SWITZERLAND Law and Practice Contributed by: Nicolas Wehrli and Melanie Wilhelm, Loyens & Loeff
• a legal arrangement chosen by the parties involved appears to be unusual (“ insolite ”), improper or out- landish, or in any case completely inappropriate to the economic circumstances (“objective element”); • it can be assumed that the chosen legal arrange- ment was made abusively, merely in order to save taxes that would be due if the appropriate circum- stances were in place (“intention to avoid”; “sub- jective element”); and • the chosen course of action would actually lead to significant tax savings, if accepted by the tax authority (“effective element”). Particular attention should be paid to the transfer of tax losses carried forward as part of the spin-off and subsequently the transfer of such tax losses carried forward and the offset with taxable profit of the acquir- ing business. In general, the offset of tax losses car- ried forward is possible to the extent that the business will be taken over and continued and that the structure would not be considered as a tax avoidance. 3.4 Timing and Tax Authority Ruling The timing of a spin-off usually depends on the prepa- ration of the transaction from an operational perspec- tive, and from a tax and legal perspective, including the informing and consultation of employees. From a legal perspective, a spin-off may be structured in dif- ferent ways, including via: • a direct business transfer by means of an asset deal (“singular succession”) or as a bulk transfer pursuant to the Swiss Merger Act (“universal suc- cession”); • a two-step demerger (transferring the business to a newly incorporated subsidiary – “newco” – and transferring the business to the seller, with subse- quent sale of the shares in the newco to the buyer); or • a statutory demerger. Where there is a transfer of a business with employ- ees, the employer has certain information obligations, and a consultation procedure must be implemented if measures apply that affect the employees. While no specific waiting period applies, it is usually recom- mended to inform and consult the employees at least one month prior to the effective date of the spin-off.
From a tax perspective, it is standard practice to file advance tax rulings with: • the competent cantonal tax authority for corpo- rate income tax and annual capital tax purposes – ie, the cantonal tax authority responsible for the assessment of corporate income tax and annual capital tax of the company; and • the Swiss Federal Tax Administration for the pur- poses of Swiss withholding tax and stamp duties (usually levy and refund). It is critical that the tax rulings are obtained prior to the implementation of the spin-off, as a confirmation will only be granted for transactions that have not yet occurred. Depending on the complexity of the spin-off, a con- firmation can usually be obtained between four and eight weeks after filing with the Swiss Federal Tax Administration and usually between three and 12 weeks after filing with the cantonal tax authorities, although this varies largely between the different can- tonal tax authorities. The preparation and completion of a spin-off usually takes six to 12 months. 4. Acquisitions of Public (Exchange- Listed) Energy and Infrastructure Companies 4.1 Stakebuilding In Switzerland, it is common for an investor to acquire a stake in a public company before launching a public tender offer. This stakebuilding may occur through pri- vate deals or on-exchange trades. Swiss law requires disclosure when an investor’s holding crosses specific thresholds – 3%, 5%, 10%, 15%, 20%, 25%, 33⅓%, 50%, or 66⅔% – in companies with their seat in Swit- zerland and listed on a Swiss exchange, or in foreign companies primarily listed in Switzerland. The notification obligation applies not only to direct share acquisitions or disposals but also to co-ordi- nated purchases, conversions of participation or profit certificates, exercises of options or convertibles, and capital changes. It is triggered upon the binding trans- action or, in the case of capital changes, upon pub-
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