If you want to incorporate in Switzerland, this article will educate you on the tax laws for an AG (plc) or GmbH (LLC) which are the most common company structure in Switzerland.
Swiss resident companies are taxed on their worldwide income. However, profits derived from foreign branches or PE or foreign real properties and profits undistributed by foreign subsidiaries may not be subject to taxation. CIT is imposed at both federal, communal and cantonal levels. Federal effective tax rate is 7.83%. Communal and Cantonal tax rate varies depending on territory. Overall CIT effective rate ranges between 11.5% and 24.2%. However, certain Holding Companies may be exempted of both communal and cantonal taxes and subject to an effective tax rate of 7.83%. In addition, under certain conditions, companies with predominantly foreign business activities, may have cantonal and communal tax reduction or exemption, and taxed at an effective tax rate between 7.83% to 11% on foreign-source income. This ranks Switzerland as 29th when compared to CIT globally.
The value added tax (VAT) rate in Switzerland is 8.00%, that ranks Switzerland as 24th when compared to VAT globally. In terms of other taxation, an employer will contribute 5.125% to the equivalent of a social security fund and an employee will contribute 5.125%. The overall complexity of the tax system is low. This is measured by average time to comply with a country's labor tax requirements is as it is 40hours. Contributing to this is the number of yearly labor tax payments, which is 7 in CH.
Thin capitalization rules are in play. This refers to any type of requirements on companies' debt-to-asset ratios.
Dividends are included in taxable income. However a participation relief may apply if recipient holds at least 10% of the capital of the paying company or participation has a market value of at least CHF 1m. Dividends are distributions of earnings of the legal entity, voted by the board of directors, to shareholders. Dividends can be either stock, cash, or property.
Capital Gains are subject to corporate income tax, but a relief is generally available for those derived from the disposal of a qualifying participation. A capital gains tax is levied on the profits that a corporation or natural person realizes when he or she sells sells a capital asset for a price that is higher than the purchase price.
Payments on interests to non-residents are not generally subject to withholding tax. Except for those from Swiss-bank deposits, bonds and bond-like loans, which are subject to 35% withholding tax. The dividends withholding tax rate is 35%. This should be interpreted that the relevant tax authorities expects relevant legal entities to automatically withhold 35% of dividends paid to non-residents. There are no withholding taxes on payments on royalties abroad. Withholding taxes may be reduced or exempt under tax treaties.
The Cantons may levy taxes on net wealth, inheritance and real property in Switzerland. There is a transfer tax on the sales of securities by Swiss security dealers. We are not aware of any commonly used credits for innovation spend that include tax incentives in CH.
The above is not tax or legal advice for your individual circumstances. We are able to point you to an expert in Switzerland who can get you an answer. Ready to get started? Click incorporate now if you are in a hurry, or press the free consultation button above.
It takes approximately 15 hours to file and prepare documents for a Switzerland Civil law (Swiss).
The corporate tax is approximately 7.83% which is 32 in the world.
Owners of a company in Switzerland are not allowed to carry back a loss and may be allowed to carry forward a loss for 7 years.
The vat rate in Switzerland is 8% which ranks 42 in the world.
Thin capitalization rules are in effect. A company is thinly capitalised when there is a greater proportion of debt than equity. The minimum capitalization for a Switzerland Civil law (Swiss) is 20,000.
A corporate director is not permitted, meaning this country is not a good option if you are setting up a structure where you want to protect director liability.
The directors are not disclosed in the public registry of Switzerland, Federal Commercial Registry Office. Shareholders are not disclosed in the Federal Commercial Registry Office.
Typically companies take 7 days to setup and there are 1 director(s) required and 2 shareholder(s) required at the time of incorporation.
Overall we think Switzerland is a good option and have given it a score of 79 as an IO score, using the Incorporations.IO proprietary formula.
We can help you form a company in Switzerland. Click the button above for a no-obligation quote. We will provide you with all the necessary documents to open a bank account as well as a registered office in Switzerland, which is required by law.
We can help you with your incorporations needs for an initial payment of just $1000.
Easy Step by Step Process:
The standard process typically takes between two (2) to three (3) weeks depending on when we receive all the required information from you. Once we receive your information, we will email you a complete set of documents for your review within 3 working days upon confirmation of payment. After executing the documents, you will need to mail them to us and we will formally submit your application for filing with the Registry. The Registry will then take about 3-8 working days to process the incorporation and produce certificates necessary for opening your bank account.
Applying for Your Bank Accounts:
Incorporations.IO maintains close working relationship within our extensive network of partner banks to help you apply for and receive banking services that are most appropriate to your specific situation. From the time of verification of incorporation it can take (1) one week to (2) two weeks to apply for and receive a bank account. We work primarily with banks that allow for remotely opened accounts to ensure you are ready to do business as soon as possible.
Applying for Payment Processing:
We include introductions to payment processors or merchant accounts with all of our incorporation services. Whether you just need standard credit card processing or specialized services for high risk processing, we have partners that can assist you and are happy to help you with introductions that can empower your business.
Start Online or via Phone:
We can get started for you whenever you are ready via a US$1000 initial payment via credit card. I get notified whenever a payment is made here and would send out the welcome letter and initial forms we would need within 12 hours. If you prefer, we can also process via a phone or Skype call.
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