The idea sounds clever on paper: buy your dream chalet in St. Moritz through a personal Aktiengesellschaft (stock corporation), deduct the VAT on renovations, then rent it to yourself at market rate. You get the tax benefits of corporate ownership while enjoying your alpine retreat. Except the Bundesgericht (Swiss Federal Court) just torched that entire playbook, and Peter Spuhler is out 865,000 CHF plus legal fees.
This isn’t some obscure tax loophole that only affects billionaires. The logic behind the ruling impacts anyone considering using a corporate structure for personal property in Switzerland. And the court’s message is brutally clear: if your AG exists solely to hold your vacation home, you’re not running a business, you’re running a tax avoidance scheme.
The Spuhler Case: A Masterclass in What Not to Do
Peter Spuhler, the chairman of Stadler Rail, purchased his St. Moritz chalet in 2017 through a single-purpose AG called Chesa Sül Spelm. The setup was textbook: the AG owned one asset (the chalet), had one shareholder (Spuhler), and one tenant (also Spuhler). Between 2018 and 2020, the company claimed VAT input tax deductions of approximately 865,000 CHF on renovation costs. This is perfectly legal for companies engaged in commercial activity.
The problem? The Eidgenössische Steuerverwaltung (ESTV, Federal Tax Administration) decided in 2021 that this wasn’t commercial activity at all. They demanded repayment. Spuhler fought back, arguing he was seeking legal clarity "for many second-home owners who use their property for professional purposes." The Bundesgericht responded with a unanimous verdict: Steuerumgehung (tax avoidance), pure and simple.
The court’s reasoning dismantles the entire justification for these structures. They noted that the chalet served exclusively private needs, with no sustainable business model. Even occasional office use by Spuhler and his wife didn’t change the fundamental nature. As the judges pointed out, the AG lacked any economic or business rationale beyond tax optimization.
Why "It Was a Condition of Sale" Fails as a Defense
Spuhler’s primary argument, that the seller required purchase through the existing AG, got zero traction. The Bundesgericht ruled this explanation insufficient, stating it was "to be assumed" that the structure was maintained abusively to save taxes. No other plausible reason could be demonstrated.
This is crucial for prospective buyers. You might encounter a seller who insists on an AG transfer. Perhaps they originally held the property in a corporate structure and want a clean exit. The court’s position is clear: that contractual requirement doesn’t obligate you to maintain the AG post-purchase. You can dissolve the company and transfer the property to private ownership. Choosing not to do so triggers suspicion.
The ruling establishes that convenience or seller demands don’t justify a tax-advantaged structure. If you inherit or acquire a property via AG, the clock starts ticking on how quickly you restructure. Keeping it corporate for years while deducting VAT? That’s when the ESTV starts calculating interest on your eventual repayment.
The Real Bill: More Than Just the Tax Savings
Spuhler’s final invoice extends far beyond the 865,000 CHF in disallowed VAT deductions. The court also rejected his argument against penalty interest, noting his AG had voluntarily registered for VAT and couldn’t now claim it was never taxable. Add 13,000 CHF in court costs, plus three years of legal fees, and the total damage likely exceeds one million francs.
But the financial hit is only half the story. The reputational cost for a public figure like Spuhler is substantial. Swiss media coverage has been unsparing, with headlines explicitly labeling him a Steuerumgeher (tax avoider). For international residents considering similar structures, the lesson is stark: the ESTV’s patience for aggressive planning has evaporated.
The Aircraft Analogy That Sealed the Deal
The Bundesgericht drew a direct parallel to aircraft holding companies, a comparison that should alarm anyone using corporate wrappers for luxury assets. Just as an AG that owns a private jet used exclusively by its shareholder isn’t considered a commercial aviation business, a chalet-holding AG isn’t a real estate company.
The key test is whether the asset generates sustainable revenue from third parties. Spuhler’s chalet didn’t. It generated "revenue" from its own shareholder, which the court treated as a circular transaction designed to manufacture tax deductions. This interpretation closes the door on most self-rental arrangements, even those with more elaborate paperwork.
If you’re genuinely renting to multiple third parties throughout the year, with proper booking systems and market-rate pricing, you might have a case. But the moment it becomes primarily your personal vacation home, the corporate structure becomes legally toxic.
