Switzerland: Corporate Tax 2023

Overview of corporate tax work over the last year

Types of corporate tax work

M&A

Despite the ongoing financial and political difficulties in 2022, the number of merger and acquisition (M&A) deals reached the highest level in the last decade. In 2021, there were 604 M&A deals involving Swiss companies with a volume of USD 170bn. In 2022, the number of deals increased to 647 with a total volume of USD 138bn, marking an increase of 7.12% in the number of transactions with Swiss participation.¹ Although the total deal value decreased by USD 31.5bn (-18.5%), the number of deals rose.²

Nearly half of all transactions were in the Technology, Media and Telecommunications (TMT), Industrial Markets, and Pharmaceuticals & Life Sciences sectors, with the most transactions taking place in the TMT sector, totalling 124 deals with a deal volume of more than USD 14.5bn. The Industrial Markets sector had 89 deals with a volume of USD 6.5bn, while the Pharmaceuticals & Life Sciences sector had 82 deals with a volume of just under USD 13bn. Swiss companies were the buyers in 283 deals, while in 152 deals, Swiss companies were the seller. In 127 deals, Swiss companies were involved on both sides.

The 10 largest deals of 2022 achieved a total volume of around USD 81.5bn, representing approximately 60% of the total volume. The largest M&A deal in 2022 was the acquisition of Firmenich SA by Royal DSM for USD 21bn.³

Environmental, social and governance (ESG) criteria played an increasingly significant role in M&A transactions in 2022, with almost 82% of market players taking them into account. Some companies expressed their willingness to pay up to 10% more if these criteria were met, highlighting the growing importance of sustainability in M&A deals.⁴

IPOs/SPACs

From May to December 2022, a total of 12 initial public offerings (IPOs) took place on the Swiss stock exchange, raising almost CHF 3.4bn in total.⁵ These IPOs involved companies from various sectors, including energy, materials, healthcare, real estate, industrial, and consumer goods.

The Swiss stock exchange also saw significant activity related to the listing of Global Depository Receipts (GDRs) by Chinese companies, which became possible for the first time in 2022 and stems from an official cooperation between the Shanghai Stock Exchange, Shenzhen Stock Exchange and SIX Swiss Exchange on the China-Switzerland Stock Connect programme. In the second half of 2022, a total of nine companies took advantage of this opportunity, with the largest transaction volume belonging to Jiangsu Eastern Shenghong Co. Ltd., which raised USD 718.3m in 2022.⁶ In the first four months of 2023, four listings of GDRs have been launched already. The transaction volume from May 2022 to April 2023 amounts over USD 4.5bn.⁷

Between May 2022 and April 2023, no Special Purpose Acquisition Company (SPAC) was listed on the Swiss Exchange.

Tax litigation

Switzerland remains a highly sought-after destination for information requests and administrative assistance under various international agreements, including double tax treaties (DTTs), information exchange agreements, and the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. As per September 2022, Switzerland conducted the Automatic Exchange of Information (AEOI) with a total of 101 states, including five new ones: Albania; Brunei Darussalam; Nigeria; Peru; and Turkey.⁸ Switzerland provided data to 74 countries, while receiving information from 27 countries. However, Switzerland did not send data to 14 states that have not yet met international standards for confidentiality and data security, or 12 states that voluntarily refrained from exchanging data. Notably, Russia was among the states to which no data was delivered last year. The exchange of tax information with Russia was temporarily suspended on 16 September 2022.

Significant deals and themes

The following M&A deals stood out between May 2022 and April 2023, all requiring tailored and often innovative tax advice for the transaction, integration, or debt financing:

