SWITZERLAND Law and Practice Contributed by: Francis Nordmann, Johannes Bürgi, Christian Eichenberger and André Kuhn, Walder Wyss Ltd
stones and completion dates are not achieved. Moreover, the parties often agree on a penalty to ensure that milestones and completion dates are complied with. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance It is common for owners to seek additional forms of security, particularly guarantees or sureties of a Swiss bank or insurance company. 7.6 Liens or Encumbrances in the Event of Non-payment Contractors that have supplied labour and/or materials are permitted to a statutory lien, while designers/planners for the intellectual work (plans, designs, etc) are excluded from such lien. The lien is entered into the land register only if, inter alia, the claim has been acknowledged by the owner or confirmed in a court judgment, and may not be requested if the owner provides the
purposes, and that the real estate property sold is not used exclusively for private purposes. In this case, the standard rate of 8.1% applies. Please note that all tasks relating to the construc - tion of a new building for a landlord are subject to VAT. Accordingly, input VAT charges incurred on the construction can only be recovered if the landlord is exercising its option to submit the rent and the sale of the property to VAT. Beside VAT, local transfer taxes and notary and/ or land registry fees also apply. Each of the 26 cantons has specific laws and rules on these transfer taxes and fees. Depending on the loca - tion of the property transferred, these additional charges may be substantial, particularly as nota - ry and land registry fees in some cantons are calculated based on the value of the property transferred. While a few cantons (such as the cantons of Zürich and Schwyz) have abolished the real estate transfer tax, all cantons levy land registry fees. In cantons where the real estate transfer tax is not known or has been abolished, notary and land registry fees may be substan - tial and can include a tax component as well, if computed based on the value of the property transferred. While a change of control in a real estate prop - erty company by the sale of (typically) a major - ity stake in the shares triggers transfer tax in those cantons that have a separate real estate transfer tax, notary and land registry fees are only triggered in the event of a change of title of the underlying property (and not by a sale of a majority stake in a real estate property com - pany). With due regard to these local taxes, it may therefore be worth conducting a compari - son between the tax consequences of an asset versus a share transaction. In a few instances, the overall charge of transfer taxes and notary
contractor with adequate security. 7.7 Requirements Before Use or Inhabitation
A project undergoes an official inspection by the competent authority of the local community before it can be inhabited or used for its intend - ed purpose.
8. Tax 8.1 VAT and Sales Tax
Generally, the sale of real estate properties is exempt from VAT without credit of input VAT. However, with respect to commercial real estate properties, the landlord can opt to submit the rent to VAT and the seller can opt to submit the property sold to VAT. Accordingly, VAT applies to the sale, provided the buyer is (or will become) a taxable person and is registered for Swiss VAT
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