Wealth income

One of the main issue in the Swiss tax system leads in the distinction between tax free capital gain and taxable wealth income.

While there is no income tax on the gain realized on the sale of an asset belonging to the private wealth, it is fully subject to income tax if the asset belongs to the « business » wealth.

If that distinction sounds clear at first, the tax authorities together with the Federal Court had much success in trying to qualify some (basically) tax free transaction into fully taxable ones. Some of the most common qualification are the “professional securities dealer” who is the one who manages his wealth in an almost professional manner (for example: numerous transactions on the stock exchange, repeated purchase and sale of various goods such as real estate, wine, car, etc.), the indirect partial liquidation (sale of company with existing distributable reserves), the factual liquidation (sale of a company with current assets only), sale of real estate companies, transposition (“sale to himself”), etc. All those cases have as a consequence that the gain realized by the seller is qualified taxable wealth income.

It is very difficult for the non specialist to be aware of all those cases, not saying that each case has multiples and complex deviances. It is therefore essential to be able to request the services of a specialist in that field who will be able to draw your attention to the risks that the envisaged transaction entails and who will guide you on the best way to realize the transaction to avoid any unwished taxation. We have to point out that it is unfortunately very difficult to negotiate with the tax authorities once the transaction has happened. It is therefore much better to anticipate the problems by consulting a specialist before any issue appears. Our numerous researches and work in that field have made us one of the best specialists of those questions.