Holding companies in Switzerland are incorporated with the purpose of owning voting rights in other companies. Investors who want to start the procedure of Swiss company formationunder a holding company must know that they can benefit from numerous advantages when setting up this structure here, related to the taxation regime applicable to holding structures, both at federal and cantonal levels. Our team of company registration representatives in Switzerland can offer advice on the main tax benefits, as well as on other advantages established for this business form.
Taxation of holding companies in Switzerland
Although the Swiss business environment provides a wide range of benefits for holding companies registered here, one of the top advantages refers to the taxation system applicable to these entities. Holding companies can benefit from the reduction of the corporate tax rate at the federal level, as long as the respective company owns 20% of the share capital of anotherlegal entity.
At the same time, the holding company can qualify for a lower corporate tax rateif the shareholding rights are held in a Swiss company with a market value estimated at CFH 2,000,000.
Investors interested incompany formation in Switzerland can benefit from tax reductions applicable at cantonal levels if the company’s articles of association state as a main activity equity investments carried out on a long term and our team of company registration agents can offer legal assistance on the main provisions related to the statutory documents of the business form.
Holding companies in Switzerland enjoy an attractive tax regime. For example, the corporate income tax on capital is imposed at the rate of 7,8%, while the corporate officer tax is applied at a value which ranges between 0,35% to 0.075% of the company's capital.
At the same time, holding companies are the direct beneficiaries of the double taxation treaties signed by the Swiss authorities, which can result in other tax advantages.
Through the provisions of the double taxation agreement, the standard tax rate can be reduced from a rate of 35% to a much lower value, ranging between 5-15%. Moreover, the double tax treaties signed with the European Union can provide tax exemptions for the dividends received by subsidiaries of Swiss holding companies, thus eliminating the tax burden related to the 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 taxesapplicable at a cantonal level, but only in the situation on which the company qualifies under certain conditions.
When opening a company in Switzerlandand registering it for taxation purposes at cantonal level, the holding structure can be exempted from paying the tax on dividends or on profit, provided that the company can prove that two thirds of its profits are deriving from shareholding rights.
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