When setting a holding company in Switzerland, this involves having a company that has a main focus of holding and managing involvement in other companies. For your holding company in Switzerland to be classified under Swiss tax law, it mustn’t undergo any other business activity in Switzerland.
During the process of setting up a holding company in Switzerland, you must be able to follow a few rules in order to be classified as a Swiss holding company. The first rule is that the investments into or the revenues earned from the participation in other companies must represent at least two thirds of the entire assets or the entire income earned by your Swiss holding company. The second rule is that out of the participations in other companies, there must be at least one that exceeds more than 10% or the total value of the participations must be at least CHF 1 million. The minimum holding period of an investment must also be one year or more.
Since the abolishment of a limited level of profit tax reduction, having a holding company in Switzerland now means you will benefit from a reduced income tax rate of 11.91% across all levels (federal, cantonal and municipal), not just at the cantonal level. This has been applicable since 1st January 2020. On top of this, an additional deduction of 50% in research and development costs is also allowed for your Swiss holding company.
Even though holding companies in Switzerland aren’t allowed to conduct their own business activities, they are allowed to do a limited amount of activities, including asset management, group management functions and foreign business activities that do not include anything Swiss.
What Is The Best Canton For Setting Up A Holding Company In Switzerland?
When it comes to setting up a holding company in Switzerland, we recommend that you set it up in the canton of Zug. We choose to operate our Swiss company formation and administration in the canton of Zug because it follows a low tax regime, has a very business-friendly environment and its location is ideal for established businesses. The fact that Zug already accounts for locating one in four Swiss holding companies means that there’s proof it is one of the best.
Zug’s tax regime also includes all areas, including federal, cantonal and communal with their corporation tax rates as low as 11.9%. VAT rates in the canton of Zug are also only at a rate of 7.7% for all goods and services supplied within Switzerland. The average rate in Switzerland is actually 8.5%, but due to the benefit of tax reductions, Zug is able to have a lower rate, making it one of the lowest cantons for tax in the country.
When setting up your Swiss holding company in the canton of Zug, you will be required to pay tax on the income that you receive worldwide which can be as high as 25%. However, Zug’s corporate income tax rate is only at a level of 14.6%.
Need More Advice On Setting Up Your Holding Company In Switzerland?
If you are planning on setting up your company as a holding company in Switzerland and you think Zug is the perfect Canton for you, then CO-Handelszentrum GmbH are happy to assist you. Our company formation and administration team can offer you a range of services when setting up your holding company in Switzerland, such as accounting, tax and ancillary services.
If you would like more information on the services we can offer you as part of your company formation and administration in Switzerland, don’t hesitate to contact us here or call us today on +41 (0)41 766 31 50.