Key tax factors for efficient cross-border business and investment involving Switzerland.
No. Please note that, in addition to Switzerland’s extensive Double Tax Treaty (“DTT”) network, a bilateral agreement with the EU (“EU-Swiss Savings Agreement”) allows Switzerland to benefit from rules similar to the EU ParentSubsidiary Directive and the EU Interest and Royalty Directive.
|Albania||Egypt||Ivory Coast||Morocco||Sri Lanka
|Australia||Finland||Rep. of Korea||Oman||Thailand
||Trinidad & Tobago
|Czech Rep.||Rep. of Ireland||Mongolia||Slovenia||Vietnam|
On May 27, 2015, Switzerland and the EU signed an information exchange agreement, according to which Switzerland and the 28 EU Member States will automatically exchange information on financial accounts about one another's residents from 2018. This new agreement will replace the EU-Swiss Savings Agreement. It also contains the same regulation which allows Switzerland to benefit from the rules similar to the EU Parent-Subsidiary Directive and the EU Interest and Royalties Directive.
On May 27, 2015, Switzerland and the EU signed an information exchange
agreement, according to which Switzerland and the 28 EU Member States will
automatically exchange information on financial accounts about one
another's residents from 2018. This new agreement will replace the EU-Swiss
Savings Agreement. It also contains the same regulation which allows
Switzerland to benefit from the rules similar to the EU Parent-Subsidiary
Directive and the EU Interest and Royalties Directive.
Aktiengesellschaft (AG),Gesellschaft mit beschränkter Haftung (GmbH).
Legal entity capital requirements
AG: CHF 100,000
GmbH: CHF 20,000
A company is a tax resident if its legal domicile is in Switzerland or if its effective management is exercised in Switzerland. Although resident companies are subject to tax on worldwide income, in practice a territorial tax system applies. Non-residents are subject to tax on Swiss source income.
Fiscal year is the same as the business year of the respective company.
Income and capital tax: filing of tax return with cantonal tax authorities (annually).
WHT: filing of WHT form with federal tax authority (annually).
VAT: filing of tax returns with federal tax authority (quarterly).
Income taxes are levied at the federal, cantonal, and municipal level.
Depending on the municipality of tax residence, the maximum standard income tax rates (on profit before taxes) vary between 12.32 and 24.16 percent. In some cantons, gains on immovable property may be subject to a separate real estate gains tax. Tax neutral reorganizations are possible.
Capital tax is levied at cantonal/municipal level only and varies between 0.02 and 0.6 percent (depending on the municipality of tax residence). Cantons may choose to credit corporate income taxes to the capital taxes levied in their territory.
Special effective tax rates apply for companies that are taxed according to the holding or mixed company regime, as basically no income taxes are due at the cantonal/communal level and a reduced capital tax rate applies. The effective income tax rate for holding companies is approximately 7.8 percent and for mixed companies approximately 8.5 - 11.7 percent. The capital tax rates for holding and mixed companies is approximately 0.001 - 0.05 percent.
35 percent (exemption depending on applicability of DTT or savings agreement between the EU and Switzerland)
0 percent on ordinary loans; 35 percent on interest payments on bonds, bondlike debt, or collective fundraising by Swiss companies (exemption depending on applicability of DTT or savings agreement between the EU and Switzerland).
Provided that the participation deduction scheme is applicable, dividend income from qualified shareholdings are virtually exempt from income tax at the level of a Swiss corporate shareholder (including a branch). A shareholding in a company qualifies for the participation deduction scheme if it meets the following requirements:
Neither an active business test nor a subject-to-tax test applies.
Provided that the participation deduction scheme is applicable, capital gains on qualified shareholdings are virtually exempt from income tax at the level of a Swiss corporate shareholder (including a branch). A shareholding in a company qualifies for the participation deduction scheme if it meets the following requirements:
Neither an active business test nor a subject-to-tax test applies.
Commercially justified losses may be carried forward 7 years. No carry-back is possible. Generally, there is no restriction on the amount of tax losses carried forward after a change of ownership (exception: dormant company).
Losses of a foreign permanent establishment may be offset against profits realized in Switzerland on a provisional basis. Provided that the losses are not taken into account within 7 years in the state where the permanent establishment is situated, the loss set-off becomes definite for Swiss tax purposes.
No. Only possible for VAT purposes.
1 percent (first CHF 1,000,000 is exempt). No stamp duty is levied on capital contributions in the case of a tax neutral reorganization.
Stamp duty is also levied on the issuance and increase of bonds or bond-like debt by a Swiss debtor. Depending on the type of bond or bond-like debt, the rate varies between 0.06 and 0.12 percent.
Debt is bond-like if more than 10 non-bank lenders (including subparticipations) grant loans at equal conditions or if more than 20 non-bank lenders (including sub-participations) grant loans at variable conditions and the relevant debt exceeds the total amount of CHF 500,000 (approximately EUR 400,000).
The acquisition and sale of taxable securities by a securities dealer is subject to a securities transfer tax of 0.075 to 0.3 percent (depending on the type of transaction). No securities transfer tax is levied in the case of incorporation, a tax neutral reorganization, and a group internal transfer of a shareholding of at least 20 percent.
A company generally qualifies as a securities dealer for Swiss tax purposes if its assets consist of taxable securities with a book value in excess of CHF 10,000,000 (approximately EUR 8,000,000).
Real estate transfer tax is levied by some cantons. No real estate transfer tax is levied in the case of a tax neutral reorganization.
1% on capital contributions (tax neutral reorganizations are possible).
Some cantons levy a minor tax on owned real estate.
There is no tax with regard to the ownership of real estate at the federal level.
There is no specific transfer pricing legislation. Related party transactions must be at arm’s length and must be substantiated upon request. Safe haven interest rates are published by the tax authorities on an annual basis.
There are no specific documentation regulations.
Thin capitalization rules are applicable on related party loans and third party debt with guarantees provided by related parties. In accordance with the tax authorities' safe haven guidelines, the thin capitalization of a company is generally determined based on the fair market value of its assets.
Unilateral anti-avoidance rules with regard to DTTs have been published by the Federal Tax Authority. The basic rules are: (a) distribution of at least 6 percent of equity or 25 percent of received amounts benefiting from appropriate DTTs (avoidance of income retention in Swiss company; no distribution is required, if a foreign shareholder holds no more than 80 percent of the shares of the Swiss company); (b) tax deductible transfer of max. 50 percent of received amounts benefiting from appropriate DTTs, unless the Swiss company meets the ‘active company test’, the ‘stock exchange test’ or the ‘holding test’.
Bilateral anti-avoidance rules contained in various DTTs. The bilateral rules take precedence over the unilateral anti-avoidance rules.
Yes. In principle, advanced tax rulings can be obtained on all relevant tax issues.
IP Incentives: available in the canton of Nidwalden (IP box); reduction of cantonal income tax rate on license income by 80 percent.
Tax holidays available if certain conditions are met (e.g. creation of jobs, investment in infrastructure, etc.).
The standard rate is 8 percent, and the reduced rate is 2.5 percent (e.g. for food, etc.). A special rate of 3.8 percent is applicable for accommodation.
Tax expenses are deductible for Swiss income tax purposes. Consequently, the effective income tax rate is calculated by including the deductibility of the tax expenses in the income tax rate applied to profit after taxes. All income tax rates of this country profile refer to profit before taxes.
KPMG in Switzerland
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KPMG in Switzerland
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