The AI pilot is the easy part.
A convincing demonstration can now be built in an afternoon. Summarise a document. Draft an email. Analyse a spreadsheet. Put a chatbot on a handful of PDFs.
Then the difficult phase begins: productive operation.
A recent Swiss survey makes the gap visible. Fifty five per cent of companies already use AI deliberately in at least one business area. Thirty one per cent remain in the pilot phase. Only 9 per cent report that AI has changed their business model. Swiss SME Portal
The obstacle is no longer access to technology. It is the organisation around it.
Which data are reliable? Which processes may be automated? Where must a person approve the result? Who monitors quality? Which systems are connected? Which roles need new skills? How will economic value be measured?
Infrastructure comes next. According to the same survey, data quality and data silos are among the biggest barriers. Security and data protection concerns follow close behind.
That may make 2026 the year after the first wave of AI enthusiasm. The technology now has to enter real processes, and that costs money. Sixty four per cent of Swiss CFOs surveyed by Deloitte accordingly expect technology and IT spending to rise. Swiss SME Portal
A pilot answers whether the technology can do something. Scaling answers a harder question: Can our company use it reliably, securely and economically?
Leadership. Capital. Technology. Switzerland. Posts
Sustainability in SMEs rarely fails because of conviction. It fails because of timing.
Most entrepreneurs I speak with have no fundamental problem with sustainability. Their problem is that the bill arrives immediately while the benefit trickles in over years, in a year when every franc is already counted twice.
That creates a common reflex: ESG is declared a programme. It comes with a strategy, workshop, roadmap, external support and a budget that must eventually be requested. It is then postponed because a programme always looks more expensive than an individual decision. That is not refusal. It is budget logic.
The pragmatic route works in precisely the opposite direction. In mid-sized businesses, sustainability is created not in the strategy paper but in procurement: with the next machine, vehicle, building technology or IT renewal. Each decision will arise anyway. The real question is not whether to decide, but which criteria apply.
That also changes the calculation. An energy-efficient installation is not an additional expense for a report. It is an investment reflected in the energy and maintenance budget. The ESG effect becomes a by-product of a commercial decision, and is robust for precisely that reason.
The pressure does not primarily come from legislators but from the value chain: banks, large customers and tenders that require emissions data. [Evidence: KPMG or PwC survey on ESG requirements for Swiss SMEs] Companies unable to provide it lose orders before price is even discussed.
The financing structure determines whether this route is viable. If every more sustainable option must be paid as a cash premium, the cheaper purchase will often win. If it is spread over predictable instalments, it is measured against operating cost savings, and the result often looks different.
A construction company leases lower-emission equipment and improves both operating costs and its ability to compete in tenders. No programme. One procurement decision.
A provocative question for the room: do SMEs really need an ESG strategy, or simply better procurement criteria?
We are recruiting skilled workers for tasks we could have eliminated long ago.
The debate about skills shortages focuses almost entirely on recruitment: advertisements, salaries, employer branding, training and immigration. All correct, necessary and well documented. [Evidence: current skilled-labour shortage index or SECO labour-market data]
The other half of the answer receives much less attention. When people are scarce, what matters is not only how many the company finds, but how much of their time genuinely creates value and how much is lost to searching, waiting, duplicate entry, setup processes, rework and unplanned journeys.
In many companies, a double-digit percentage of working time is lost this way. That is not employee negligence but the result of processes and tools that evolved separately and were never considered together. Each friction point is too small to fix on its own. Together, they amount to a position the company would not need to fill.
Modern equipment, digital scheduling, properly equipped vehicles and ergonomic tools therefore work twice. They increase output per employee without requiring anyone to work faster, an important distinction often lost in the productivity debate. And they change how the workplace feels.
That creates an uncomfortable budget issue: investment in tools is investment in employer quality. We simply do not account for it that way. It therefore competes with other capital expenditure rather than with the cost of an unfilled position. That cost is substantial: overtime, declined orders, pressure on the existing team and months of recruitment effort.
Combining the two calculations produces different decisions. Financing also helps: a monthly instalment can be compared directly with the capacity gained. A one-off investment, by contrast, enters a budget pot where it loses against everything else.
An installation company leases modern vehicles and digital scheduling tools so its technicians spend less time in the office and more time with customers.
How many hours a week does your best team lose to avoidable friction, and what would one fewer position be worth?
The strong franc may be the oldest productivity programme in the Swiss economy.
It requires no grant application, no project office and no regard for the annual budget.
In a recent Deloitte survey, 68 per cent of Swiss CFOs identify the strong franc as a burden on margins. Labour costs follow at 58 per cent and energy and raw material prices at 51 per cent. Swiss SME Portal
Swissmem likewise identifies the strong franc, US tariffs and weak export markets as major challenges for Switzerland’s technology industries this year. Swissmem
An export oriented SME has limited influence over any of these forces. It cannot weaken the franc, abolish a US tariff or dictate world market prices.
It can influence its own productivity. How many working hours go into one unit? How much energy? How much scrap, downtime and administration?
That is why investment in automation and modern equipment is not a luxury reserved for good times. It can be a response to structural margin pressure.
Every investment still needs a sound calculation. But the benchmark should not be the purchase price alone. It should include the cost of the existing process.
Swiss companies will rarely win internationally through the lowest wages. They win through quality, innovation and productivity.
The strong franc simply makes that truth more visible.
The term is the most underestimated variable in an investment decision.
Prices are negotiated, interest rates debated and specifications contested for weeks. The term is simply entered. Usually as long as possible, because that lowers the monthly instalment and makes the application easier to approve.
