19 May 2020

Asset-Deal / Swiss VAT

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  • Tax
  • Trade / Logistics / Competition
  • Transactions / M&A

According to a new decision of the Federal Supreme Court, the Swiss VAT risks are also transferred to the buyer in the case of an asset deal (partial tax succession). In view of this development, it is advisable to perform similar Swiss VAT assessments (i.e. due diligence) for asset deals as for share deals.

  • Fredrik Dekker

    Tax Advisor
The Swiss Federal Supreme Court ("Court") has taken a new approach to asset deals with its recently published decision 2C 923/2018 ("Decision").

In the past, the Swiss VAT risks associated with the acquisition of assets and liabilities (asset deal) remained with the seller, unless all assets and liabilities were transferred and the transferring entity ceased to exist with the transaction (and few other exceptions). The buyer of the assets and liabilities was thus protected and did not have to concern about the historical VAT risks of the business acquired by means of an asset deal. This in contrast to a share deal, where the shares in the company and thus the whole "VAT history" of the company were acquired.

With the new Decision, the Court has modified the previous confirmed practice based on the new article 16 paragraph 2 Swiss VAT Act, which came into force on 1 January 2010. According to the Decision, it should be assumed that in the case of an asset deal, the VAT risks of the acquired business are transferred to the buyer (partial tax succession), even if the selling legal entity continues to exist and continues to carry out its operations.

The final implications of the Decision have not yet been finally determined. There are still questions open.

However, the Decision means that in future not only in the case of a share deal, but now also in the case of an asset deal, the possible Swiss VAT risks (and opportunities) should be carefully assessed by the buyer before the acquisition (for example with a due diligence) and corresponding provisions should be included in the purchase contract.
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