is used for commercial purposes. On January 1, 2019, Hephaistos AG sells the building to Thetis AG. Thetis AG intends to demolish the building and subsequently construct apartments (to be rented to private individuals for residential purposes). Thetis AG commissions Perses AG to carry out the demolition, which takes place on July 1, 2022. From the purchase of the residential building on January 1, 2019, until its demolition on July 1, 2022, Thetis AG leased the commercial building with an option (temporary use).
Perses AG issues an invoice to Thetis AG for the demolition, including VAT.
