Asset swap for pension plans

Although the contribution of real estate of a pension fund against the issuance 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 of a pension fund to a real estate investment foundation in exchange for claims in an investment group of the real estate investment foundation, constitutes a tax deferral event. This has been controversial so far, in particular in the Canton of Zurich. In the case in question, the Federal Supreme Court ruled that in the case of a corresponding change of ownership based on Art. 80 para. 4 BVG, i.e. in the case of a "splitting" of pension funds (which constitutes an asset swap), no real estate gains taxes may be levied or the taxes must be deferred. This, as long as the real estate portfolio remains attached to the previous pension purpose.

As a result, such transactions can now also take place in the Canton of Zurich (and in all other cantons) in a real estate gains tax-neutral manner. The ruling should clearly also apply to corresponding transactions of tax-exempt real estate funds.

However, not all questions have yet 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.