Commercial subletting in Switzerland
Commercial subletting in Switzerland explained simply: What is permitted, what is legally applicable, and when is it subject to value added tax?
In a business world increasingly characterized by flexibility, one topic is moving more and more into focus: commercial subletting. Companies are downsizing, shifting work models to the home office, or wanting to bridge temporary vacancies. Especially in such cases, the subletting of office or commercial spaces can be an attractive solution. But what is the legal situation in Switzerland? What are tenants allowed to do – and where are the limits? What about tax obligations?
Download here our free template for the subletting of commercial premises.
What does commercial subletting mean?
Commercial subletting occurs when the main tenant of a commercial space sublets it – entirely or partially – to a third party. This can be a single office in a larger unit or an entire floor that is currently not needed. In this case, the main tenant becomes the intermediary landlord, while the new user acts as the subtenant. Unlike classic residential renting, commercial subletting exclusively involves spaces used for business purposes – such as offices, retail spaces, hospitality areas, or even storage rooms.
Is commercial subletting allowed in Switzerland?
Generally, the subletting of commercial spaces is allowed in Switzerland – but not without restrictions. The Swiss Code of Obligations (Art. 262 CO) stipulates that subletting is only permissible if the landlord consents.
However, this consent may not be withheld without a valid reason. A prerequisite, though, is that the tenant fully informs the landlord about the planned subletting. This includes, in particular, who the subtenant will be, how the use of the space is planned, and under what conditions the subletting will take place.
A landlord can refuse consent, for example, if the subletting creates commercial competition, if the use does not match the agreed purpose, or if the subtenant would excessively wear the property. If such reasons are absent, subletting cannot be prohibited.
What falls under commercial letting – and how is it defined?
Commercial letting is always present when rooms are not used for private residential purposes but serve the exercise of an economic or business activity. This covers a wide range of usage types: classic offices as well as retail spaces, practice rooms, studios, workshops, or warehouses.
The type of use should always be specified in the rental agreement. If a tenant wishes to change the use – for instance, using an office as a retail space or subletting it to operate a photo studio – this must be coordinated with the landlord. Because even within the framework of subletting, the original purpose remains binding.
What is a commercial intermediary tenant?
A commercial intermediary tenant is a person or company that is itself a tenant of a commercially used space and sublets it to another party. This means: the intermediary tenant is in a contractual relationship both with the owner as a tenant and with the subtenant as a landlord.
This dual role brings responsibility. Because regardless of how the subtenant behaves, the intermediary tenant remains responsible for all obligations towards the owner. For example, if the subtenant does not pay or misuses the space, the intermediary tenant is liable. They must also ensure that the sublease agreement does not contradict the main contract.
Is commercial subletting subject to VAT?
Another important aspect concerns the tax treatment of subletting – specifically the question of value-added tax liability. Basically, the renting of real estate in Switzerland is exempt from VAT. However, the Swiss Value Added Tax Act provides the option for opting into value-added tax (VAT) for the renting of office and commercial spaces. In addition: if the annual income from subletting amounts to CHF 100,000 or more, the intermediary landlord must register for VAT with the Federal Tax Administration.
If the intermediary landlord decides to voluntarily subject the sublease to VAT (opt in), they must state the rent accordingly with VAT. In return, however, they can also claim the input tax on related expenses. Whether such an option makes sense depends on the specific business model and should be clarified with a tax professional.
What should be considered in practice?
In order for commercial subletting to be implemented successfully and legally soundly, transparency and clear communication with the owner are above all necessary. Tenants who wish to sublet should inform the landlord early on, clearly state the use and the intended subtenant, and record all relevant information in writing.
The sublease agreement should be drawn up professionally and, in particular, regulate questions concerning rent, duration, use, termination, and return. Insurance issues and liability for damages should also not be underestimated. It is also important that the intended purpose of the rental property is adhered to – both by the intermediary tenant and by the subtenant.
On the owner's side, it is advisable to check exactly whether the planned subletting fits into the usage concept of the property and whether the proposed subtenant has sufficient creditworthiness and reliability.
Conclusion: Flexible solutions with clear rules
Commercial subletting offers companies an attractive opportunity to react to changing space requirements. In times of home office, project work, and short-term business models, it can be a real advantage – provided the legal framework is observed.
In Switzerland, it is generally allowed, provided the landlord consents and there are no justified objections. From a tax perspective, it is subject to VAT under certain circumstances – a point that should be carefully examined.
Those who communicate clearly, inform in good time, and draw up their contracts neatly can be on the safe side, both economically and legally, with commercial subletting.