The “step-up” allows, upon the sale of shares in a SIAL, for a proportional increase in the value of the real estate held by the company on its tax balance sheet to reflect the price paid for the shares.
In practical terms, when a shareholder acquires shares at a price higher than the book value of the underlying property, the step-up allows, under certain conditions, for the revaluation of the property’s tax basis. Thus, in the event of a subsequent sale of the property by SIAL, income tax is calculated based on the difference between the sale price of the property and this revalued amount, rather than on the basis of its book value.
This mechanism is designed to prevent the same capital gain from being taxed twice: once when the former shareholder sells the shares (in the form of real estate gain tax) and a second time when the company sells the property.
In principle, the step-up applies only to cantonal and municipal taxes.
The conditions for applying the step-up vary depending on the canton in question and the circumstances of the specific case.
