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.
If you are interested in setting up a Swiss holding company, our agents are at your service.
The main characteristics of holding companies in Switzerland
The Swiss holding company is a legal entity set up as a limited company or corporation and that has a main economic activity the purchase shares of other companies, foreign or local. There are several types of holdings that can be created in Switzerland, among which pure and financial companies, each with its own advantage.
The pure holdings company has as objective the long-term management of assets in its subsidiary or subsidiaries. In order to qualify as such, it must own at least 2/3 of the total assets and income from its subsidiaries. Also, the pure holding cannot engage in any commercial activity in Switzerland. Capital that does not enter the participation income category is taxed with a corporation tax of 7.83%.
The holding company is created for the benefits its shareholders obtain from it, particularly tax incentives. Among these, this type of entity can also take advantage of the double taxation treaties of Switzerland, however, it is required to maintain at least 10% of the shares with voting rights attached.
Income such as dividends, capital gains and liquidation dividends may be exempt from the corporate tax if certain conditions are met, such as dividends obtained from a subsidiary in which the holding owns at least 10% of the nominal share capital or the holding’s market value is at least CHF 1 million.
Other activities a Swiss holding company can enter into are the exploitation of intellectual property, debt financing, or grants.
Setting up a holding company in Switzerland enters the attention of our local agents who can also provide you with tailored accounting services.
Taxation of Swiss holding companies
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 Swiss 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.
Holding companies 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. If you have any questions on the taxation of a Swiss holding company, our local advisors can help you.
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 dividendsreceived by subsidiaries of holding companies, thus eliminating the tax burden related to the withholding tax.
A Swiss holding company is an excellent tax planning solution for foreign entrepreneurs.
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. The Swiss holding company is one of the most popular business forms in this country.
Taxation of Swiss holding companies in the canton of Zug
Zug, one of the Swiss cantons, provides some of the best tax conditions for the registration of a Swiss holding company. In this sense, it is important to know that this canton is the preferred business destination in Switzerland for a holding company (1 in 4 holding companies in this country are set up in Zug) due to the following tax conditions:
• if specific conditions are met, the holding company can benefit from an exemption on the cantonal tax; in case you need the assistance of an accountant in Switzerland, our team of accounting experts is at your disposal.
• the corporate tax applicable at a federal level is imposed at a rate of 8,5%;
• the business form can also benefit from an exemption on income or gains deriving from qualifying participations;
• if the company performs investments in the real estate sector, it can qualify under the privileges provided by the double tax treaties signed by Switzerland.
If you want to create a Swiss holding company under the form of a SA, you can rely on our experts in company formation.
Conditions for obtaining tax exemptions of the Swiss cantonal tax
As mentioned above, the Swiss holding company can benefit from an exemption on the Swiss cantonal tax and our team of specialists in company registration in Switzerland can offer advice on the qualification requirements. One of the main aspects that have to be fulfilled refers to the company’s articles of association, which have to prescribe that the business will have as a main activity the management of equity investments on a long-term basis. The company may enter only in specific business activities, such as holding and/or exploitation of intellectual property, debt financing or subsidies and others.
Why open a Swiss holding company?
One of the main reasons for opening a holding company is the tax benefits available at all levels in this country. Even is taxation of a Swiss holding company can vary according to the canton in which it is incorporated, these differences are only available at this level.
When it comes to federal taxes, all holding companies in Switzerland are taxed the same, regardless of the canton they are base in. Foreign investors should know that a holding company benefits from specific tax advantages and deductions, among which:
• exemptions for participation from various types of income;
• exemptions from dividends, capital gains and passive income taxes;
• dividend tax exemptions only apply if the holding owns at least 10% of the shares in other companies;
• the capital gains tax exemption applies to the ownership of the parent company;
• a company is not subject to any transfer tax in most cases;
• deductions are also available for holdings when incurring capital losses and interest expense;
• the holding also qualifies for exemptions under the EU-Parent Subsidiary Directive.
If you need more information on the benefits offered by a holding company in Switzerland, you can obtain it from our company registration consultants.
Why choose Switzerland as an investment destination?
The stable political system and the prolific economy make Switzerland an attractive investment destination for entrepreneurs from all over the world.
Switzerland has in place many investment protection treaties (more than 100) and specialists in company formation in Switzerland can offer more information these agreements. Investors should also consider the following when choosing Switzerland:
• the shareholder power index is 8.0 and is higher that the one registered by OCED;
• Switzerland has around 112 investment protection treaties;
• in 2017, the holding sector was one of the preferred investment activities;
• finance and holding sectors accounted for 56.6% of all foreign investments in Switzerland;
• however, the country also attracted 137 green investments.
If you are interested in opening a holding company in Switzerland and need guidance in choosing a canton, our local agents can help you. We can also provide updated information on the newest changes in the taxation system which also affects this type of company.
Paul Gheorghiu is one of our experienced company formation agents. He will help you register your company in Switzerland as fast as possible.
Call us now at +41 41 266 0070 to set up an appointment with our experts in Zug, Switzerland. As a Sig Fiduciaire client, you will beneficiate from the expertise of our local consultants for opening a company in Switzerland.
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