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Company in Switzerland ?

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georgio

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Sep 12, 2019
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#1
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#3
marzio said:
No, it is not. Right now Nidwalden tax rate is 11.97% and is only beaten by Zug which is 11.90%.
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They said it would be 8% till 2025.. But still 11,90% seems quite good. Does anyone know if there are other taxes, or "traps", for a non-resident? (e.g. dividend tax) If necessary someone could rent a very small accommodation there..
 
#4
So what is the personal incom tax in Zug you have to pay, still 0% or has this changed as well ?
 
#5
georgio said:
Does anyone know if there are other taxes, or "traps", for a non-resident?
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If a Swiss company distributes a dividend, that dividend, generally speaking, is subject to dividend withholding tax of 35%. Shareholders residing outside of Switzerland can only receive relief from Swiss dividend withholding tax insofar as this is provided for in a double tax treaty.

If, however, the Swiss company has capital contribution reserves and the dividend is distributed from these capital contribution reserves, then the dividend, under the current law, will be completely free of Swiss dividend withholding tax. These dividend distributions are also income tax free for individuals in Switzerland.

source
 
#6
Corporate income tax consists of 3 components: federal, cantonal and municipal. Each canton has its own calculator. Here is the list of them: Tax Calculation - EZYcount. The cheapest cantons right now are Zug (11.8% in municipality Baar), Lucerne (11.3% in Meggen) and Nidwalden (12.7%, municipality-independent).

Dividends are subject to 35% WHT. These 35% can be reclaimed in the personal income tax declaration (for Swiss nationals or residents) in which you declare the dividends as your income. Dividends are taxed at ca. factor 0.65 of your normal income tax rate.

Dividends to non-residents are subject to the DTAs. Here's a list of the current rates: Switzerland - Corporate - Withholding taxes
You can get away with 0% for corporations in certain countries (i.e. Georgia).

The personal income tax is dependent on your residence status. If have the L or B permit (which you would get for at least the first 5 years of your residency) your company pays a withholding tax on your income which is based on the canton (i.e. Zug, Nidwalden) you live in. There is a calculator for it:
https://en.comparis.ch/steuern/quellensteuerrechner/quellensteuervergleichRigh now, Zug is the cheapest.

If you have the C permit or you're a Swiss national, you're taxed at the end of the year. This kind of taxation depends on your municipality. Moving to a different municipality in the same canton (i.e. next village) or to a different canton can play a big role in your personal taxes. Here is another calculator: Calculate taxes and compare municipalities – comparis.ch

If you own the business, it is not enough to declare profits and pay the corporate income tax and then pay out the dividends (and the WHT). You're bound to:
- pay yourself a fair wage (and therefore pay into various social security schemes)
- build reserves according to a formula if you pay out more than 5% of the yearly income / share capital.

You can mix and match your wage and dividends where dividends are a bit lower taxed in the end.
But it is nowhere the 10% in the end. The complete gross->net cycle (taxes corporate and personal, social security, domicile - i.e. Regus, other insurances for a Swiss LLC) is more in the 25-35% bracket if we're talking about mid-6-figures for a Swiss resident.
 
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#8
marzio said:
If a Swiss company distributes a dividend, that dividend, generally speaking, is subject to dividend withholding tax of 35%. Shareholders residing outside of Switzerland can only receive relief from Swiss dividend withholding tax insofar as this is provided for in a double tax treaty.

If, however, the Swiss company has capital contribution reserves and the dividend is distributed from these capital contribution reserves, then the dividend, under the current law, will be completely free of Swiss dividend withholding tax. These dividend distributions are also income tax free for individuals in Switzerland.

source
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still the very best deal you can have worldwide 8-) is registering a swiss BRANCH of a - any - foreign company... your income accounted on this "full" swiss company ist taxed on swiss rates... and there is no minimal capital to become paid into the company... distributions are exempted from with withholding tax... and if you are accepted to run the entity as management tool for holding patents, licencing deals you might be able to get a 90% tax deduction on local and "regional" (cantonal) level

take care as you risk to get discounts higher than any tax duty (joke!) 8-)
 
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#9
ffbkdavid said:
still the very best deal you can have worldwide :cool: is registering a swiss BRANCH of a - any - foreign company... your income accounted on this "full" swiss company ist taxed on swiss rates... and there is no minimal capital to become paid into the company... distributions are exempted from with withholding tax... and if you are accepted to run the entity as management tool for holding patents, licencing deals you might be able to get a 90% tax deduction on local and "regional" (cantonal) level

take care as you risk to get discounts higher than any tax duty (joke!) :cool:
Click to expand...