For Swiss SMEs with international business, that is the wrong optimisation. When trade policy decisions can change calculations within weeks and sales markets must be reassessed, a ten-year planning horizon is not a plan. It is an assumption dressed as a forecast. [Evidence: current tariff and trade situation for Swiss exporters, SECO or Swissmem]
The term determines something that appears in no investment proposal: how quickly a company can adapt capacity to a changed market. That makes it a strategic variable rather than a pure financing detail. The same applies to residual values and return points. They determine what a misjudgement actually costs and whether it can be corrected at all.
The uncomfortable consequence is that the lowest instalment is not automatically the best solution. A shorter term costs more per month but may prove significantly cheaper in retrospect because it allowed the company to adapt. SMEs practically never price these option values. The financial industry does little else.
This leads to a different conversation with the financing partner. Not: what is the lowest instalment over eight years? But: what term fits the cycle of this order, this market and this technology? And what happens if the order is not renewed after three years?
Those who ask these questions in advance negotiate structure. Those who ask them afterwards negotiate damage control.
A supplier leases additional production capacity for a fixed-term major order instead of permanently tying up capital in excess capacity. When the order ends, the obligation ends with it. That is not a financing trick. It reflects the economic reality in the contract.
A question for everyone with export exposure: how long are you currently committed, and was that a deliberate decision or the result of optimising the instalment?
Diversification is one of those words almost everyone supports until the bill arrives.
When an export market becomes more difficult, the recommendation comes quickly: enter new markets. Correct, but those markets do not appear for free.
The current environment for Swiss exporters is demanding. In the first quarter of 2026, Swiss exports fell by 4.2 per cent after seasonal adjustment to CHF 66.9 billion. Exports to North America dropped sharply. Exports to the United States were 15.6 per cent below the previous quarter. Swiss SME Portal
Since 24 July, new US tariffs have applied to numerous Swiss goods. SECO
Diversification is therefore sensible. It also needs capital.
A new market may require different certifications, products, packaging, logistics, inventory, sales and service capacity. It may even require additional machinery.
Market diversification is therefore a balance sheet issue. A company that has committed all available liquidity to long lived assets has less strategic room to manoeuvre.
That does not mean ownership is wrong. It means capital commitment has a price that may become visible only when a new opportunity or a new constraint appears.
Diversification costs money. Concentration does too, only at a time no one can predict.
Entrepreneurs are not walking tax bases. Wealth is not a social offence. And a country does not become richer by driving away the people who create prosperity.
Yet economic success is increasingly discussed as if it required political justification.
Those who own a lot should pay more. Those who have built a business should pay again when they pass it on to the next generation. Anyone who objects is quickly put on the defensive.
The liberal counter-question is: What does a country actually lose when successful entrepreneurs and wealthy families leave?
The answer is: far more than tax revenue.
Entrepreneurial wealth is not a pile of cash
The wealth of a family entrepreneur rarely sits in a bank account.
It is tied up in companies, factories, machinery, patents, inventories and shareholdings. It is equity. It absorbs losses, supports borrowing and finances investment.
A wealth tax therefore does not automatically tax disposable luxury. It can tax capital that is working inside a business.
Switzerland is one of the few OECD countries that still levies a general wealth tax. Holdings in unlisted companies are generally part of taxable wealth, although cantons apply different valuation and relief rules. The OECD explicitly points out that wealth taxes can create liquidity problems where assets are illiquid.
The problem is simple: Taxes have to be paid in cash. Company values do not necessarily consist of cash.
Someone who owns a business worth CHF 50 million does not automatically have CHF 50 million in liquidity.
That distinction is surprisingly often lost in political debate.
Taxes change behaviour
Switzerland can measure this.
A study published in the American Economic Journal: Economic Policy analysed differences between Swiss cantons. Its finding: when a cantonal wealth tax rate falls by one percentage point, declared taxable wealth rises by at least 43 per cent after six years.
The researchers attribute around 24 per cent of the effect to taxpayer mobility and around 21 per cent to rising property prices. For a significant part of the remaining effect, they find evidence of changes in reporting behaviour.
The key lesson is not that every wealthy person leaves a canton after a tax increase.
It is much simpler:
People respond to taxes.
So does capital.
That is why Swiss tax competition is more than a marketing tool for locations. Cantons are free to raise or lower taxes. But they also have to live with the economic consequences.
Power is constrained.
That is federalism in its most economic form.
Norway shows how mobile entrepreneurs have become
Norway increased wealth taxation from 2022 onwards and subsequently tightened dividend taxation as well. In particular, the government increased the valuation of shareholdings for wealth-tax purposes and introduced a higher rate for large fortunes.
In the same year, according to Norwegian population registers, at least 30 wealthy entrepreneurs and investors deregistered and moved abroad. Switzerland was one of the most popular destinations.
Norway subsequently tightened its exit-tax regime. The reforms were designed in particular to prevent unrealised gains accumulated while a person was subject to Norwegian taxation from permanently escaping Norwegian tax after emigration.
One can take different views on the tax policy.
But the economic message is difficult to ignore:
When a country needs rules to determine how much wealth can still be taxed when people leave, mobility is no longer a theoretical risk.
France shows that the cost is more complicated than a tax bill
Until 2017, France imposed a broad wealth tax known as the ISF.
According to France Stratégie, between 2011 and 2016 an average of around 370 wealth-tax households returned to France each year. Around 950 left.
