Tax Optimisation Made Easy
Contributed by LAUNCHSWISS AG
10 January, 2011
Switzerland in general and the canton of Zug in particular enjoy an ever rising popularity among companies from around the world, not only for its excellent location at the heart of Europe.
Switzerland offers a few different, very interesting solutions for international companies seeking a solution with respect to tax optimisation. In Switzerland taxes are for one collected by the Cantons and also at the confederation level (federal government). The proportional tax rate on earnings for the federal level is 8.5%. Before I address the benefits of the canton of Zug, which is generally considered very pro-business, I would like to mention that due to the federalist structure the tax authority primarily falls under the cantons. So the tax charged varies depending on the companys registered office. In order to be extra attractive to international companies the Zug canton offers a few tax privileges for international company founders, briefly summarised below:
- Domicile company taxation
Domicile company refers to any company carrying out mere administrative work in Switzerland. Possible legal forms are the various corporations and commercial units of international corporations. All legal forms share that as a purely domicile company they are not permitted to hire staff or rent offices in order to benefit from the tax privilege. The purpose of the company, however, is not limited. Foreign revenue and foreign profits from (controlling) holdings, which include dividends and capital gains, are not taxed in Switzerland. Profits originating from Switzerland (interest, dividends, capital gains, profits from immaterial rights and property gains) are taxed at a standard rate of 6.5 %. Capital (equity) is also taxed only minimally.
- Holding company taxation
The term holding doesnt refer to a separate legal form but rather a group of different companies. When the term holding is used it refers to a company with the primary purpose of managing various stakes in other companies. These companies are further prohibited from conducting business operations in Switzerland. On the other hand a holding is absolutely permitted to own property provided this activity is consistent with the nature of the company.Other conceivable activities are wealth management, group management or general business operation abroad. If a company falls under the above definition of a holding, it is in principle only subject to minimal capital tax based on the equity. Gains are only taxed in special cases, namely in the case of revenue from properties or DTA supported revenue.
- Taxation of management companies as mixed companies
By definition the term management companies as mixed companies refers to companies with very limited business activity in Switzerland. Unlike pure domicile companies in Switzerland mixed companies are permitted to keep offices and hire personnel. The basic rule, however, is a minimum of 80 % of business activity must be conducted abroad. Procurement in Switzerland on the other hand is only permitted as an exception. Production and commercial activity in Switzerland, however, is prohibited. The taxable gains are determined with the help of so-called segment accounting. In practise income from abroad is taxed based on the companys number of employees in Switzerland. For less than 6 employees the taxable rate is 10 %, for 6 10 employees 15 %, for 11 30 employees 20 % and for more than 30 employees 25 %. Profits originating from Switzerland (interest, dividends, capital gains, profits from immaterial rights and property gains) are taxed at a standard rate of 6.5 %. The mixed company also pays only minimal capital taxes on equity.
If one then looks at Switzerlands basic benefits as a company location Switzerlands location at the heart of Europe is certainly worth mentionable. Any larger city within Europe quickly be reached with various means of transportation. The excellent link to international air traffic provides access to European metropolises such as Paris (1 hour), Berlin (1.5 hours), Moscow (3 hours) and Stockholm (2 hours) in minimal times. Positive attributes such as the overall high standard of living, the excellent infrastructure (including mail and public transportation), legal security, low crime rate and the very high skill level of Swiss workers are certainly also mentionable. In this respect we can in good conscience summarise Switzerland in general and canton of Zug specifically to be an excellent match for international companies and furthermore offers notably interesting tax conditions.
About LAUNCHSWISS AG
LAUNCHSWISS AG is a business consultancy located in Switzerland specialising in the formation and management of corporations in Switzerland. This also includes establishing legally and tax compliant configurations.
We offer support tailored to your specific needs and true to the motto everything from one source. We will find the perfect legal form for you, compile all documents required by authorities and will form a company on your behalf, tailored to your needs. At our representative location in the pro-business canton of Zug we can provide you a residence for your new company and as a competent and professional contact we will take care of your entire back-office so you may entirely focus on your core business.
Our comprehensive experience allows us to always be a reliable partner helping you with word and deed if questions arise pertaining to your business venture in Switzerland.
Please feel free to contact Mr. Samuel Wyrsch.
CH 6340 Baar
Phone: +41 41 500 33 00
Fax: +41 41 500 33 01
Your personal contact person:
Mr. Samuel Wyrsch
Phone: +41 41 500 33 04
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