Moving the company abroad: exit tax and taxes

Moving a company or its activity out of Switzerland is not a simple change of address. In tax terms, leaving a tax system is a critical moment: the state you are leaving wants to tax, before departure, the value accrued while the company was subject to its jurisdiction. This is the logic of the exit tax. Anyone planning a transfer without considering it risks finding an unexpected tax bill at the very moment of transition.

Why there is a tax on exit

During its life in Switzerland, a company accumulates hidden reserves: the difference between the book value and the real value of its assets. A property recorded at a low historical value, an internally developed and unaccounted brand, goodwill built up over the years: all of this holds capital gains never taxed, because not yet realised.

As long as the company remains subject to tax in Switzerland, taxation is merely deferred: it will trigger when those assets are sold. But if the company or the assets leave the Swiss tax perimeter, the state loses the future possibility of taxing that capital gain. This is why the transfer of the seat or of the effective management abroad, or the transfer of assets to a foreign permanent establishment, is generally treated as a moment of realisation of the hidden reserves, with the related profit tax.

The forms of transfer

“Moving abroad” can mean very different things, with distinct tax consequences:

• Transfer of the seat or of the effective management: the company ceases to be tax-resident in Switzerland. This is the case that typically triggers taxation of the hidden reserves.
• Transfer of individual assets or functions to a permanent establishment or to a foreign group company: the capital gain on the assets that leave is taxed.
• Liquidation in Switzerland and re-establishment abroad: the liquidation brings all the reserves to the surface, taxed as profit, and the subsequent distribution to shareholders bears the 35% withholding tax.

The route chosen radically changes the tax burden and the timing.

The shareholders’ side: liquidation and withholding tax

Besides the company, the shareholders must be considered. If the transfer occurs by way of liquidation, the surplus distributed over and above the paid-in capital is treated as income from participation, subject to the 35% withholding tax and taxable in the hands of the shareholder according to their residence. For the shareholder who has in turn moved abroad, the double taxation treaty comes into play to avoid a double levy.

There is also the individual dimension: an entrepreneur who moves their own tax residence out of Switzerland must coordinate their own transfer with that of the company, so as not to leave grey areas that the tax authority of departure or arrival might challenge.

The mirror-image risk: deemed domestic residence

Anyone who transfers the formal seat abroad but continues to manage everything from Switzerland resolves nothing: the state can continue to consider the company resident in Switzerland because the effective management has remained here. To hold up, the transfer must be substantial: decisions, administration and activity must genuinely move. A façade exit combines the worst of both worlds.

Recurring mistakes

• Treating the transfer as a formal act: leaving the tax system is a taxable event.
• Ignoring the hidden reserves: properties, brands and goodwill conceal capital gains taxable on exit.
• Forgetting the shareholders: the liquidation triggers the 35% withholding tax.
• Transferring only on paper: without substance, you remain resident where you were.

How we approach it

At SIH ONE we start from a snapshot of the hidden reserves and a simulation of the exit burden across the different scenarios — transfer of seat, of functions or liquidation. We coordinate the company side and the shareholder side, verify the applicable treaty and, where useful, assess a ruling to fix the treatment in advance. The goal is for the transfer to be efficient and defensible, not a source of litigation.

Are you thinking of moving your company out of Switzerland? Let’s simulate the exit tax before you decide.