Switzerland is not only known for its lovely alpine scenery but it is also known for its known for its tax-friendly environment. As a result, the country is a favoured locale for international business dealings. Other reasons can be attributed to the following:
- The environment in Switzerland is stable with respect to economics and politics.
- Both Geneva and Zug are prime centres for the trading of commodities.
- The support structures in the company attract a large variety of professional people including bankers, accountants, lawyers, insurance specialists, and corporate service providers.
- The workforce in Switzerland is comprised of people that possess excellent backgroundsand are multilingual.
- Because Switzerland is located in the centre of Europe, real-time communication can be easily facilitated.
Establishing a Holding Company
When a Swiss holding company is formed, it enjoys certain cantonal or federal tax exemptions as long as certain criteria are met. Upon its establishment, the company takes the form of an AG or GmbH. It holds and oversees financial participations or investments in other firms. Therefore, a company formation in Swiss cantons is an ideal solution for an investor who wishes to manage the shares from other businesses. Switzerland offers the best tax advantages for international investors as well.
The most familiar type of company is the AG form, or Aktiengesellschaft, which is a joint stock corporation. The Gesellschaft mit beschränkter Haftung (GmbH) is a limited liability company. To qualify for a holding company, a business must meet the following criteria:
- It cannot conduct business in Switzerland unless the company is overseeing long-term asset management or managing investments for its subsidiaries.
- The company should own at least two million CHF of the outstanding assets of other companies. The income may be sourced from capital gains, dividends, share certificates, shares, and cooperative LLCs.
The establishment of an AG or GmbH is a basic process that normally takes no more than three weeks. Both an AG and GmbH need to be registered. Shareholders in an AG may remain anonymous if they prefer.
Review the Cantonal Tax Rates
Before you set up a Swiss holding company, you need to confirm whether Switzerland maintains a tax treaty with your country of origin and review the terms and conditions. Businesses from countries that do maintain treaties can benefit substantially by establishing a holding company. Scrutinise the tax rates that are set by each Swiss canton to see the variances.
Holding companies are beneficiaries of the treaties signed with respect to double taxation. Through the provisions of the agreements, the standard rate for taxes can be lowered from 35% to one that is between 5% and 15%. Double tax treaties signed with the EU can also offer exemptions for dividends that were obtained from Swiss holding company subsidiaries, thereby getting rid of withholding tax burdens.