Switzerland: Domestic Corporate Taxation
Calculation of Taxable Base
There are substantial differences between the federal government and cantons, and between individual cantons, in the calculation of taxable income. The following list of broadly applicable rules must be checked in any given situation:
- GAAP principles apply to most aspects of the tax computation;
- Group or consortium relief does not exist in Switzerland;
- Losses can be carried forwards for between 4 and 7 years, but not backwards;
- There is no controlled foreign company tax legislation of the type that exists in the UK and USA;
- Capital gains made by a non-resident parent company on the sale of its shareholding in a Swiss subsidiary are not taxable in Switzerland (unless the Swiss subsidiary owns real estate in Switzerland);
- The payment of loan interest by a resident or non-resident subsidiary to a Swiss parent company is free of any corporate income tax in Switzerland;
- Provisions for future employee retirement liabilities are tax deductible;
- Income or capital gains accruing to a resident or non-resident company on the rental or sale of Swiss real estate (including the sale of shares in a company which owns real estate in Switzerland) are subject to corporate income tax at both federal and cantonal levels;
- Income and capital gains from foreign immovable property are exempt from corporate income tax;
- The profits of the foreign branches of a Swiss company are exempt from corporate income tax in Switzerland as are any capital gains made on a sale of a branch;
- The losses of the foreign branch of a resident company can be set off against the profits of the resident Swiss company.
- Where there is no double taxation treaty in place withholding taxes deducted in a foreign jurisdiction on remittances paid to a Swiss entity give rise to a tax credit in Switzerland. See Double Taxation Treaties.
See Offshore Legal and Taxation Regimes for details of the taxation of holding, domiciliary, auxiliary, mixed and service companies.