The following article discusses tax incentives for Swiss holding companies, Swiss management companies, and Swiss subsidiary companies.
- Holding companies in Switzerland
Corporate tax reliefs are offered to Swiss holding companies to avoid double taxation. The cantons have the responsibility to determine the criteria for obtaining the status of a Swiss holding company.
Here are some of the basic criteria that Swiss holding companies have to meet:
- Companies must have holding activities, which means operating through affiliates. Such activity must be stated in the corporate mission statement and must be registered in the Swiss trade register.
- In the long run, two-thirds of the assets on the balance sheet must be from affiliates, or two-thirds of the revenues must be generated from affiliates.
- Trading and manufacturing activities cannot be part of the company’s operations in Switzerland.
- For a company to own status as a “Holding” it has to own at least 20 percent of the affiliate’s capital or when the capital exceeds the value of at least 2 million CHF.
What are the tax incentives for holding companies in Switzerland?
Swiss holding companies are not obliged to pay income taxes to the Cantons and have reduced rates on the capital. Federal taxes are usually at a rate of 7.83 percent, however, the activities of holding companies are not subject to such taxation.
- Management companies in Switzerland
Here are some of the basic criteria that Swiss management companies have to meet:
- Commercial activities are prohibited to Swiss management companies;
- Management companies can only perform management activities.
In general, management activities involve management services such as financial or administration services, consulting, or technical assistance. Officially, management activities haven’t been defined on a federal level, and the task of defining them is left to the cantons.
What are the tax incentives for management companies in Switzerland?
Domestic income has a normal tax rate, but foreign income is taxed and evaluated based on the importance of the services performed in Switzerland. The level of importance is evaluated case by case by the canton’s administration. Foreign income is usually taxed from five to fifteen percent, and the rate of 7.83 percent of the total revenue is added to it.
- Subsidiary companies in Switzerland
Here are some of the basic criteria that Swiss subsidiary companies have to meet:
- Swiss subsidiary companies only perform services abroad and rarely do any domestic activities. Up to a minimum of 80 percent of the business’ revenues and expenses must be carried out outside of Switzerland.
- Every canton has different conditions for obtaining status as a subsidiary company.
- In general, it focuses on the “place of the market” (the country in which the merchandise or service is sold or purchased) rather than the “place of origin” (the country in which the infrastructure and employees are located). The definition of service differs in every canton.
What are the tax incentives for subsidiary companies in Switzerland?
Domestic income has a normal tax rate, but foreign income is taxed and evaluated based on the importance of the services performed in Switzerland. The level of importance is evaluated case by case by the canton’s administration. Foreign income is usually taxed from five to twelve percent, and the rate of 7.83 percent of the total revenue is added to it.