• UBS to acquire Credit Suisse: On 19 March 2023, UBS entered into a landmark takeover transaction to acquire 100% of Credit Suisse following discussions initiated jointly by the Swiss Federal Department of Finance, the Swiss Financial Market Supervisory Authority (FINMA), and the Swiss National Bank.⁹ Under the terms of the transaction, Credit Suisse shareholders will receive one UBS share for every 22.48 Credit Suisse shares. The combination will further strengthen UBS's position as the leading Swiss-based global wealth manager (with more than CHF 3.1tn of assets under management) and reinforce its standing as the leading universal bank in Switzerland. The Swiss Federal Council enacted an emergency ordinance to exempt the transaction from shareholder approval and to facilitate timely implementation of the transaction.¹⁰
• Merger of Dufry and Autogrill: On 3 February 2023, Dufry entered into an agreement with Edizione, an Italian company, to collaborate with Autogrill to create a new integrated global travel experience. Edizione transferred its entire 50.3% stake, valued at USD 3.9bn, in Autogrill to Dufry in exchange for promissory notes that are mandatorily convertible into a total of 30,663,329 newly issued Dufry shares, with an implied exchange ratio of 0.158 new Dufry shares for each Autogrill share. Completion of the transfer is subject to regulatory approvals, the approval of Dufry shareholders at the extraordinary general meeting, and other conditions. Upon completion of the transfer, Dufry will make a mandatory offer for the remaining Autogrill shares. Edizione will ultimately become Dufry's largest shareholder, and the parties will enter into a longterm relationship agreement.¹¹
• Philip Morris acquires Swedish Match AB: On 28 November 2022, Philip Morris Holland Holdings B.V., one of the affiliates of Philip Morris International, announced that it had acquired 93.11% of the shares in Swedish Match, valued at USD 16bn,¹² and intends to initiate a compulsory redemption of the remaining shares and request the delisting of Swedish Match from the stock market. Philip Morris and Swedish Match share a mutual vision of a smoke-free world, and a firm commitment to developing, scientifically substantiating, and responsibly commercialising smoke-free products that are a better alternative to cigarettes.¹³

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Footnotes

1. https://kpmg.com/ch/en/home/media/press-releases/2023/01/another-record-year-inswiss-ma-market.html (last visited 16 May 2023).

2. https://www.kmu.admin.ch/kmu/de/home/aktuell/news/2023/fusionen-und-uebernahmen-2022-war-ein-rekordjahr.html (last visited 16 May 2023).

3. https://kpmg.com/ch/en/home/media/press-releases/2023/01/another-record-year-inswiss-ma-market.html (last visited 16 May 2023).

4. https://www.kmu.admin.ch/kmu/de/home/aktuell/news/2023/fusionen-und-uebernahmen-2022-war-ein-rekordjahr.html (last visited 16 May 2023).

5. https://www.six-group.com/de/products-services/the-swiss-stock-exchange/marketdata/shares/ipo-history.html#tfl_dlc19saXN0=/year/2023 (last visited 16 May 2023).

6. https://www.ey.com/de_ch/news/2022-press-releases/12/number-of-ipos-falls-by-almosthalf-worldwide-in-2022-in-switzerland (last visited 16 May 2023).

7. https://www.six-group.com/de/products-services/the-swiss-stock-exchange/market-data/shares/ipo-history.html#tfl_dlc19saXN0=/year/2023 (last visited 16 May 2023).

8. https://www.estv.admin.ch/estv/de/home/die-estv/medien-news/nsb-news_list.msg-id90593.html (last visited 16 May 2023).

9. https://www.efd.admin.ch/efd/en/home/the-fdf/nsb-news_list.msg-id-93793.html (last visited 16 May 2023).

10. https://www.baerkarrer.ch/en/news/ubs-to-acquire-credit-suisse (last visited 16 May 2023).

11. https://www.dufry.com/en/press_release/2023-02-03/combination-between-dufry-andautogrill-successfully-closed-0#:~:text=On%20February%203%2C%202023%2C%20 Dufry,the%20largest%20shareholder%20of%20Dufry (last visited 16 May 2023).

12. https://www.bloomberg.com/news/articles/2022-11-07/philip-morris-wins-83-accept ance-for-swedish-match-bid#xj4y7vzkg (last visited 16 May 2023).

13. https://www.pmi.com/media-center/news/PMI-progresses-toward-sole-ownership-ofswedish-match (last visited 16 May 2023).

Originally Published by GLI – Corporate Tax 2023, 11^th Edition

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.