Tax and accounting regulations

Individual Tax Rate:
  • Residents subject to Cantonal and Federal Tax on their worldwide income.
Corporate Income Tax Rate:
  • No centralized taxation system and tax is imposed at both the Federal and Cantonal level.
  • The Federal rate is 8.5% on net income. Since income and capital taxes are deductible in determining taxable income the effective rate is 7.8%.
  • Taking into account both the Federal and Cantonal Tax the combined effective income tax rate is between 12% and 22% for companies subject to ordinary taxation.
  • The Canton with the lowest rate of Corporate Taxation is Zug.
Holding Company Regime:
  • The Holding Company tax privilege is granted to companies whose primary purpose is the holding of participations, when at least 2/3 of the total assets consist of investments in subsidiaries, or when 2/3 of income consists of dividends and must have no active trade in Switzerland.
  • A Holding Company is fully exempt from Cantonal taxes
  • The effective Federal tax rate on non-dividend income is 7.8%
Incentives:
  • A Mixed Company Tax Privilege is granted to companies with predominantly foreign business activities.
  • A business activity is deemed to be performed outside Switzerland if at least 80% of the total gross income is derived from foreign sources and 80% of expenses are incurred abroad.
  • Foreign source income of a mixed company is taxed at a combined effective rate of between 9-11% (including Federal Tax)
  • Swiss source income is taxed at ordinary Canton and Federal Tax Rates.
Capital Gains Tax Rate:
  • No specific capital gains tax levied at the federal level.
  • Capital gains on the sale of assets are treated as ordinary income regardless of how long the assets have been held
  • Capital gains derived from the sale of a participation in at least 10% in a resident or non-resident company benefit from participation relief if the participation has been held for more than 1 year.
Withholding Tax: Dividends:
  • Subject to 35% tax rate.
  • Under the Switzerland-EU Savings Agreement, which provides Switzerland access to benefits similar to those in the EU parent-subsidiary directive withholding tax is 0% on cross boarder payments of dividends between related companies residing in EU member states and Switzerland where capital participation is 25% or more and certain other criteria are met.
  • Many tax treaties provide for a 0% or 5% residual withholding tax rate for qualifying investments.
  • The repayment of nominal share capital and capital surplus is exempt from withholding tax.

Interest:

  • 35% but only in specific cases
  • No withholding tax is levied on interest. Exceptions apply to interest derived from deposits with Swiss banks and bonds which are subject to 35% in withholding tax at the Federal level.
  • Interest paid to a non-resident or on receivables secured by Swiss real estate is subject to tax at source.
  • The 35% withholding tax and tax at source can be reduced to 0% or 10% under a tax treaty with most investor countries.

Royalties:

  • 0%
Losses:
  • Losses may be carried forward for 7 fiscal years and may be used against any capital gains or income
  • Losses may not be carried back
VAT
  • 8%

Take the next step, we are here to help.

Register a Switzerland (GmbH/Sarl) company.
Open a Switzerland (GmbH/Sarl) bank account.

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