When deciding to invest in real estate in Switzerland one can do so by buying the asset on their own name or using a company.
Purchasing real estate in Switzerland through a company can offer several benefits, particularly in terms of tax efficiency, privacy, and flexibility in ownership structure. Below are the key advantages:
1. Tax Efficiency
– Capital Gains Tax: In some Swiss cantons, capital gains realized from the sale of real estate by a company may be taxed differently compared to gains realized by individuals. Corporate structures may provide opportunities for deferral or reduction of capital gains tax, particularly if the company is based in a canton with favourable tax laws.
– Deductibility of Expenses: Companies can often deduct a wider range of expenses related to the maintenance, improvement, and management of the property, reducing the taxable income generated by the property.
– Corporate Tax Planning: By purchasing through a company, especially a holding company, owners can optimize their overall tax structure, benefiting from potential reductions in corporate income tax or dividend tax, depending on the jurisdiction and specific corporate structure.
2. Privacy and Confidentiality
– Anonymity: Buying real estate through a company can help maintain privacy, as the property is registered in the company’s name rather than the individual’s. This can be particularly valuable for high-net-worth individuals who prefer to keep their real estate holdings private.
3. Estate Planning and Succession
– Simplified Succession Planning: Owning real estate through a company can simplify the process of transferring ownership in the event of death or inheritance. Shares in the company can be transferred according to the company’s bylaws or a shareholder agreement, potentially avoiding the need for a formal and public probate process.
– Control and Flexibility: Using a company structure allows for more flexible arrangements in estate planning, such as the division of ownership among family members or the implementation of specific governance structures to manage the property.
4. Ease of Transfer
– Sale of Shares: Instead of selling the real estate itself, the owner can sell shares in the company, which may be more tax-efficient and administratively simpler in some cases. This can also make the transaction less visible to tax authorities, depending on the jurisdiction.
– Lower Transfer Taxes: In some cantons, transferring shares of a company that owns real estate might be subject to lower transfer taxes compared to directly transferring the property.
5. Asset Protection
– Limitation of Liability: Owning property through a limited liability company (such as a Swiss AG or GmbH) can shield the owner’s personal assets from claims arising from the property. This is particularly relevant if the property is used for commercial purposes or rented out.
6. Attractiveness to Foreign Buyers
– Overcoming Legal Restrictions: Switzerland imposes restrictions on foreign nationals purchasing real estate, particularly residential properties (Lex Koller). However, buying through a company, especially if structured properly, might offer a way to navigate these restrictions, though this depends on the specific circumstances and requires careful legal advice.
7. Professional Management
– Efficient Property Management: Companies can employ professional management teams to handle the day-to-day operations of the property, offering a more efficient and systematic approach to managing large or complex real estate holdings.
Conclusion
Purchasing real estate in Switzerland through a company can provide significant advantages in terms of tax efficiency, privacy, asset protection, and succession planning. However, this approach requires careful structuring and professional advice to navigate Swiss legal and tax regulations effectively. It is advisable to consult with Swiss legal and tax experts to ensure that the benefits are fully realized and that compliance with all local laws is maintained.
