IN569 Using Switzerland For Asset Protection In An Increasingly Challenging World

Background

Switzerland is an incredibly attractive jurisdiction for international companies and high net worth individuals, seeking stability (political and economic).

Taking into account the many factors that influence the choice of jurisdiction, the case for Switzerland is a strong one.

Reasons Why Switzerland is a Favoured Location

  1. Political, financial, social and economic stability

The economy of Switzerland is one of the world's most advanced economies. The service sector has come to play a significant economic role, particularly the financial services sector. The economy of Switzerland ranks first in the world in the 2015 Global Innovation Index and the 2017 Global Competitiveness Report, according to the United Nations.

The economy of modern Switzerland is recognised as one of the world's most stable. In addition, in terms of the ‘human development index’ (a statistical composite of life expectancy, education and per capita income), with a rating of 0.944, Switzerland ranked second in the world in 2018.

Swiss neutrality is one of the main principles of Switzerland's foreign policy which dictates that Switzerland is not to be involved in armed conflicts between other states. This policy is self-imposed, permanent, and designed to ensure security from external events as well as assisting in the promotion of peace.

The stable political and economic environment of Switzerland makes it a strong jurisdiction from an asset protection perspective with little motivation to over tax companies or individuals.

2. Favourable tax environment for holding companies

There are 26 cantons in Switzerland, with French speaking Geneva being one of the most important. The Swiss tax system grants holding companies privileged tax status at the cantonal level with each canton having slightly different tax rates varying from 13.04% to 24.16%.

If the holding company owns 20% of the share capital of another legal entity, it can also benefit from a corporate tax reduction at the federal level.

The double tax treaties signed by Switzerland with the European Union and several other jurisdictions, can provide tax exemptions for the dividends received by the subsidiaries of Swiss holding companies. These subsidiaries are entitled to receive a federal tax reduction, the amount of which depends on the ratio of dividend income to total net income.

3. Banking advantages of setting up a Swiss company

The global move towards transparency, increase in exchange of information obligations, new reporting criteria and the demand for privacy are increasing the need for stable and well-regulated financial centres with a favourable and predictable tax environment. Across the world, it is becoming increasingly difficult for clients and organisations to open bank accounts for international business.

Switzerland is one of the strongest and most commercial banking centres in the world. There is a wide variety of large domestic banks as well as private banks in Switzerland experienced in operating accounts for Swiss commercial and/or holding companies or a Swiss branch of a foreign company.

  1. Different types of Swiss companies

Public limited company (AG)

The public limited company (AG), is an important and popular legal structure in Switzerland. Foreign companies often use this legal form when establishing a subsidiary. An AG is a corporation with a legal entity whose liabilities are covered exclusively by its own assets.

Limited liability company (GmbH)

A limited liability company, (GmbH) is a company with its own legal entity formed by at least one or more individuals or companies with a predetermined capital (nominal capital). Each partner participates by paying in an initial share of the capital. The partner's liability is limited to the predetermined nominal capital.

General partnership

A general partnership consists of two or more natural persons who form a corporation to run a trade, manufacturing, or other commercial business. All partners are jointly liable with no limitation.

Sole enterprise

A one-man business usually engaging in trade, manufacturing or commerce has no legal personality. This legal structure is often chosen by young entrepreneurs wanting to establish a small business on their own. Anyone is able to start up a one-man business at any time and start working right away. No dedicated seed capital is required. However, the proprietor is liable for debts incurred by the one-man business from his personal assets.

A one-man business can easily be transformed into a limited liability company or a public limited company at a later point. It is the easiest legal structure to dissolve.

Additional Information

If you would like additional information regarding the use of Switzerland for asset protection, please contact Christine Breitler at the Dixcart office in Switzerland: advice.switzerland@dixcart.com. Alternatively please speak to your usual Dixcart contact.

 

 

Categories: Switzerland