Group companies as intermediaries for Swiss transfer stamp tax purposes
By Lenz & Staehelin Â
Recent clarifications from the Swiss Federal Tax Administration (SFTA) provide much-needed guidance on when holding companies and management companies qualify as securities dealers under Swiss transfer stamp tax law. The changes make it easier for Swiss headquartered group of companies to purchase shareholdings without attracting Swiss transfer stamp tax, thereby increasing Switzerland’s appeal as a holding company jurisdiction.
Larger Swiss holding companies that hold taxable securities (shares in subsidiaries) with a book value exceeding CHFÂ 10m qualify as securities dealers for Swiss transfer stamp tax purposes. As such, transactions in which they participate as parties or intermediaries are subject to the Swiss transfer stamp tax at a rate of up to 0.3% (foreign securities) or 0.15% (Swiss securities).
A 2021 Federal Supreme Court (FSC) case (2C_638/2020) introduced considerable uncertainty regarding the question, when a group holding company is considered an intermediary in securities transactions. In that case, the FSC determined that a Swiss top-holding company acted as an intermediary in a transaction by a non-Swiss indirect subsidiary, as board members and directors of the Swiss top-holding company were involved in the negotiation of the transaction.
Following the FSC’s decision, some groups of companies began channeling M&A activities through separate management (M&A) companies, which, as they do not hold securities, do not meet the CHF 10m threshold. However, these structures raised questions about whether these management companies should not be considered securities dealers, given their primary role in negotiating (taxable) securities transactions. This posed a particular challenge for Swiss-headquartered groups that, for operational reasons, often locate their M&A company domestically, unlike non-Swiss groups, whose M&A companies are typically based abroad.