After the ISF was replaced by the more narrowly focused real-estate wealth tax, the IFI, the picture changed. Between 2018 and 2021, an average of around 380 households returned each year, while only around 260 left. France Stratégie explicitly cautions against drawing a simple causal conclusion from these figures. At the same time, the reform came at a substantial cost in direct tax revenue. For 2022, the difference was estimated at around EUR 4.5 billion.
That is precisely why the usual debate is too narrow.
The relevant question is not:
How much tax does an entrepreneur pay this year?
It is:
Where will that entrepreneur’s capital be in ten years? Where will the next generation start businesses? Where will the next company be created? Where will investments be made? Where will the family office be based? Where will a foundation be established?
Those effects never appear fully in short-term tax statistics.
The United Kingdom provides the necessary counter-example
A liberal argument should take its counter-examples seriously.
In 2017, the United Kingdom tightened the rules for long-term resident non-doms. A later HMRC evaluation found that the reform did indeed lead to additional departures. Long-term non-doms affected by the reform were 10 to 12 per cent more likely to emigrate.
Most nevertheless stayed.
And those who stayed paid substantially more tax. HMRC estimates additional revenues of around GBP 1 billion in both 2018/19 and 2019/20 compared with a scenario without the reform.
That disproves one simplistic claim:
Higher taxes do not automatically lead to lower tax revenues.
But it does not prove that mobility is irrelevant.
Since 6 April 2025, the United Kingdom has operated a fundamentally different system. The previous remittance basis was replaced by a residence-based regime with a special four-year rule for qualifying new residents.
The fiscal balance can be measured.
The long-term effect on investment, company formation and location decisions will be far harder to quantify.
Germany shows what lies behind the label “the wealthy”
Public debate likes to talk abstractly about “the rich”.
The structure of German business shows how misleading that can be.
According to a ZEW study published in 2025, 88 per cent of private companies in Germany are family-controlled. They employ 18.3 million people, accounting for 58 per cent of all private-sector employees.
Behind large private fortunes there are therefore often no anonymous financial portfolios.
There are companies.
Jobs.
Factories.
Suppliers.
Apprenticeships.
And owners who carry responsibility for decades.
Anyone discussing the taxation of large fortunes should therefore at least ask what exactly is being taxed.
The JUSO initiative made the conflict visible
The Swiss initiative “For a Social Climate Policy – Tax-Financed Fairly” proposed a federal inheritance and gift tax of 50 per cent on the portion of an estate or gift exceeding CHF 50 million.
On 30 November 2025, 78.28 per cent of voters rejected the initiative. Not a single canton voted in favour.
The debate around large family-owned companies highlighted the central problem of any tax based on substance:
The value of a company is not the same as available liquidity.
A large tax bill at the moment of succession can therefore affect liquidity, ownership structures or the financing of a company.
The OECD points to precisely this issue in the context of inheritance taxes on family businesses and notes that many countries therefore provide special rules.
That is not an argument for making inheritances tax-free as a matter of principle.
It is an argument against treating business assets as if they were cash sitting in a vault.
Entrepreneurs create more than companies
The contribution of wealthy entrepreneurs does not end at the factory gate.
Swiss entrepreneur Heinrich Gebert endowed the Gebert Rüf Foundation with CHF 220 million. By the end of 2025, the foundation had invested CHF 292.4 million directly in projects. According to its own evaluations, 35 per cent of the completed projects examined led to the creation of a start-up.
In Germany, the Robert Bosch Stiftung invested around EUR 195 million in health, education and global issues in 2025 alone. Since its creation, it has provided more than EUR 2.7 billion for charitable work.
These examples are not substitutes for taxation.
They illustrate that private wealth can generate social value without first passing through a government budget.
A pluralistic society consists of more than the state and the individual.
Between them stand companies, foundations, associations, universities, philanthropists, investors and private initiatives.
It is precisely this diversity that limits power.
Economic success is not a moral failing
This is where the real dividing line in the debate lies.
One can view wealth primarily as a distribution problem.
Or one can first ask how that wealth was created and what it makes possible.
Of course, wealth generated through corruption, fraud or political privilege deserves no special protection.
But in a market economy, substantial wealth is often created because someone starts a company, takes risks, creates jobs, invests and remains an owner for decades.
To then place the result under moral suspicion sends a peculiar message to the next generation of entrepreneurs.
The state can tax. It cannot legislate entrepreneurship into existence.
A state can tax income.
It can tax wealth.
It can tax inheritances.
It can tighten rules and invent new taxes.
What it cannot create by law are risk-taking, trust, owner responsibility and an entrepreneurial tradition.
From a liberal perspective, this does not imply a state without taxes.
It implies a restrained state that understands that its own economic foundation is created outside the state.
Legal certainty.
Property rights.
Predictable taxation.
Competition.
And respect for economic success.
The most important question for sensible location policy is therefore not:
How much more can we take from successful people?
It is:
What must we do to ensure that people who create companies, invest capital and assume responsibility still want to invest here tomorrow?
Because when they leave, a country may first lose a taxpayer.
Then perhaps an investor.
Then a decision-making centre.
Later, a foundation.
And eventually an entire generation of entrepreneurs.
Only the first loss ever appears on the tax bill.
Leave a CommentAXA is building a global AI hub and says an initial version is used across five entities. EIOPA reports that 65% of insurers in its survey already use generative AI and another 23% intend to. Those figures tell us how widely the technology has spread. They do not show whether any particular process now works better.
For a leasing company, I would count fewer agents and measure more work: time per application, errors in document checks, the quality of the credit memo and the time until a useful question reaches the customer.
