The liquidation of a real estate investment company can result in a significant tax liability. The amount of this liability depends, in particular, on the shareholder’s status (individual or corporation) as well as the size of the stake held in the SIAL.
In practice, several taxes may apply:
- Under the SIAL, a capital gains tax may be due on the capital gain from the property, which is the difference between its market value and its book value;
- From the shareholder’s perspective, the amounts distributed upon liquidation may be subject to income tax or corporate income tax, depending on the circumstances;
- In some cases, a withholding tax (35%) is also levied.
In addition to these taxes, there are transaction-related costs, such as notary fees, land registry fees, and, in some cantons, transfer taxes.
Given the complexity of the applicable rules, it is recommended that you assess the tax implications before initiating a liquidation to avoid any unpleasant surprises.
