Taxation of holding companies in Switzerland
Even though Swiss business conditions offer a wide range of perks for a number of business types, the perks for Swiss holding companies are magnified. Holding companies are given the benefit of corporate tax reduction at federal levels if the company owns at least 20% of share capital of another business entity.
If the holding company has shareholding rights in a Swiss company valued at CFH 2,000,000, the corporate tax rate can be even further reduced.
Investors who are eager to form a company in Switzerland can also expect tax reductions at cantonal levels, but only if the company's articles of association show that equity investments are conducted in the long term. Our consultants are available to assist with information gathering and legal assistance relating to this.
Holding companies based in Switzerland can heavily benefit from a business-friendly taxation system. A corporate tax rate on capital is imposed at 7.8% and corporate officer tax is implemented at values from 0.35% to 0.075% of the company's capital.
Swiss authorities have also enacted double taxation treaties, which allow for holding companies to benefit from even more tax advantages.
The double taxation agreement allows for the standard tax rate to be cut from 35% down to a far lower value, normally between 5%-15%. Adding to this, the double tax treaties agreed upon by the European Union mean that tax exemptions on dividends collected by subsidiaries of Swiss holding companies exist. Therefore, removing the tax strain related to withholding tax.
Taxation at cantonal level in Switzerland
Switzerland is comprised of 26 cantons, which can have different taxation regimes. However, as a general rule, it is important to mention that holding companies are not required to pay income taxes applicable at a cantonal level, but only in the situation on which the company qualifies under certain conditions.
Switzerland is made up of 26 cantons, which feature different taxation systems. Although it is safe to assume that in all Swiss cantons holding companies are not ordered to pay income tax which is normally required at cantonal levels. Important to note is that in some situations income tax is required.
During the establishment of a company in Switzerland and taxation registration, a holding company can be spared from paying tax on dividends or profits, but only if the company can undeniably prove that two thirds, or more, of its profitable income come from shareholder rights.
Investors and prospective business developers are invited to contact our consultants for more information on forming a company in Switzerland and the tax and entitlement benefits receivable.