Can you elaborate a bit on that? You mean you can avoid the founding share capital requirement? That was quite typical in a lot of countries some years ago, so people used to register UK Ltd.’s which were treated like local companies by other EU countries, but you didn’t have to pay the share capital. Is that what you mean?
Is that the only advantage with registering a Swiss branch of a foreign company instead of a “regular” Swiss company?
 
#10
JustAnotherNomad said:
Can you elaborate a bit on that? You mean you can avoid the founding share capital requirement? That was quite typical in a lot of countries some years ago, so people used to register UK Ltd.’s which were treated like local companies by other EU countries, but you didn’t have to pay the share capital. Is that what you mean?
Is that the only advantage with registering a Swiss branch of a foreign company instead of a “regular” Swiss company?
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- full swiss company privileges without to have any paid-in capital
- totally independent handling of transactions from the "head office" company
- no withholding tax for financial transactions of any kind (specifically transfer of profits)
- favourable swiss taxation system (depending on place of registration of the company/branch office)
- full anonymity as duty to publish beneficiaries/shareholders etc. depends on the legislation within the jurisdiction of the "head office" company
 
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#13
Since 2020 there is "patent box" in place where profits from patents and comparable rights are taxed at a lower rate. The discount may not exceed 90% and each canton may put a lower discount in place. For example canton Lucerne plans only 10% discount. Non-patented inventions and copyrighted software do not qualify for the patent box.

For R&D, the cantons may make additional deductions of up to 50% of the corresponding expenditure. The measure is focused on domestic R&D. Some deductions for R&D done in abroad are possible.

Here's the list of cantonal deductions for patent box and R&D:
https://www.bucher-tax.ch/2020/01/17/umsetzung-der-steuervorlage-17-staf-in-den-einzelnen-kantonen/
In Lucerne the tax relief due to the patent box and the additional deductions for R&D may not exceed 70 percent of the taxable profit.

No special application is necessary but it would be wise to talk about your patents and rights with the cantonal tax office beforehand.
 
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#16
marzio said:
Would you please elaborate on how this would work? Do you need to apply at the cantonal registry of commerce?
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needs some intensive work to PROOF the existence of the BASIC (means: foreign) company... including submitting NOTARIZED and APOSTILLED documents, resolution of the board of directors deciding to open a branch office in switzerland etc. etc. - don't think, if you like that the registration is done within an acceptable time frame (!), that you can do all the necessary work by yourself

there are corporate services professional specialized in providing all services needed... including a "real" physical business address and at least one officer accepted by the local authorities
 
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#17
ffbkdavid said:
distributions are exempted from with withholding tax
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Can a branch distribute dividends? I know that branch profits needs to be remitted to the head company and then dividends could be distributed to shareholders. That's why i was asking which country do you suggest to register the foreign company as most countries impose withholding taxes on dividends.
 
#18
Quote-ish:
The Swiss branch of a foreign company is considered a dependent, limited taxable entity whose profits are not subject to WHT. The branch is subject to limited tax liability for profits and capital attributable to the branch and is treated as an independent company, which determines the tax factors by means of an independent accounting.
 
#20
Sorry, I misread the question. From what I've read (i.e. here) you can distribute the profits of the branch as dividends directly to the shareholders. Here is the part (translated):
In contrast, the distribution from a Swiss AG or GmbH to the shareholder resident in Germany is subject to tax in Germany on an amount of 60% of the distribution (partial income method) at the personal tax rate. The distribution is pre-taxed with Swiss profit tax, which is incurred by the AG or GmbH itself. The tax burden thus accumulated often exceeds that which would be incurred if there were only one level of taxation. Thus, the permanent establishment is worth considering if the profits are to be distributed to the entrepreneur anyway.
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Though it doesn't really makes sense to me and I am currently in the process of double checking that, as I myself looking to restructure my Swiss holdings.

Should one have to remit the profits to the headquarter first, there are several countries which do not impose WHT on dividends (i.e. UK) or very little (i.E. Georgia). Having zero WHT is sometimes undesirable in certain residency regimes (i.e. PT NHR). Here is a list of WHTs around the world: Withholding tax (WHT) rates

Substance and CFC issues might pose problems to your chosen headquarter. As even the Swiss started looking into substance issues of branch's foreign headquarters, not even talking about your country of residence.
 
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