Every pilot needs a baseline and a comparison. A draft produced in two minutes offers little benefit if correcting it takes twenty. Detecting missing documents early and reducing repeated requests would be a better outcome for customers and colleagues alike.
Scaling begins when speed and quality can be measured together.
Which measure would show genuine progress in your organisation?
Sources: https://www.axa.com/press/press-releases/axa-and-publicis-sapient-collaborate-to-deploy-global-ai-hub-at-scale
https://www.eiopa.europa.eu/publications/scaling-ai-finance-systemic-risks-resilience-and-european-sovereignty_en
Resilience has become a synonym for standing still. That misunderstanding has expensive consequences.
For several years, many companies have considered it robust to avoid major risks: investments postponed, projects paused, capital retained and workforce planning frozen. It feels responsible and is rarely challenged by boards of directors because caution always wins rhetorically.
But that is rigidity, not resilience. A business that can respond to a shock only by waiting is not resilient. It is blocked, and may not notice until a competitor has proved more agile.
The term comes from materials science. There, it describes not hardness but the capacity to deform and return to the original shape. Hard materials break. That is a better metaphor for corporate leadership than we might like.
Resilience therefore means retaining the ability to act even when the next three years are unknown. A company that cannot predict tariffs, supply chain risks, energy prices and regulation does not need better forecasts. It needs decisions that can be corrected without endangering the business.
This is primarily a question of commitment period, not courage. Equipment used for a defined term and then deliberately replaced, extended or returned creates planning certainty in both directions. Purchased equipment ties up capital and fixes the technology decision for a decade whose course is unknown.
The objection is valid: flexibility is not free. Shorter terms and return options carry a price. The question is what that price is measured against. It is too high if the world remains stable. In a world where tariff decisions can overturn calculations within weeks, it is an insurance premium. [Evidence: current assessment of trade barriers for Swiss exporters, for example by SECO or economiesuisse]
An export-oriented SME modernises its packaging and warehouse technology without burdening its balance sheet for years. It invests and remains agile.
An honest question for the room: is your current caution resilience, or merely well-argued postponement?
A legal and tax analysis of hire purchase, finance leases and financed sales
Hire purchase is possible in Switzerland. Swiss law does not, however, provide a separate, comprehensive statutory regime for a contract type called Mietkauf. What matters is therefore not the title of the contract but the rights and obligations the parties actually agree.
For movable capital goods, the most important distinction lies neither in tax law nor in accounting. It lies in property law:
Does the finance provider remain the legal owner as lessor, or is the transaction a sale in which the seller merely reserves title until the price has been paid in full?
In the customer’s insolvency, this distinction determines whether the finance provider can reclaim the asset from the bankruptcy estate or merely has a claim against the customer. The contract’s label alone does not settle the issue: even a contract described as a lease may be characterised as a sale where the residual amount is nominal.
1. Hire purchase is possible, but it is not a defined statutory contract type
The Swiss Code of Obligations (CO) contains no special provisions for a contract type called Mietkauf. The former rules on instalment sales in Articles 226a et seq. CO were repealed when the Consumer Credit Act entered into force on 1 January 2003.
The general principle in Article 18(1) CO therefore applies when characterising a contract today: the parties’ common, actual intention is decisive, not an inaccurate description. A contract labelled “lease”, “hire purchase” or “financing agreement” must be assessed by its substance.
The Federal Supreme Court treats a finance lease as an innominate contract that does not fit entirely within any statutory contract type. In judgment 4A_404/2008 of 18 December 2008, it describes as typical a transaction in which the leasing company acquires the asset from the supplier and then makes it available to the lessee for use.
That differs fundamentally from a sale subject to reservation of title.
2. The central choice: Lessor’s ownership or reservation of title?
BGE 118 II 150 of 30 April 1992 is the leading decision on this distinction. The leasing company had bought two vehicles from the supplier, who delivered them directly to the lessee. Because the parties intended only to grant use, not to transfer ownership, the leasing company remained the owner. The Federal Supreme Court upheld its claim to recover the vehicles in the lessee’s bankruptcy. The Court also refers to this case law in the joined proceedings 4A_398/2018 and 4A_400/2018 of 25 February 2019, particularly at consideration 3.1.
This leaves two models:
Under a genuine finance lease, the lessor buys the asset and remains its legal owner. The lessee obtains a right to use it. A subsequent sale may be possible, but it is not an essential part of the lease from the outset.
Under a purchase-like hire purchase arrangement, the asset is intended to pass to the customer under the original transaction. If the seller or finance provider wishes to retain title only until payment is complete, the arrangement is, in property-law terms, a sale subject to reservation of title.
The finance provider’s intention alone does not decide the matter. The parties’ intention, as evidenced by the contract as a whole, does. Section 9 returns to this point.
3. A clause saying “title remains with the finance provider” is insufficient in a sale
Under Article 714(1) of the Swiss Civil Code (CC), acquiring title to a movable asset generally requires a transfer of possession. If the asset is handed to the buyer, title passes on delivery unless there is a valid reservation of title.
Under Article 715(1) CC, a reservation of title is valid only if entered in the public register at the purchaser’s relevant place of residence. The debt enforcement office keeps that register. The details are governed by the Ordinance on the Registration of Reservations of Title (SR 211.413.1). For a company limited by shares, BGE 106 II 320 of 30 October 1980 holds that its statutory registered office, as entered in the commercial register, is decisive.
The consequence for hire purchase is clear:
If the substance of the transaction is a sale with deferred passage of title, a clause saying “title passes only when the last instalment is paid” does not itself create an effective proprietary security interest. Without registration, the customer becomes the owner on delivery.
