k-flash audio commentTax avoidance?
k-flash audio commentTax avoidance?

The case

Does the tax-neutral transfer of commercial property to a company constitute tax avoidance?

Source: 9C_87/2025 – 19. September 2025  

The commentary

In principle, the tax-neutral transfer of commercial property to a company cannot be classified as tax avoidance per se. The decisive factor is whether the arrangement fulfils the three cumulative elements: Objective element, i.e. that the chosen legal arrangement is unusual, inappropriate or completely unreasonable from an economic point of view. Subjective element, i.e. that the arrangement was made primarily (or exclusively) for the purpose of saving tax. Effective element, i.e. that a significant tax saving would result if the arrangement was accepted by the tax authorities.

(… ) Tax avoidance only comes into question in very exceptional situations where there is a legal arrangement (objective element) which, apart from the tax aspects, is beyond what is economically reasonable. The subjective element proves to be decisive insofar as the assumption of tax avoidance remains excluded if reasons other than mere tax savings play a relevant role in the legal arrangement (BGE 142 II 399 E. 4.2; 138 II 239 E. 4.1). – E 4.1

In the present case, the Federal Supreme Court ruled that there was no tax avoidance. According to the Federal Supreme Court, the transfer was within the scope of the legal framework (Art. 19 para. 1 lit. b DBG; Art. 8 para. 3 lit. b StHG; § 19 para. 1 lit. b StG/ZH) because it involved the tax neutral transfer of a business from a sole proprietorship to a corporation. In addition, in this specific case, there was a business reason for the transfer, namely estate planning. There was no evidence of a short-term arrangement that was purely tax-motivated and appeared economically inappropriate as such.

(…) The taxpayer had good reasons for transferring the properties to a limited company in view of his estate planning (see E. 2.6.3 of the contested judgment). Thus, there is no evidence of tax avoidance, and the lower court was right to defer the capital gains tax on the property in accordance with § 216 para. 3 lit. d StG/ZH. This leads to the dismissal of the appeal. – E 4.3

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