Swiss Holding Company

Why Should You Choose Switzerland To Incorporate A Company

Swiss Holding Company

Switzerland has an envious position being a beautiful and wealthy country with a small population and a relatively low corporate and personal tax regime. It is situated in the heart of Europe but outside the EU. It has a long-standing reputation as a first class financial centre, and Swiss Companies, unlike “brass plate” entities domiciled in jurisdictions such as certain Caribbean countries or the Channel Islands, have an international stature and a reputation for quality.

Why Switzerland

Some Key Information:

  • Population: 8.57 Mio (2019)
  • Capital: Bern
  • Largest City: Zurich
  • Major Languages: German, French, Italian, Romansch (English widely spoken)
  • Life expectancy: 83.4 Yrs
  • Monetary Unit: Swiss Franc (CHF) (1 CHF = 100 Rappen)
  • Main Exports: Machinery and Electronics, Chemicals, Precision Instruments, Watches
  • GNI Per capita: $ 82, 786 (World Bank 2018)

Low Taxation

The Swiss tax system features both Federal, Cantonal and Communal tax regimes. The Canton of Zug is regarded as having one of the most favourable tax regimes in Switzerland and is increasingly regarded as the Canton of choice of multinationals when establishing a Swiss Corporate Entity.

Corporation Taxes: 11.9% (Zug)
VAT: 7.7% (for goods and services supplied within Switzerland)

Personal Taxation (Worldwide basis)

Personal taxes are also low. Personal taxes are levied at three different levels; Federal, Cantonal and Communal . These are progressive and based on income bracket, marital status, number of children etc and are assessed on household income (earnings of husband and wife) . As an example below is an estimated income tax rate for the Canton Zug for a salaried employee earning CHF 200,000 p.a., married with two children). Note this includes all Federal, Cantonal and Communal and Wealth taxes)

Income tax rate: 16.2 %
Capital Gain Tax: Nil (except for Swiss Real Estate)

For wealthy individuals over 55 who do not need to work in Switzerland it is also possible to negotiate a “lump-sum” tax agreement with many of the Cantons. This equates to a fixed tax p.a. regardless of wealth or income and is normally based on an imputed income based on a multiple of housing cost.

Common company structures used in Switzerland and the Canton of Zug include:

Swiss Holding Company

Main purposes:

  •  To hold group subsidiaries.
  • To hold significant shareholdings in external companies.
  • To Hold Intellectual Property.
  • Protection of Assets.

Main benefits:

  • Exemption or reduction of income tax on Dividends from “qualifying participations”.
  • Exemption or reduction of corporate tax on Capital Gains arising from the sale of “qualifying participations”.
  • Low income taxes on ancillary activities.
  • Deductibility of accrued or paid borrowing costs.
  • Enhanced anonymity, confidentiality and transferability of shares through use of bearer shares.
  • Exemption from Withholding Taxes under certain double tax treaties and of EU shareholders holding in excess of 10% the share capital if held for at least 1 year.

Swiss Trading Company

Main purposes:

  • To trade in goods or services.
  • To manage and administer international business operations.

Main benefits:

  • Low corporate taxes -11.9% (Zug).
  • Exemption or reduction of income taxes on dividends from “qualifying participations”.
  • Exemption or reduction of corporation taxes on Capital gains arising on the sale of “qualifying participations”.
  • Deductibility of accrued and paid external and intra-group borrowing costs.
  • VAT 7.7%

Swiss Finance Company/Subsidiary

Main purposes:

  • To fund group/international operations.

Main benefits:

  • Reduced corporate taxes on financial/interest income.
  • Exemption or reduction on interest income from “qualifying participations”.
  • Deductibility of accrued or paid borrowing costs including inter-group companies.
  • Deductibility of Bad Debt Reserves of up to 10%.
  • Deductibility of Realised Foreign Exchange Losses.

Swiss Management Company

Main purposes:

  • Provision of management or services to non-Swiss entities.

Main benefits:

  • Low corporate taxes on income -11.9% (Zug).

Swiss Branch Office

Main Purposes:

  • To manage and administer international business operations.

Main benefits:

  • Low tax burden.
  • Exemption from withholding taxes.
  • Exemption of Swiss Profits in hands of parent (according to Double tax treaty).
  • No Share capital required.

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