A valid reservation of title can be asserted in bankruptcy under Article 242 of the Debt Enforcement and Bankruptcy Act (DEBA). If the registration was not effective before bankruptcy proceedings began, the seller generally has no right to recover the asset on that basis. BGE 96 II 161 illustrates this for an entry that ceased to be effective after a change of residence. Unless another security interest exists, the unpaid price generally remains an unsecured claim in bankruptcy.
That is the central difference from the lease in BGE 118 II 150.
4. Reservation of title entails substantial administrative work
For a standardised hire purchase product, the current registration system has three practical consequences.
Application: Under Article 4 of the Registration Ordinance, the parties may apply jointly or one may apply alone. A unilateral application requires the other party’s written consent on all essential registration details. The signed standard contract should therefore cover those details in full; the documents should be coordinated with the competent debt enforcement office.
Updating the entry: If the purchaser changes residence or the relevant registered office, the entry at the former location ceases to be effective after three months unless a new entry is made at the new location (Article 3 of the Registration Ordinance; BGE 96 II 161). The period runs regardless of when the seller learns of the move. A finance provider with many live contracts must therefore monitor changes in customers’ locations systematically.
Public notice: The register does not have the same publicity effect as the land register. Third parties are not generally obliged to consult it. This further limits its protective effect (see Section 5).
This decentralised mechanism is itself the subject of reform. Motion 22.4254, “Revision of the law on security interests in movables (reservation of title)”, was adopted by the Council of States on 14 December 2022 and by the National Council on 1 June 2023. Parliament lists it as referred to the Federal Council; according to the Swiss Leasing Association, the Federal Office of Justice has been tasked with preparing the revision. Until the law changes, the existing system under Articles 715 et seq. CC remains in force.
5. Even a registered reservation of title does not provide absolute protection
Registration does not protect the seller retaining title against every third party. Article 714(2) CC, read with Article 933 CC, protects an acquisition in good faith of rights in movable property entrusted to the transferor under certain conditions.
According to BGE 85 II 580, possession of an asset subject to a reservation of title can also be “entrusted possession” within the meaning of Article 933 CC. A third party may therefore acquire a right in rem under the statutory conditions even though the person in possession was not yet the owner.
Whether a third party acted in good faith depends on the circumstances and the attention required by Article 3(2) CC. This risk matters especially for assets that are easy to resell. For vehicles, eCode 178 can additionally be entered on the registration certificate to prevent a change of registered keeper without the beneficiary’s consent. It is available to all vehicle owners, including a seller retaining title.
6. Article 716 CC materially changes the recovery of a hire purchase asset
Under Article 716 CC, an owner may demand the return of an asset transferred subject to a reservation of title only if the instalments already paid are refunded. The owner may deduct reasonable rent and compensation for wear and tear.
That is very different from assuming that, after a payment default, the finance provider may simply recover the asset and retain every instalment paid. Whether, and to what extent, a different repossession clause would be effective in a business-to-business contract requires a separate legal assessment. Product design should not assume that Article 716 CC can freely be contracted out of.
Default, termination and repossession clauses must therefore take Article 716 CC into account from the outset. Under a genuine lease, the consequences of returning the asset rest on a different ownership and contractual structure.
7. Entering a completed purchase later creates a particular ownership risk
In BGE 119 II 236 of 25 May 1993, the future lessee had concluded a purchase agreement for a machine with the supplier, specifying payment of the price “through leasing”. The machine was delivered before the lease was signed. The Federal Supreme Court held that title had passed to the customer on delivery. The leasing company’s subsequent payment of the purchase price did not make it the owner. It could not reclaim the machine in the bankruptcy of a third party to whom the customer had lent it.
The product-design consequence is:
If the finance provider is to become the owner under a direct purchase from the supplier, that acquisition chain must be clearly agreed and documented before delivery to the customer.
This applies to both models. Under Model B, the finance provider must itself acquire title before it can reserve title against the customer. Purporting to enter into the customer’s already completed purchase after the event fails as a matter of property law.
8. Sale and leaseback of movable assets requires a separate ownership analysis
If a business sells a machine to a finance provider and simultaneously leases it back, the machine remains in the seller’s possession. Title is then intended to pass by means of a Besitzeskonstitut, an agreement under which the transferor continues to possess the asset under a different legal relationship.
Article 717 CC applies. If the asset remains with the transferor under a special legal relationship, the transfer of title is ineffective against third parties where it is intended to prejudice them or circumvent the rules on possessory pledges. The court decides this at its discretion (Article 717(2) CC).
The Federal Supreme Court described the arrangement in BGE 119 II 236, which only resembled a leaseback, as problematic in light of Articles 717 and 884 CC. In that case, however, the leasing company had not actually repurchased the machine. The decision does not establish a general prohibition of every sale and leaseback. Where title is transferred while the seller retains possession, the acquisition chain and the requirements of Article 717 CC must be assessed carefully in each case. Without an effective ownership position, recovery from the bankruptcy estate is not assured.
The property-law analysis is separate from the VAT treatment of the same transaction under Article 2(3) of the VAT Ordinance.
9. A nominal residual value can also put the lessor’s title at risk
Buying the asset from the supplier does not by itself secure the lessor’s ownership position. BGE 118 II 150 upheld recovery because the parties intended the contract only to grant use. If the contract was in fact intended to transfer the asset to the customer, title may pass directly to the customer on delivery.
Whether a purchase option causes an original lease to be characterised as a sale depends on the parties’ overall intention and the specific contract. A nominal option price is a significant indicator, but not conclusive proof.
