Question Is foreign income tax exempt for CH tax residents?

[Marzio]

According to Deloitte, profits from foreign business are tax exempt for Swiss resident individuals.

https://www2.deloitte.com/content/d...s/Tax/dttl-tax-switzerlandhighlights-2022.pdf
What are considered foreign business profits? Dividends from foreign businesses?

 

[Martin Everson]

According to Deloitte, profits from foreign business are tax exempt for Swiss resident individuals.

Switzerland has no CFC rules so its logical this will be the case. However as long as the company is managed and controlled outside Switzerland and not used for tax avoidance then this is all true indeed.

What are considered foreign business profits? Dividends from foreign businesses?

Yes

 

[backpacker]

According to Deloitte, profits from foreign business are tax exempt for Swiss resident individuals.

https://www2.deloitte.com/content/d...s/Tax/dttl-tax-switzerlandhighlights-2022.pdf
What are considered foreign business profits? Dividends from foreign businesses?

In order to avoid confusion and prevent daydreamers from heading for Switzerland :
This does not apply to Individual Taxation (read the Deloitte guide from top to bottom).

 

[Marzio]

This does not apply to Individual Taxation (read the Deloitte guide from top to bottom).

I've read the whole guide top to bottom many times actually.

Could you enlight us daydreamers on why the exception does not apply to individual taxation when the exception is right under the Individual taxation paragraph so it applies to resident individuals?

 

[backpacker]

I've read the whole guide top to bottom many times actually.

Could you enlight us daydreamers on why the exception does not apply to individual taxation when the exception is right under the Individual taxation paragraph so it applies to resident individuals?

• Déclarer les actions en Suisse
• Berücksichtigung ausländischer Steuern auf Dividenden, Zinsen oder Lizenzgebühren - TaxInfo - Kanton Bern
• Switzerland - Individual - Income determination

 

[Marzio]

Will send an email to Deloitte asking why they allow daydreamers think they can flock to Switzerland.

In Taxand Switzerland tax guide they reiterate the same exemption but only for companies so what Deloitte wrote is correct only not for individuals.

 

[JohnnyDoe]

Switzerland has no CFC rules so its logical this will be the case. However as long as the company is managed and controlled outside Switzerland and not used for tax avoidance then this is all true indeed.



Yes

Sorry I’m slow: do you mean that a Swiss resident doesn’t pay taxes on dividends received from whatever foreign company?
So for example a Swiss resident can receive whatever amounts from a BVI company tax free?

Also, are we talking of federal taxes only or also of cantonal taxes?

 

[Marzio]

do you mean that a Swiss resident doesn’t pay taxes on dividends received from whatever foreign company?

Wouldn't this be awesome? Why dreaming about Florida or Texas when you can settle in Bad Ragaz? I mean how cool that name is? When somebody asks you "where do you live?" you'll answer "Dude, i'm from Bad Ragaz where the baddest guys come from"

 

[backpacker]

Will send an email to Deloitte asking why they allow daydreamers think they can flock to Switzerland.

In Taxand Switzerland tax guide they reiterate the same exemption but only for companies so what Deloitte wrote is correct only not for individuals.

I can not tell you why these organizations publish such badly worded brochures. If you are interested in Switzerland I urge you to consult a local tax advisor and to not rely on publications in English language.

In the meantime read carefully point 10.1 (corporate taxation) of the following -> https://www.s-ge.com/sites/default/...r-das-schweizer-steuersystem-s-ge-2018-07.pdf . It's in German, find a good (!) translator.
There is no simple tax free possibility. It only applies to extremely convoluted situations which are not applicable to many. Otherwise every Swiss resident/citizen would have a company to cash in dividends tax free

 

[Marzio]

I can not tell you why these organizations publish such badly worded brochures

I don't know either because those informations are thought as a gateway for attracting customers so publishing wrong informations is definitely counter productive for them.

Otherwise every Swiss resident/citizen would have a company to cash in dividends tax free

Ok and what's wrong with that? Super wealthy countries like Hong Kong and Singapore built their wealth on the backbone of territorial taxation.

 

[JohnnyDoe]

What I know about Switzerland matches with what I calculate here: ESTV Steuerrechner

Wouldn't this be awesome? Why dreaming about Florida or Texas when you can settle in Bad Ragaz? I mean how cool that name is? When somebody asks you "where do you live?" you'll answer "Dude, i'm from Bad Ragaz where the baddest guys come from"

If I lived there, this is what I would pay:

Anticipated tax burden for 2022: CHF 207’501​

Which is not that bad. But I prefer tropical sea to the thermal springs of Bad Ragaz.

 

[backpacker]

I don't know either because those informations are thought as a gateway for attracting customers so publishing wrong informations is definitely counter productive for them.

Deloitte also published nonsense with regards to Armenia and Egypt. They are masters in that.

With regards to Armeniq they claim that" "Where capital gains are subject to tax, the tax applies on the total sales proceeds, rather than on the net capital gains." That is, of course, as wrong as it can get. And a result of a badly worded brochure.
When I contacted Deloitte in Yerevan regarding this obvious mistake I received zero reply.

Ok and what's wrong with that? Super wealthy countries like Hong Kong and Singapore built their wealth on the backbone of territorial taxation.

30 years ago not much. However, we live in 2022 where green socialist ideologies have taken over.
Switzerland is in the heart of Europe, aligns with EU-ideas and is in many ways even more extreme in milking it's citizens than the countries who surround it.
Today the only important things are social equality and LGBTQIA+ , like in the socialist EU.

 

[Martin Everson]

Sorry I’m slow: do you mean that a Swiss resident doesn’t pay taxes on dividends received from whatever foreign company?
So for example a Swiss resident can receive whatever amounts from a BVI company tax free?

Switzerland has no CFC rules only tax avoidance rules. Like any country with no CFC rules you an operate a company and the income of the company is not attributed to you as long as you don't breach tax avoidance rules.

Now if you take the income from CFC company into your hand then that's a different story as its now in your hands. Typically when countries have CFC rules the income from the company can be attributed to yourself or the company even be considered transparent for tax purposes which is far worse.

Also, are we talking of federal taxes only or also of cantonal taxes?

All taxes.