There are many countries in the world to set up new businesses, so why should you choose Switzerland to do this? There is no doubt that it is a gorgeous country in which to spend time, and it is relatively wealthy when you look at the small population who reside there. It has all this, but its main selling point from a business and investment point of view, is that it has low personal and corporate tax. This makes it very attractive to external companies and although it is situated geographically in the heart of the European, it isn’t actually in the European Union. It has a stellar reputation as being a prominent financial centre and the companies currently there, enjoy an international reputation for all things quality.
The Tax System.
When looking into a Swiss company formation, it is important to understand the tax system there. It has two tax systems, namely the Federal and the Cantonal and Communal tax. The Cantonal tax system is seen as one of the better tax regimes in all of Switzerland, with corporation taxes of around fourteen per cent and VAT at around eight per cent. Personal tax is also really low at around sixteen per cent and the capital gains tax is zero, except in regards to real estate sold in the country. If retired, you can actually negotiate a fixed sum payment, no matter how much money you have.
Common Company Structures.
Holding Company – A Swiss holding company can be established for the sole purpose of holding subsidiaries and also to hold large shareholdings in companies outside Switzerland. The holding company can also hold intellectual properties and can be used to protect your assets. There are many benefits to a Swiss holding company, like no income tax or reductions on dividends and the same may apply to corporation tax on your capital gains. Having a holding company, you are assured of anonymity and confidentiality.
Mixed Company – A mixed company can be created to manage your business operations internationally and also to hold corporate assets or to hold intellectual property. The benefits of setting up such a company, are reduced corporate taxes, reduced income tax on dividends, reduction in corporation tax on capital gains and reduced borrowing costs.
Swiss Finance Company – This company’s purpose is to manage and do administration in regards to your business operations internationally and the benefits are similar to the ones above. Exemptions apply in some cases as well as reductions. You can also set up a Swiss management company for the purposes of providing management to non-Swiss entities and you get a reduction on your corporate taxes regarding your income. A branch office can also be set up to manage international business which will have a low tax burden and there is no share capital required at all to set it up.
Setting up a company in Switzerland is clearly an attractive proposition with the many benefits in relation to taxation. When compared to other countries corporate taxation it is right there at the top and is the lowest of the countries in the modern world.