The CHF 1 purchase option
A machine costs CHF 500,000. Over five years, the customer pays instalments covering virtually the full price plus the financing costs. At the end, the customer may buy the machine for CHF 1.
If its market value is substantially above CHF 1, exercising the option is practically preordained. The small option payment may indicate that acquisition of ownership was the intended purpose from the outset. If the transaction is in fact characterised as a sale, the finance provider’s ability to recover the asset may fail without a validly registered reservation of title. The entire contract still has to be assessed.
A nominal purchase option may put the lessor’s position at risk in bankruptcy if the contract is in substance a sale and no valid reservation of title exists.
Automatic transfer of title after the last instalment brings the structure even closer to a sale. A finance provider seeking to retain genuine lessor ownership should offer a real return option and set any purchase option on economically defensible terms, while clearly documenting the parties’ intention.
10. Hire purchase of real estate follows different rules again
Under Article 216(1) CO, contracts for the sale of real estate must be executed as a public deed. Under Article 216(2) CO, the same applies to preliminary contracts and agreements creating an option to purchase or repurchase real estate.
In BGE 132 III 549 of 30 June 2006, the Federal Supreme Court held that a real estate lease is not, as such, a contract transferring title and therefore need not be executed as a public deed. A lessee’s option to purchase for a price fixed in advance is an exception: it falls under Article 216(2) CO and requires a public deed.
Article 216a CO also limits purchase options to ten years and permits their notation in the land register for that period. This creates a separate design issue for longer real estate lease or hire purchase contracts.
Real estate transactions also require analysis of property gains tax and real estate transfer tax, particularly whether an economic transfer of the property occurs. For leases of commercial or industrial real estate, the relevant guidance includes Circular No. 29 of the Swiss Tax Conference of 27 June 2007 and Circular No. 19 of the Federal Tax Administration (FTA) of 6 February 2008 on direct federal tax.
The product structure described for movable assets cannot simply be applied to real estate without specific formal and tax analysis.
11. Consumer hire purchase may face stricter Consumer Credit Act rules than leasing
The Consumer Credit Act (CCA) generally does not apply to purely business-to-business transactions with legal entities. Under Article 3 CCA, a consumer is a natural person concluding a contract for a purpose outside their professional or commercial activity.
Care is needed with sole proprietorships. A sole proprietor is a natural person, and the purpose of the particular transaction is decisive. Mixed private and business use requires especially careful classification.
Article 1(1) CCA covers deferred payments, loans and similar financing arrangements. Article 1(2)(a) CCA additionally covers leases of movable goods for private use that provide for an increase in instalments if terminated early. A hire purchase arrangement intended from the outset to result in acquisition against instalment payments is more likely to be treated as deferred payment. The CCA would then apply in full, rather than only to the limited extent applicable to leases under Article 8 CCA.
The most important practical difference concerns the assessment of creditworthiness:
Consumer credit (Article 28 CCA): Under Article 28(4), repayment must be assessed on the assumption that the credit is amortised within 36 months, even if a longer term is agreed.
Leasing (Article 29 CCA): The assessment asks whether the lessee can pay the instalments without drawing on the portion of income protected from attachment.
A 48- or 60-month consumer hire purchase agreement would therefore be assessed as though repayment had to be completed within 36 months. This can materially reduce the customer’s assessed borrowing capacity compared with leasing and weighs against Model B in the consumer market.
Other requirements include rules on form and content, the right of withdrawal under Article 16 CCA and the interest-rate ceiling under Article 14 CCA, which Article 8 CCA also applies to covered leases. Since 1 January 2026, the ceiling has been 10 per cent for cash loans and 12 per cent for overdraft credit. The applicable category and calculation for a particular product must be determined separately.
Article 7 CCA contains exemptions, including credit below CHF 500 or above CHF 80,000. Before offering hire purchase to individuals, a provider must therefore determine which CCA category applies. Importing the compliance framework for a lease without reviewing the transaction may be wrong.
12. Finance leases and credit-like hire purchase are subject to anti-money laundering rules
Under Article 2(3)(a) of the Anti-Money Laundering Act (AMLA), credit transactions, expressly including finance leases, constitute financial intermediation. Financial intermediaries acting professionally must generally affiliate with a recognised self-regulatory organisation (Article 14 AMLA) unless they are subject to the relevant prudential supervision.
Renaming “leasing” as “hire purchase” changes nothing in this respect. A credit-like hire purchase product must be assessed as a credit transaction for anti-money laundering purposes. For a leasing company already affiliated with a self-regulatory organisation, the main task is to incorporate the new product into its existing AML processes and the organisation’s rules.
13. VAT: Both leasing and sales are supplies of goods, but their tax treatment can differ
Under Article 3(d) of the VAT Act (VATA), a supply of goods includes both transferring the power to dispose economically of an asset and making it available for use. The sale and lease of a movable asset are therefore both supplies of goods for VAT purposes. Their tax consequences need not be identical.
Leasing: Lease payments are generally consideration for the taxable grant of use under Article 3(d) VATA. A financing element embedded only in the calculation of the payment does not thereby become a separate grant of credit. The treatment of separately agreed components depends on the particular contract structure.
Sale with separate financing: Under Article 21(2)(19)(a) VATA, the granting and arranging of credit are exempt from VAT without credit for input tax. If a separately identifiable credit is granted alongside the sale and the interest is shown separately, it must be assessed whether that interest is an exempt financing service rather than part of the taxable price of the goods.
