Corporate restructurings place high demands on both tax and legal planning – particularly when they occur across national borders. This is especially evident in cross-border transactions between Liechtenstein and Switzerland: despite similar underlying legal principles, differences in implementation remain. This article outlines the tax-related challenges of such restructurings and illustrates how proactive planning can help mitigate potential risks.
What Is Meant by Restructuring?
The term encompasses mergers, demergers, contributions in kind, and changes to a company’s legal form. Functional relocations – such as the transfer of production, marketing, product development, or other parts of the value chain – can also fall under the broader definition of restructuring.
Such changes often have significant tax implications. Early analysis is vital to avoid unexpected tax burdens or subsequent corrections and to establish corporate structures that are legally secure.
Tax Framework in Liechtenstein and Switzerland
In both Liechtenstein and Switzerland, the restructuring of a company can be done tax-neutral provided certain conditions are met.
In the tax law of the Principality of Liechtenstein, this is specifically regulated in Article 52 of the Tax Act. In Switzerland, the governing regulations are Articles 19 of the Federal Direct Tax Act (DBG) and Article 8(3) of the Federal Harmonization Act (StHG) for income tax purposes, and Article 61 DBG and Article 24(3) StHG for corporate income tax. Additional provisions apply to other types of taxes, such as stamp duty and value-added tax (VAT).
Simply put: Restructurings are tax-neutral if the previously applied tax values are retained, and no tax base is removed from the taxing rights of a jurisdiction. As a result, the taxation of hidden reserves is deferred until either a disposal or an exit from the jurisdiction takes place.
Challenges of Cross-Border Restructurings
The complexity increases in areas where the laws of Switzerland and Liechtenstein differ – for example, with contributions in kind of qualifying investments, retroactive demergers, or indirect tax liabilities resulting from spin-offs.
Although the overarching principles in both countries are similar, differences in practical application – often arising from variations in tax law – can create significant obstacles for cross-border restructurings.
This makes coordinated planning essential – ideally involving consultation with both national tax authorities.
Conclusion
Cross-border restructurings offer room for strategic planning but also bring tax challenges. Tax neutrality is subject to strict conditions, and their application must be carefully aligned in all countries involved.
In addition to corporate and income taxes, other forms of taxation – including VAT, turnover tax, stamp duties, and other transaction-based taxes – must also be considered from the outset.
A thorough tax analysis and early engagement with the tax authorities are indispensable. In many cases, obtaining a binding advance ruling can provide the legal certainty required for successful implementation.
