Sale of real estate - asset deal or share deal?

The most common forms of property transfer for real estate companies are the asset deal and the share deal. While an asset deal involves the sale of one or more properties from the company individually (change of ownership under civil law), a share deal involves the sale of all or a majority of the shares in a real estate company itself (economic change of ownership).

It is a widespread misconception that, from a tax perspective, the asset deal and the share deal are equivalent in terms of the tax consequences of an economic change of ownership. Therefore, despite the fact that asset deals are usually easier to implement, the advantages and disadvantages of the two types of transfer should be carefully weighed up and comparative tax calculations made before the sale.

Asset deal: At cantonal level, the reinvested depreciation is subject to profit tax. Depending on the cantonal taxation system, the increase in value realized through the sale of the property is subject to property gains tax (monistic system) or profit tax (dualistic system). Furthermore, direct federal tax is due on the entire book profit.

Share deal: The increase in value realized through the sale of the shares in the property - and only this - is generally subject to real estate gains tax due to the economic change in ownership. The capital appreciation rate is not taxed at federal level. The recaptured depreciation is not taxed at either cantonal or federal level.

Conclusion: A share deal is often more advantageous from a tax perspective, as the effective tax burden is lower and a significant deferred tax burden remains. This deferred tax burden can be divided between the contracting parties during the sales negotiations - without the involvement of the tax office. A "win-win situation" is possible between the seller and the buyer.