- The Swiss Federal Administrative Court denied a real estate company’s claim to full input VAT deduction on demolition and site remediation costs.
- On a change of ownership, demolition costs are assessed based on the property’s future intended use, not the predecessor’s past taxable use, even if the transfer occurred via a VAT-neutral restructuring.
- Here, the planned redevelopment was 75% VAT-exempt residential use and 25% taxable commercial use, so only 25% of the input VAT was deductible.
- A short interim lease-back to the operating business before demolition was treated as a temporary bridge arrangement and did not change the future-use analysis.
- The decision upheld the tax authority’s partial denial of input VAT, leading to a demand of about CHF 179,000.
Source: bvger.weblaw.ch
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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