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