The economic difference can be significant. But exempt financing services can restrict the finance provider’s input-tax deduction, and there is no option to tax services under Article 21(2)(19) VATA (Article 22(2)(a) VATA). The structure must therefore be assessed beyond its nominal VAT rate.
No blanket FTA rule follows under which a nominal purchase option always turns a lease into a sale from inception. Where there is an obligation to buy, automatic transfer of title or a nominal option, the VAT characterisation must be established from the actual rights and obligations. A written ruling under Article 69 VATA is advisable for the particular standardised product.
The acquisition chain under Model B also affects VAT. If the finance provider buys from the supplier and resells to the customer, there are two supplies. If the supplier sells directly to the customer and assigns the claim to the finance provider, the latter may provide only a financing service.
14. The timing and place of VAT can differ too
In a sale, the power to dispose is granted on completion, bringing the supply to an end. A lease makes an asset available for use over time and is an ongoing supply.
The tax claim arises in accordance with Articles 39 and 40 VATA, taking account of the accounting method, invoices, instalment invoices and payments. It would therefore be wrong to say that the full VAT on every hire purchase transaction is always due on day one. Equally, monthly invoicing cannot by itself turn a substantive instalment sale into a lease.
For cross-border transactions, classification also affects the place of supply under Article 7 VATA and the treatment of import VAT.
Article 69 VATA expressly gives a taxable person the right to submit a specifically described set of facts to the FTA in writing and obtain a ruling on the VAT consequences. The ruling binds the applicant and the FTA for those facts. A product launch warrants an application enclosing the model contract, payment schedule, invoicing arrangements and mechanics of title transfer.
15. Accounting concerns both customer and finance provider
The accounting standards treat leasing differently on both sides of the contract:
| Standard | Customer (lessee or buyer) | Finance provider (lessor or seller) |
|---|---|---|
| Swiss CO | No general recognition duty based on the IFRS 16 model; accounting follows the general CO principles, with disclosure of certain lease obligations. Recognition on purchase depends on the specific allocation of the asset. | The leased asset and receivables are accounted for under general CO principles and the transaction’s economic substance; Model B generally produces a purchase-price receivable. |
| Swiss GAAP FER 13 | Under a finance lease, the asset is recognised and a liability recorded; operating lease obligations are disclosed. | FER 13 addresses presentation by the lessee. The lessor’s accounting must be assessed separately under the applicable FER principles. |
| IFRS 16 | Generally a right-of-use asset and a lease liability, subject to exceptions for short-term and low-value leases. | Finance leases remain distinct from operating leases: the former are presented as a receivable, the latter as the underlying asset. |
Under Article 959c(2)(6) CO, obligations arising from purchase-like leases and other lease commitments must be disclosed if they cannot expire or be terminated within twelve months of the reporting date.
Model B may also change the accounting for a leasing company. Under IFRS 16, however, a lessor already recognises a receivable for a finance lease; moving to Model B does not necessarily create a receivable for the first time. Swiss GAAP FER 13 expressly governs presentation by the lessee. The lessor’s accounting requires a separate assessment of the applicable principles and the contract.
16. Direct tax does not follow the product’s name
There is no federal rule saying that a hire purchase asset must always be recognised by the finance provider or always by the customer.
For legal entities, Article 58 of the Direct Federal Tax Act (DFTA) generally starts from the balance of the statutory profit and loss account, subject to tax adjustments. The relevant accounts are the statutory individual financial statements; IFRS or Swiss GAAP FER consolidated accounts do not automatically determine taxable profit. For sole proprietors, the provisions on self-employment apply (Articles 18 and 27 et seq. DFTA).
Cantonal practice varies. The current TaxInfo guidance of the Canton of Bern, “Tax treatment of lease agreements for business operations”, distinguishes according to the actual accounting treatment. In exceptional cases, it provides for partial recognition of lease payments as advance payments where the contract term is substantially shorter than the asset’s economic life and a purchase option at a price far below market value exists at the end.
On the finance provider’s side, Model B changes the tax base: depreciation of the asset falls away and interest income is taxed. The customer, conversely, must determine whether to recognise and depreciate the asset or expense the instalments.
Where transfer of title is assured and the price is almost fully amortised, a product-specific discussion with the competent cantonal tax authority is therefore advisable, ideally through a written ruling.
17. Two fundamentally different product models
There are two possible structures for a Swiss hire purchase product. As discussed in Section 9, a nominal purchase option increases the risk of recharacterisation.
| Feature | Model A: Finance lease with a possibility to buy | Model B: Instalment sale with reservation of title |
|---|---|---|
| Acquisition chain | Finance provider buys from supplier; supplier delivers directly to customer. | Finance provider first acquires the asset and then sells it subject to reservation of title. If the supplier sells and assigns the claim, the security transfer and registration must be structured separately. |
| Ownership during term | Finance provider is the legal owner. | Finance provider retains ownership only if the reservation of title is validly registered. |
| End of contract | Genuine economic choice between return and purchase; realistic residual value. | Title passes after the final instalment. |
| Security | Lessor’s ownership; eCode 178 for vehicles. | Entry in the register at the customer’s registered office, updated if that office moves; eCode 178. |
| Recovery after default | Governed by the contract. | Subject to repayment under Article 716 CC. |
| Customer’s bankruptcy | Recovery of the asset, provided the transaction is not recharacterised as a sale. | Recovery only if the registration was effective before bankruptcy proceedings began. |
| CCA for consumers | Lease assessed under Article 29 CCA. | Deferred payment assessed under Article 28 CCA, with the 36-month assumption. |
| VAT | Entire lease payment generally taxable. | Price of goods taxable; separately stated interest may be exempt. |
| Finance provider’s accounting under Swiss CO | Case-specific assessment under general CO principles. | Generally a purchase-price receivable; precise entries require assessment. |
If the supplier’s claim for the purchase price is assigned, the transfer of the reservation of title must also be agreed and documented. BGE 82 IV 182 discusses an assignment accompanied by transfer of the reservation of title; under Article 4bis of the Registration Ordinance, the assignment may be noted in the register. An assignment of the claim alone should not simply be assumed to transfer title to the finance provider.
