The real estate company in Switzerland
Holding property in your own name or through a company is not a neutral choice: it changes the taxation, the liability, the transferability of the assets and the ease of bringing in new partners. The real estate company is a powerful but not universal tool: it is worthwhile in some situations and adds needless weight in others. Let us see how it works and when it makes sense in Switzerland.
What a real estate company is
A real estate company is a company — usually an AG or a GmbH — whose purpose is to buy, hold, manage and enhance immovable property. Instead of owning the building as a natural person, you own the shares or quotas of the company that holds it. The property assets live inside a vehicle with its own legal personality and liability limited to the capital.
This separates the property assets from the rest of your personal or business wealth, and opens the way to structured management: several partners, several properties under the same corporate roof, clear exit rules.
Private or corporate holding: the tax difference
The decisive point is taxation, and the two worlds work differently.
- Private holding: rental income is added to the natural person’s taxable income, with the progressivity of the tax; the property enters the net worth subject to wealth tax. On the private side the imputed rental value (Eigenmietwert) also applies to an owner-occupied home.
- Corporate holding: rental income is the company’s profit, taxed with profit tax; dividends distributed to the partners incur a second level of taxation. This is where the issue of economic double taxation arises, which must be assessed case by case.
There is no answer valid for everyone: it depends on the personal marginal rate, the number of properties, the holding horizon and the succession plans.
The real estate gains tax
A central element, often overlooked: the sale of a property in Switzerland is subject to the real estate gains tax (Grundstückgewinnsteuer), a cantonal/municipal tax that hits the capital gain between the purchase price and the sale price.
A typical feature is its degressiveness with respect to the holding period: the longer you have held the property, the lower the rate tends to be; quick, speculative sales are taxed more heavily. The rules vary from canton to canton, so planning must be done at the location of the property, not in general terms. The transfer of the shares of a real estate company can also, under certain conditions, be treated as an economic transfer of the property.
When the real estate company is worthwhile
The corporate form becomes attractive in specific situations:
- Several properties and several partners: if the assets are to be shared among partners, family members or investors, the company makes it simple to allocate shares, profits and decisions.
- Structured activity: those who buy, renovate and rent on an ongoing basis find in the company an orderly vehicle, with accounting and limited liability.
- Generational transfer: transferring shares is more flexible than splitting the ownership of a property among heirs.
- Separation of risks: isolating the property assets from the risks of an operating business.
For a single property for personal use, or for occasional letting, by contrast, the company normally only adds costs and compliance.
Substance and management: the company must be real
Like any structure, the real estate company holds up only if it is effective: documented management, decisions actually taken, accounts in order. Above CHF 500,000 in turnover the obligation of full accounting kicks in, and the letting of property has specific VAT rules (partly exempt, with the possibility of opting for taxation in certain cases). The form must be built to match reality, not to look good on paper.
How we work at SIH ONE
At SIH ONE we help owners and investors decide whether to hold property in private or corporate form, comparing the overall tax impact — income, wealth, real estate gains and distribution to partners. Where the company makes sense, we form and structure it, taking care of accounting, VAT and governance among the partners.
Are you weighing up how to structure a real estate portfolio in Switzerland? Discover the services of the corporate division and build the right vehicle for your objectives.