INITIAL SITUATION – SWISS COMPANY RELOCATES TO LIECHTENSTEIN WITHOUT TAX AND LEGAL GUIDANCE
A Swiss company had relocated its operational headquarters to Liechtenstein. The move was carried out, however, without comprehensive tax and legal support.
The result: although business operations had already factually been shifted to Liechtenstein, the company remained registered in Switzerland – both under commercial law and for tax purposes.
This created a situation in which the relocation had already been completed on an operational level, while significant legal and tax uncertainties and consequences persisted – with only limited room to maneuver.
Adding to the complexity, the tax implications differed at both the company level and for each of the two shareholders and were in some cases substantial.
THE REAL CRUX OF THE MATTER – WHEN A RELOCATION IS TREATED AS A LIQUIDATION FOR TAX PURPOSES
From a Swiss tax perspective, the relocation of a company’s registered seat abroad is generally treated as a liquidation.
This entailed not only income tax consequences at the company level, but also – and critically – withholding tax implications and potentially income tax consequences for the Swiss-resident shareholder.
The withholding tax aspect was particularly serious: although it can in principle be reclaimed in full or in part, the immediate 35% charge frequently creates significant liquidity problems in practice.
Additional complexity arose from the need to value the company at the time of the relocation. Determining a defensible exit value for tax purposes was central to both the Swiss and Liechtenstein tax positions and required coordinated engagement with both tax authorities. Since the valuation agreement and tax consequences could not be settled in advance through the usual ruling process, the available room to maneuver was simultaneously constrained.
OUR APPROACH – MAKING USE OF REMAINING OPTIONS AND COORDINATING TAX CONSEQUENCES
Since the relocation had already been completed operationally, the focus was not on restructuring, but on systematically working through and coordinating the existing situation.
Together with the company, the relevant tax facts were analyzed systematically, and the differing interests of the company and its two shareholders were clearly delineated.
The central question was where room to maneuver still existed – despite the structure already being in place – both with respect to the Swiss tax consequences and the future tax starting position in Liechtenstein.
Through a targeted reconstruction of the facts and structured dialogue with the relevant Swiss tax authorities, the income tax consequences were substantially reduced.
On the withholding tax side, the focus was on limiting the impact as far as possible while simultaneously developing solutions that kept the liquidity burden manageable for the company.
A key component of the project was also the coordinated alignment with the Liechtenstein tax authorities regarding the future tax position. By establishing and activating the relevant exit value for tax purposes, a step-up was achieved in Liechtenstein that sustainably improved the company’s future tax base.
WHAT HAS ACTUALLY CHANGED – FROM DAMAGE LIMITATION TO A FORWARD-LOOKING SOLUTION
The initial situation could not be fully corrected. Nevertheless, a solution was developed that significantly reduced the tax impact and at the same time created a sound basis for the future.
The income tax consequences were substantially reduced, while the remaining withholding tax burdens were structured and contained to a manageable level.
At the same time, the tax step-up achieved in Liechtenstein created a significantly improved starting position for the company’s future tax burden.
Today, the company has a tax-coordinated and robust structure, clearly aligned with both Swiss and Liechtenstein tax authorities.
Or, as the entrepreneur himself put it:
The starting point was far from ideal. That made it all the more important to find a solution that works cleanly from a tax perspective and gives us planning certainty again.
Key Facts at a Glance:
- Resolution of a seat relocation already completed operationally (CH → LI)
- Coordination of complex income and withholding tax consequences
- Structured engagement with Swiss and Liechtenstein tax authorities
- Reduction of the overall tax burden and liquidity impact
- Tax step-up in Liechtenstein to improve the future tax base
- Creation of a coordinated and long-term sustainable structure
ABOUT THE AUTHOR
Providing tax support for seat relocations requires experience in situations where not all options remain open and where differing tax interests must be coordinated.
As a partner with many years of experience advising companies and entrepreneurs in Switzerland and Liechtenstein, Michael Abegg regularly handles complex issues at the interface of both legal systems.
A particular focus lies on practical implementation and coordinated engagement with the relevant tax authorities – especially in situations where tax, legal, and economic aspects are closely intertwined.
His goal is to develop viable and long-term robust solutions even in challenging situations – pragmatic, structured, and with a clear eye for the economic implications.
MICHAEL ABEGG Partner & Managing Director
New technologies are transforming business models faster than tax law can respond. We analyze innovative business models in the fintech and blockchain sectors, bring tax clarity to dynamic structures, and minimize uncertainty – so that innovative ideas can be put into practice.