Model A broadly corresponds to the finance lease described in BGE 118 II 150 and 4A_404/2008. Model B is legally possible, but substantially more demanding administratively and in insolvency.
Conclusion
Hire purchase is possible in Switzerland. The decisive issue is the ownership structure actually created, not the name given to the contract.
Under a genuine finance lease, the leasing company acquires the asset from the supplier and remains its legal owner. It can generally recover the asset in the lessee’s bankruptcy, as BGE 118 II 150 illustrates. Recovery presupposes an effective ownership position. Depending on the contract, a nominal purchase option can indicate that a sale was intended from the outset.
Under hire purchase or a financed sale, by contrast, the original contract provides for title to pass to the customer. Anyone seeking to secure title until payment in full must comply with Articles 715 and 716 CC. That includes registration, updating the entry when the customer’s registered office changes, and recognising the limits of protection against third parties acting in good faith.
For a leasing company, “full amortisation plus automatic transfer of title after the last instalment” is therefore not simply a variant of a finance lease. It entails a shift to a sale subject to reservation of title. A CHF 1 purchase option may put the classification, and therefore the right to recover the asset, at risk; it does not automatically eliminate the lessor’s ownership.
Other consequences also differ. For consumers, hire purchase is more likely to fall under the stricter rules for consumer credit. For VAT, separately agreed financing may be treated differently from a financing element embedded in a lease payment. Accounting and direct-tax consequences depend on the applicable standard and the transaction’s specific classification.
Before introducing a business-to-business hire purchase product, a written assessment should cover four areas:
- Ownership, acquisition chain and enforceability in bankruptcy, including Articles 715 to 717 CC.
- Contract classification, residual-value policy and default mechanics under Article 716 CC.
- Statutory and tax accounting for both finance provider and customer, coordinated with the cantonal tax authority.
- A binding VAT ruling from the FTA under Article 69 VATA.
Reform of security interests in movable property under Motion 22.4254 could substantially change the current system. A product designed today should be capable of adaptation to a future register.
Sources
Legislation and ordinances
- Swiss Civil Code, SR 210, especially Articles 3, 714–717 and 933 CC: Fedlex
- Ordinance on the Registration of Reservations of Title, SR 211.413.1, especially Articles 3, 4 and 4bis: Fedlex
- Code of Obligations, SR 220, especially Articles 18, 216, 216a and 959c CO: Fedlex
- Debt Enforcement and Bankruptcy Act, SR 281.1, especially Article 242 DEBA: Fedlex
- Consumer Credit Act, SR 221.214.1, especially Articles 1, 3, 7, 8, 14, 16, 28 and 29 CCA
- Direct Federal Tax Act, SR 642.11, especially Articles 18, 27 et seq. and 58 DFTA
- VAT Act, SR 641.20, especially Articles 3(d), 7, 21(2)(19), 22, 39, 40 and 69 VATA: Fedlex
- VAT Ordinance, SR 641.201, especially Article 2
- Anti-Money Laundering Act, SR 955.0, especially Articles 2 and 14 AMLA: Fedlex
Case law
- BGE 118 II 150 of 30 April 1992, lessor’s ownership and recovery in bankruptcy: Federal Supreme Court
- Judgments 4A_398/2018 and 4A_400/2018 of 25 February 2019, consideration 3.1: Federal Supreme Court
- BGE 119 II 236, finance provider’s failure to acquire title when entering an existing purchase: Federal Supreme Court
- Judgment 4A_404/2008 of 18 December 2008, finance lease as an innominate contract: Federal Supreme Court
- BGE 132 III 549 of 30 June 2006, real estate leasing and public deed for a purchase option: Federal Supreme Court
- BGE 106 II 320, registration location for legal entities: Federal Supreme Court
- BGE 96 II 161, effect of registration after a change of residence: Federal Supreme Court
- BGE 85 II 580, reservation of title and entrusted possession: Federal Supreme Court
- BGE 82 IV 182, assignment of the purchase-price claim and transfer of the reservation of title: Federal Supreme Court
Authorities, practice and standards
- Swiss Tax Conference, Circular No. 29 of 27 June 2007, and FTA, Circular No. 19 of 6 February 2008, leases of commercial or industrial real estate: FTA with appendix
- Tax Administration of the Canton of Bern, Tax treatment of lease agreements for business operations
- Federal Office of Justice, Consumer Credit Act and the 2026 interest-rate ceiling
- FINMA, anti-money laundering treatment of credit and leasing transactions: FINMA
- Swiss GAAP FER 13 Leases: FER Foundation
- IFRS 16 Leases, especially paragraphs 61–67: IFRS Foundation
- Motion 22.4254, revision of the law on security interests in movable property: Curia Vista
- Swiss Leasing Association, progress on the movable-property register: SLA
As at 28 September 2026. Older decisions made under the since-repealed instalment-sale rules are used only for property-law principles that remain relevant. Specific products require an assessment of their contracts, registration procedure, accounting and tax treatment on their own facts.
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