Asset swap for pension funds

Although the contribution of real estate from a pension fund in exchange for the issue of share rights in a real estate investment foundation appears at first glance to be a tax-neutral exchange, there has long been inconsistent practice in the cantons regarding the tax consequences of such transactions.

In a recent decision, the Federal Supreme Court ruled that an asset swap, i.e. the transfer of properties from a pension fund to a real estate investment foundation in exchange for claims to an investment group of the real estate investment foundation, constitutes a tax deferral. This was previously disputed, particularly in the canton of Zurich. In the case in question, the Federal Supreme Court ruled that in the event of a corresponding change of ownership on the basis of Art. 80 para. 4 BVG, i.e. in the event of a "division" of pension funds (which constitutes an asset swap), no real estate gains tax may be levied or the taxes must be deferred. This is the case as long as the real estate portfolio remains in line with the previous pension purpose.

As a result, such transactions can now also be carried out in the canton of Zurich (and in all other cantons) without incurring property gains tax. The ruling should clearly also apply to corresponding transactions by tax-exempt real estate funds.

However, not all questions have been resolved, such as whether it is sufficient to transfer a single property in exchange for share rights in order to benefit from the tax deferral.