Taxes

Besides the guidelines in the relevant ESTV Circular, it is not possible to assume that an established practice regarding real estate leasing exists because of federalism (26 full and half cantons) and the relatively low number of taxable real estate leasing transactions.

The tax treatment of leasing transactions is usually a decisive factor as to whether or not the planned transaction makes commercial sense for the parties to the lease. Since the lessee ultimately is liable for taxes and fees, as part of a cost comparison it will examine whether or not traditional borrowed lending (mortgage) is less expensive.

ESTV Circular

Initial information about tax-relevant topics is found in

  • ESTV Circular no. 19 dated 6 February 2008 on Leasing Transactions with Commercial and Industrial Properties

The contents of the ESTV Circular no. 19 on Leasing Transactions with Commercial and Industrial Properties are: 

  1. Introduction and general preface
  2. Lessor profits and income tax
  3. Lessee profits and income tax
  4. Property profits and income tax: chargeable capital expenses
  5. Takes force (6 February 2008) with effect on the 2007 financial year and later

Tax advantages?

To be on the safe side, before a closer examination it must be assumed that there are more tax risks than tax benefits in real estate leasing (economic approaches, property transfers at the beginning or end of the leasing relationship, purchase right or buy-back concessions, etc.).

Whether real estate leasing – as claimed by many – really offers tax advantages, must be checked in concrete instances on an individual basis.

Tax rulings

It is recommended that the tax implications of a specific real estate leasing transaction are clarified before the finalisation of the leasing agreement. Further, it should be discussed with responsible tax authorities in advance to avoid unpleasant surprises.

Audit entities include the respective

  • founding of a special legal entity for the real estate leasing project
    • OpCo        operation corporation
    • PropCo     property corporation
  • depreciation quotas (as part of the amortisation quotas?)
  • depreciation rates for the type of real estate material to the agreement
  • special assessment bases
    • income and equity tax or capital and revenues tax with separate real estate pots (OpCo or PropCo)
    • possible real estate transfer tax (if provided for in the canton of domicile)
    • property profits and income tax 

Further information

Literature

  • JANS THOMAS, Leasing als Instrument der Investitionsfinanzierung in der Industrie und im Gewerbe der Schweiz, Diss. Zürich 1976, S. 34
  • BRUMANN HANSJÜRG, Das Leasinggeschäft heute, Bern und Stuttgart 1979, S. 210 f.
  • BRÜHWILER ALEX, Das Immobilien-Leasing aus steuerlicher Sicht, in: Der Schweizer Treuhänder, Nr. 6/88, S. 235 ff
  • SCHÜPBACH HENRI-ROBERT, Le leasing immobilier, in: ZBGR 64 (1983) 202 f., Ziffer 9
  • GIOVANOLI MARIO, Le Crédit-bail (leasing) en Europe: Développement et nature juridique, Paris 1980, S. 209 ff.
  • MEIER THOMAS, Besteuerung des Immobilienleasinggeschäfts unter besonderer Berücksichtigung der Grundsteuerpraxis des Kantons Zürich, Zürich 1994, S. 62 f. und S. 93
  • MEYER VICTOR / HAFNER STEFAN, Immobilienleasing – Besondere steuerliche Probleme, in : Der Schweizer Treuhänder 5/05, S. 407 ff.
  • ESTV Circular
  • Cross-border leasing and taxation
    • BGE 2P.292/2004 dated 22 June 2005