For companies in particular, it can be essential to know the fiscal consequences of major business decisions in advance. Our expert Bruno Leibundgut advises on when a so-called tax ruling is appropriate and why it gives Switzerland a locational advantage.
A tax ruling is the binding information provided by a tax authority on a specific tax matter and may be requested, for example, if you are planning a business reorganization, an estate settlement or a major private asset restructuring. In such cases, it is advisable to discuss the planned facts with the responsible tax authority and clarify the basis of assessment or the taxes owed in advance.
Advance rulings do not constitute an official decree under Swiss law; however, they function according to the principle of reliance. Therefore, you must always provide a complete and concise presentation of the facts, limited to the specific issues of the respective request. In terms of jurisdiction, it should be observed that the assessment of income and wealth taxes for individuals or of profit and capital taxes for legal entities is the responsibility of the cantonal tax administration, and thus all matters concerning state and municipal taxes as well as direct federal tax must be requested from the cantonal tax authority. Applications concerning value-added tax or withholding tax, on the other hand, must be submitted directly to the federal tax administration. Hypothetical or already realized cases are excluded from a ruling. In addition, it is not advisable to request a tax ruling in different cantons or to evaluate multiple requests comparatively.
If the submitted facts are ultimately implemented exactly as intended, the advance ruling by the tax administration is binding, provided that no relevant change in legislation has occurred in the meantime and the taxpayer cannot reverse the disposition without any disadvantage.
The resulting legal certainty is a helpful benefit in planning and can be decisive for choosing Switzerland as a tax location, especially when founding a company. Moreover, the ruling process means that a planned transaction, such as the sale of a company, is thoroughly planned and carefully outlined. This way, possible sources of error can be identified and eliminated at an early stage, which is helpful not only from a fiscal, but also from a business or legal point of view.
We at Experfina will be happy to advise you on all tax matters and have a great deal of experience in handling ruling procedures.
20. January 2022
