Source: http://www.swisstaxnetwork.ch/individual-taxation---besteuerung-nat-personen/transposition
Timestamp: 2019-04-21 22:13:35+00:00

Document:
Under the criteria mentioned in Art. 20a para. 1 lit. b FITA and Art. 7a para. 1 lit. b CCITHA certain transactions of a Swiss resident private shareholder can trigger income taxes even if such shareholder does not directly receive cash payments.
A AG has retained earnings in the amount of CHF 3 mio., i.e. it has a deferred tax substrate.
B AG has no disclosed reserves.
Both A AG and B AG have no hidden reserves.
A AG has no hidden assets and for this reason, it is not subject to income tax.
A AG has CHF 4 mio. in cash, which it distributes as liquidation proceeds to shareholder X.
After repayment of capital of CHF 1 mio. in favour of shareholder X, CHF 3 mio. remain subject to withholding tax (Art. 4 para. 1 lit. b WHTA in conjunction with Art. 20 WHT Ordinance) and for X constitute income from investment (Art. 20 para. 1 lit. c FITA).
Shareholder X may benefit from the partial-taxation procedure (Art. 20 para. 1bis FITA).
If the proceeds of the sale exceed the nominal value of the Shares in A AG, the difference will be taxable according to Art. 20a para. 1 lit. b FITA, respectively Art. 7a para. 1 lit. b CCITHA, in conjunction with Art. 20 Abs. 1 lit. c FITA, respectively Art. 7 para. 1 CCITHA. In the above example, the taxable difference is CHF 3 mio (CHF 4 mio. of sale proceeds ./. CHF 1 mio. nominal value).
The acquiring company increases its share capital only to the extent of the nominal value of the acquired shares and the remaining amount is booked in the additional paid-in capital account (not booked as withholding tax free capital contribution). It should be noted that the aquired reserves are not booked on capital reserves, as they may be repaid tax-free pursuant to the capital contribution principle.
The acquired participation will be booked by the acquiring company at nominal value in the balance sheet. This results in hidden reserves in the amount of the difference between market value and nominal value.

References: Art. 20
 Art. 7
 Art. 20
 Art. 20
 Art. 7
 Art. 20
 Art. 7