Tax-neutral contribution (Switzerland)

A tax-neutral contribution (apport fiscalement neutre) in Swiss law is a transfer of assets or business activities to a company where, under applicable conditions, no immediate taxation of latent capital gains is triggered. Swiss tax law (LIFD art. 61 and cantonal equivalents) permits deferral of gain recognition when assets are contributed at book value (carry-over basis), the receiving entity is Swiss-domiciled, the activity continues and a 5-year holding period is observed. The tax step-up alternative allows recognition and amortisation of latent gains. Choosing between the two approaches requires careful analysis with cantonal tax advisors.

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Example: an entrepreneur contributes CHF 8.0 million fair value business to a new holding (CHF 2.0 million book value, CHF 6.0 million latent gain). Under tax-neutral contribution: assets transferred at book value (CHF 2.0 million), no immediate tax on CHF 6.0 million gain, 5-year lock-up. Under tax step-up: gain recognised, CHF 6.0 million amortisable over 10 years — CHF 71,400 annual tax saving. The optimal choice depends on liquidity needs and the probability of a transaction within 5 years.

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Hectelion advises on the optimal approach between tax-neutral contribution and step-up in Swiss restructuring mandates, coordinating with cantonal tax specialists.