REITs in Switzerland

Despite the economic advantages of REITs, the Swiss legislator was still unable to decide on the creation of this investment category.

Reasons for resistance

There are many reasons for the resistance to REITs:

  • Swiss federalism30
  • Structural policy31
  • Tax losses32


There are arguments on both sides as to whether tax breaks for real estate companies make sense. However, it is a fact that countries which do not have REIT vehicles are compelled to act if they do not want to witness the outflow of investment funds and/or real estate companies. Switzerland will not be able to escape this trend33).

Interesting alternatives to the REIT

In Switzerland real estate funds represent a form of investment that is similar to the REIT (no tax on capital or earnings on the asset sui generis, basic taxation only). If as is expected a Limited Partnership for Collective Capital Investment (KGK) is assessed for taxation in the same way as an investment fund, the following advantages result for the KGK’s with direct real estate holdings:

  • Limited group of people is possible
  • KGK pay only 4.25% federal taxation
  • Partners in the KGK (investors) are not taxed on revenue from direct real estate holdings.

30 Switzerland’s federal tax system knows 26 different real estate tax laws with different object taxes (real estate, transfer of ownership and real estate profits taxes) and different tax authorities (cantons and/or municipalities).

31 Companies which would qualify for REIT status would be exempt from real estate taxes (real estate, transfer of ownership and real estate profits taxes); one “asset class” would then be taxed and the other not.

32 The financial directors of the cantons fear tax losses of approximately 150 million Swiss francs. The tax reductions already concluded, the imminent reductions from tax competition among cantons and the individual tax concessions are causing the fiscal legislators to hesitate in awarding further “tax gifts”.

33 Meanwhile in the English speaking world the next trend of PICs (Property Index Certificates or participation in rental income or value fluctuations in real estate markets) is already underway.

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