New Geneva real estate investment tax policy

Managing Director, Integrated Compliance & Reporting Technology Leader, PwC Switzerland

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The Federal Supreme Court's ruling on case 9C_393/2023 marks a pivotal change in the taxation of real estate capital gains for investment foundations in Geneva. The ruling, delivered on 10 June 2024, found the Canton of Geneva's practice of applying ordinary profit tax to these gains to be impermissible. Instead, the court decided that tax-exempt investment foundations should be subject to real estate capital gains tax, in alignment with the "Loi générale sur les contributions publiques".

Impact of court ruling

This decision has profound implications for tax-exempt investment foundations, particularly regarding the tax burden associated with varying holding periods. Short-term holdings under 10 years face a higher tax rate, while longer-term holdings may benefit from reduced rates or similar burdens.

“If a property in Geneva has been disposed of and the tax assessment is not yet final, it's imperative to review whether the new decision could result in a more favourable tax outcome.”

The next steps for real estate investment foundations

In response to the Federal Supreme Court's ruling, investment foundations should act swiftly. If a property in Geneva has been sold and the tax assessment is not yet final, it is imperative to review whether the new decision could result in a more favourable tax position.

Furthermore, investment foundations now have to consider changing their approach in calculating the deferred taxes for their next year-end.

PwC is monitoring future developments in this regard closely, and is ready to assist you with any queries during year-end calculations. In addition, we are happy to assist you in analysing any open or pending assessments to determine whether it is necessary to consult the Geneva tax authorities.