SWITZERLAND Law and Practice Contributed by: Marco Toni, Gilles Pitschen, Leonard Baumann and Lara Pafumi, Loyens & Loeff
• the chosen course of action would actually lead to a significant tax savings, if accepted by the tax authority (“effective element”). Particular attention should be paid to the transfer of tax loss carryforwards as part of the spin-off and, subsequently, the transfer of such tax loss carry- forwards and the offset against the taxable profit of the acquiring business. In general, offset of tax loss carryforwards is possible to the extent that the busi- ness will be taken over and continued, and that the structure would not be considered as tax avoidance. For completeness purposes, however, it should be noted that a contribution of a business followed by an upstream merger could trigger adverse Swiss tax consequences. 5.4 Timing and Tax Authority Ruling The timing of a spin-off usually depends on the prepa- ration of the transaction from tax and legal perspec- tives, as well as from an operational perspective. From a legal perspective, a spin-off may be structured in different 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 sell- ing the shares in the newco to the buyer); or • a statutory demerger pursuant to the Swiss Merger Act. In the case of a transfer of a business with employ- ees, the employer has certain information obligations towards the employees and ‒ if measures apply that affect the employees – a consultation procedure must be implemented. Although no specific waiting period applies with respect to the employees’ information and consultation, it is usually recommended that the employees be informed and consulted at least one month prior to the effective date of the spin-off. From a tax perspective, it is best 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 the 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 imperative that the tax rulings are filed 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 confirmation can usually be obtained between three and six weeks after filing from the Swiss Federal Tax Administration, and usually between three and 12 weeks after filing from 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. 6. Acquisitions of Public (Exchange- Listed) Technology Companies 6.1 Stakebuilding In Switzerland, it is common to acquire a certain stake in a public company prior to making a public tender offer. The stakebuilding can take place as a private transaction or through trades on the exchange. Whenever the relevant shareholder reaches or exceeds a threshold of 3%, 5%, 10%, 15%, 20%, 25%, 33.3%, 50% or 66.6% of votes in the company through an acquisition of shares (or falls below such thresholds as a result of a sale of shares), the rel- evant shareholder has to notify the company and the exchange. These thresholds apply to stakebuilding in: • companies having their corporate seat in Switzer- land and having all or parts of their participations listed on a Swiss stock exchange; and • companies having their corporate seat abroad, but which have all or parts of their participations primarily listed on a Swiss stock exchange.
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