TAXATION OF SWISS COMPANIES
Why Use Switzerland?
Switzerland is an attractive jurisdiction for the establishment of companies, as a location for individuals and for the provision of trust services. Advantages include:
- Low rates of corporate tax for Swiss companies.
- Lump Sum Tax for non-Swiss resident individuals.
- A Swiss company can act as Trustee of a Trust formed under the Law of another jurisdiction. The Trust is not subject to taxation in Switzerland and neither are the Settlor and Beneficiaries, as long as they are not resident in Switzerland.
The two most popular company entities regulated by Swiss Law, are the Société Anonyme (SA) and the Société à responsabilité limitée (SARL).
Swiss Corporation Taxes
SA and SARL companies are treated in the same way from a tax point of view.
Swiss companies have a zero tax regime for capital gains and dividend income, however trading companies have always attracted a local canton (region) tax rate.
- Federal tax on net profit is at an effective rate of 7.83%.
- There are no capital taxes at the federal level. Capital tax varies between 0% and 0.2% depending on the Swiss canton that the company is registered in. In Geneva, the capital, the tax rate is 0.0012%. However, in circumstances where there are ‘substantial’ profits, no capital tax will be due.
- In addition to federal taxes, cantons operate their own tax systems. Subsequent to tax reforms in May 2019, the effective cantonal and federal corporate income tax rates (CIT) are between 12% and 18%. In Geneva the CIT is 13.99% (federal plus cantonal tax).
- Swiss Holding Companies benefit from a participation exemption and do not pay income tax on profits or capital gains arising from qualifying participations. This means that a pure Holding Company is exempt from Swiss tax.
Swiss Withholding Tax
A withholding tax of 35% is levied on dividend distributions. This amount is reimbursed to shareholders domiciled in Switzerland who have declared an interest in the company.
If the shareholders are located in the EU, there should be no withholding tax payable. This is because of the EU Parent/Subsidiary Directive.
If shareholders are domiciled outside Switzerland, not located in the EU, and a double tax treaty applies, the final taxation on distributions will generally be between 5% and 15%.
Double Tax Treaties
Switzerland has an extensive double tax treaty network, with access to tax treaties with 109 countries.
FORMATION OF SOCIETE ANONYME (SA)
AND SOCIETE A RESPONSABILITE LIMITEE (SARL) COMPANIES
- Share Capital
SA: Authorised share capital minimum: CHF 100,000
SARL: Authorised share capital minimum: CHF 20,000
SA: Registered shares or bearer shares are allowed. The identity of any of the shareholders is not publicly available.
SARL: Participations are registered. The identity of any of the shareholders is public.
There must be at least one director. Directors domiciled outside of Switzerland are permitted but, at least one manager signing individually on behalf of the company, must be Swiss domiciled. Corporate directors are not permitted.
The names and domiciles of the directors are public.
Approximately three weeks from receipt of all of the requisite information.
- Shareholders Meetings
A meeting of the ordinary shareholders must be held once a year.
Annual accounts are required. An annual audit may be required depending on the turnover of the company.
- Annual Return
An annual return is required.
Updated: May 2019