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Purchasing property through a company, whether a public limited company (Ltd.) or a limited liability company (LLC), is becoming increasingly popular in Switzerland for both real estate investments and business assets.

  • While this structure offers the advantage of limited liability, it is subject to a separate tax regime. Income such as rental income and capital gains is first taxed at the corporate level and then taxed again when distributed to the shareholders or partners.
  • Although it offers greater management flexibility, this option requires a minimum share capital (CHF 20,000 for an LLC and CHF 100,000 for a Ltd.).
  • Acquiring property through a company may also result in higher administration, accounting and compliance costs than owning the property in your personal name.


Why Own Real Estate Through a Company?

In Switzerland, the choice between private ownership and corporate ownership mainly depends on your long-term investment strategy.


While private individuals may benefit from tax advantages on real estate capital gains after a long holding period in certain cantons, a company can deduct all operating expenses, including maintenance costs, mortgage interest and management fees. It may also depreciate the value of the building for accounting and tax purposes.


This structure is particularly well suited to large real estate portfolios or property development projects. It allows profits to be reinvested more easily into new acquisitions, as the corporate income tax rate is often more favourable than the personal income tax applicable to high-income individuals.


Buying Property Through a Company: What Are the Tax Advantages?

Deductibility of Expenses and Depreciation

Unlike private owners, who are generally limited to deducting actual maintenance costs or a standard allowance, a company may claim annual depreciation on the building. Although depreciation does not involve a cash outflow, it reduces the company's taxable profit for accounting purposes.


As a result, you generate cash flow while significantly reducing, or even eliminating, your tax burden during the first years of the investment.


Profit and Dividend Management

The company receives the rental income and pays corporate income tax on its profits. As the beneficial owner, the investor is only personally taxed when dividends are distributed.


This tax deferral allows profits to be retained within the company to finance major renovations or provide the equity required for future property acquisitions, without immediately triggering personal income tax.


Access to Specific Financing Solutions

Financing a real estate company differs from obtaining a standard residential mortgage. Although banks generally require a higher equity contribution (typically between 25% and 30%), they primarily assess the property's and the company's ability to generate sufficient cash flow.


As a result, the investor's personal borrowing capacity remains largely unaffected, leaving room for other private investment projects.


How to Invest in Swiss Real Estate Through a Company

Setting up a real estate investment company requires a structured approach to comply with both legal requirements and administrative procedures.

  1. Choosing the legal structure: A public limited company (Ltd.) is often preferred because it offers greater confidentiality, as shareholders are not publicly disclosed, and because of its prestigious corporate image. A limited liability company (LLC), which requires less initial capital and offers greater flexibility, is often the preferred option for smaller groups of investors.
  2. Defining the company's purpose: The articles of association should explicitly include activities such as the acquisition, ownership, management and sale of real estate. A corporate purpose that is too restrictive may complicate certain banking or notarial transactions.
  3. Contributing equity: In addition to cash contributions, it is possible to make an in-kind contribution by transferring a property you already own into the company. Be aware that such transactions may be subject to property transfer taxes and generally require a valuation certified by a qualified accountant or valuation expert.
  4. Preparing the financing application: To secure financing, your business plan must be comprehensive and well documented. It should include realistic rental income forecasts, appropriate maintenance cost provisions, and a detailed mortgage repayment plan covering a period of 10 to 15 years.


Investing Through a Company: What Is the Best Exit Strategy?

One of the main advantages of owning real estate through a company is the ease with which ownership can be transferred.


Selling Company Shares

Instead of selling the property itself (an asset deal), you sell the shares of the company that owns the property. This indirect transfer of ownership offers several significant advantages.

  • Lower transfer taxes: Depending on the rules of the canton, property transfer taxes may be optimized.
  • Faster transaction: The sale process is simplified because the buyer acquires an existing company with its financing arrangements and management structure already in place.
  • Easier succession planning: Ownership can be transferred progressively by gifting or selling company shares rather than dividing the property itself.


Double Taxation

This is the main drawback of holding property through a company and should always be carefully assessed before proceeding.

  • At the corporate level: The company pays tax on the capital gain realized when the property is sold.
  • At the shareholder level: When the proceeds are distributed as dividends, shareholders are subject to personal income tax.

For this reason, a long-term comparison of the net profitability of each ownership structure is essential before making an investment.


FAQ

Can I transfer a personally owned property into an existing company?

Yes. This can be done either through a sale to the company or as an in-kind contribution. However, this transaction is generally treated as a taxable sale, meaning that real estate capital gains tax and property transfer taxes may become payable, just as if the property had been sold to a third party.


What is the minimum capital required to create a dedicated real estate company?

For an LLC, the minimum share capital is CHF 20,000. For a public limited company (Ltd.), the minimum share capital is CHF 100,000, of which at least CHF 50,000 must be paid in at the time of incorporation.


Can I purchase my primary residence through a company?

Although legally possible, this is generally not recommended in Switzerland. The tax authorities often consider the personal use of the property to be a taxable benefit in kind. In addition, you would lose the possibility of using funds from your second or third pillar retirement savings to finance your primary residence.


Does the Lex Koller apply to companies?

Yes. If a company is controlled by foreign individuals or entities, it is subject to the same restrictions as non-resident individuals when acquiring residential real estate in Switzerland.


What are the annual operating costs of such a company?

You should budget for accounting fees, audit costs (where required), corporate taxes and general administrative expenses. Depending on the size of the real estate portfolio, annual costs typically range between CHF 3,000 and CHF 7,000.