Private Purchase vs. AG: The Math That Actually Matters
Spuhler claimed he would have saved "certainly over one million francs" by buying privately and deducting renovation costs as maintenance from personal income. The court dismissed this as unproven, but the underlying point deserves attention.
When you own privately, you pay VAT on renovations but can potentially deduct costs as value-preserving measures from your income tax, depending on your canton and income level. More importantly, you avoid the Eigenmietwert (imputed rental value) trap that corporate ownership creates.
The Eigenmietwert system taxes you on the theoretical rental income of your own property. While this seems unfair, it’s offset by mortgage interest deductions. In an AG structure, you lose these offsets. You’re taxed on the AG’s profit (your rent payments) while the company pays property taxes and faces corporate tax rates on any deemed profit.
For most buyers, assessing affordability when purchasing real estate in Switzerland requires modeling both scenarios. Spuhler’s case demonstrates that the corporate route’s apparent VAT savings often evaporate when you factor in higher overall tax burdens and compliance costs.
When Corporate Ownership Might Actually Work
The Bundesgericht left narrow room for legitimate corporate use. If your chalet functions as a genuine business asset, hosting paid retreats, serving as a company training center, generating substantial third-party rental income, you could justify the structure.
But the bar is high. You’d need:
– Arms-length lease agreements with third parties
– Public advertising and booking platforms
– Professional property management
– Clear separation between personal and business use
– Commercial-level accounting and compliance
For the typical buyer wanting a family vacation home, this is overkill. The administrative burden alone, annual financial statements, board meetings, tax filings, costs thousands annually. And you’re always one ESTV audit away from having to prove your "business" isn’t just tax theater.
The comparison of property ownership costs in Swiss municipalities shows that private ownership becomes more attractive once you factor in these hidden corporate expenses. The VAT savings rarely justify the complexity.
The Compliance Minefield You’re Walking Into
Here’s what the Spuhler case reveals about modern Swiss tax enforcement: the ESTV is aggressively pursuing substance-over-form arguments. They’ll look at your AG’s actual activity, not its paperwork. If the substance is "rich person owns nice house", the form of an AG won’t protect you.
The court specifically noted that registering for VAT and receiving initial approval doesn’t create a right to those deductions. The ESTV can, and will, retroactively challenge structures they deem abusive. This "approval now, audit later" approach makes corporate ownership risky even if you receive initial green lights.
For international residents, there’s an added layer of complexity. Many come from jurisdictions where corporate property ownership is standard. Switzerland’s tax authorities view these arrangements through a different lens, focusing on economic reality rather than legal formality. Your perfectly legitimate UK limited company buying a Verbier chalet looks like Steuerumgehung to the ESTV.
Practical Steps If You’re Already in This Structure
If you’ve already purchased through an AG, don’t panic. But take immediate steps to regularize your position:
- Document any commercial use meticulously: Keep guest registers, publish rental listings, maintain separate bank accounts for rental income.
- Consult a Swiss tax attorney: Not your corporate lawyer from London or Zurich’s M&A partner. Someone who specializes in ESTV disputes.
- Consider voluntary disclosure: If you’ve claimed VAT deductions you’re now questioning, the ESTV looks more favorably on proactive correction than on forced repayment.
- Model dissolution costs: Calculate the tax and legal fees of transferring the property to private ownership versus maintaining the AG.
The long-term mortgage and retirement planning considerations for property owners become even more critical with corporate structures. Swiss banks are increasingly reluctant to finance AG-owned properties for retirees, viewing them as higher-risk collateral.
The Bottom Line: Private Ownership Wins for 99% of Buyers
The Spuhler verdict should kill the chalet-AG strategy for personal use. The Federal Court has provided a clear, precedent-setting framework: no commercial substance, no tax benefits. The risks, financial, legal, and reputational, vastly outweigh the potential VAT savings.
For those weighing real estate purchase against continued investment in liquid assets, the math now strongly favors private ownership. The VAT you pay on renovations becomes a predictable cost rather than a disputed deduction. Your tax position is transparent. And you sleep better knowing the ESTV won’t come knocking with a seven-figure repayment demand.
The chalet dream in Switzerland remains alive and well. Just don’t let a corporate wrapper turn it into a tax nightmare. Buy it privately, pay your taxes transparently, and spend your energy enjoying the mountains rather than fighting the tax authorities. The view from your legally uncomplicated balcony will taste much sweeter.
