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JNE - Formation of Companies in Switzerland
TAXATION OF SWISS COMPANIESWhy Use Switzerland?
- Swiss corporate rates of tax are low. There are federal taxes and cantonal taxes. Cantonal taxes are negotiated separately with each canton.
- Withholding taxes on dividend payments can be reduced through double taxation agreement provisions and under the provisions of the EU Parent/Subsidiary Directive.
- Foreign individuals resident in Switzerland can elect to pay a fixed amount of tax every year. The individual must be resident in Switzerland and must not conduct any commercial activities there.
- Managed trust companies can be established in Switzerland to provide many of the benefits enjoyed through the establishment of a dedicated trust company, without the associated administrative costs of an independent office.
Background
The two most popular company entities regulated by Swiss Law, are the Société Anonyme (SA) and the Société à responsabilité limitée (SARL).
SA and SARL companies are treated in the same way from a tax point of view.
• Federal tax on net profit is at the rate of 8.5%.
• There are no capital taxes.
• In addition to Federal taxes, Cantons operate their own tax systems which are able to provide tax rulings.
The Geneva tax authority grants tax rulings to certain types of companies. These tax rulings either entitle the beneficiaries to lower rates of cantonal tax on part or all of their income, or exempt their income from cantonal tax altogether. Lower rates of equity tax may also apply. These rulings are granted for a period of five years and can be renewed upon request provided that the same conditions exist.
(The Federal tax authorities do not grant any such tax rulings.)
• Tax Ruling for Holding Companies: Holding companies are exempt from cantonal and communal tax on their entire income.
• Tax Ruling for Auxiliary Companies: These are defined as Geneva based companies conducting commercial activities outside Switzerland. Foreign source commercial income is taxed at between 2.6% and 5.6%. Dividend income is exempt from cantonal and communal income tax. Capital gains on durably held participations are also exempt from cantonal and communal income tax.
• Tax Ruling for Service Companies: Such companies provide affiliated companies with assistance relating to administrative, technical and scientific issues. A minimum remuneration is required in order to achieve a taxable income equal to 10% of expenses. Income derived from foreign sources is taxed at one-fifth of the standard rate. Income derived from a Swiss source is taxed at the standard rate.
FORMATION OF COMPANIES IN SWITZERLAND
A. SOCIETE ANONYME (SA) – SWISS STOCK COMPANY
• Law
Articles 620 to 763, Swiss Code Obligations
• Capital
Authorised share capital (minimum): CHF 100,000
Paid up capital (minimum): CHF 50,000
• There are no capital taxes.
• In addition to Federal taxes, Cantons operate their own tax systems which are able to provide tax rulings.
The Geneva tax authority grants tax rulings to certain types of companies. These tax rulings either entitle the beneficiaries to lower rates of cantonal tax on part or all of their income, or exempt their income from cantonal tax altogether. Lower rates of equity tax may also apply. These rulings are granted for a period of five years and can be renewed upon request provided that the same conditions exist.
(The Federal tax authorities do not grant any such tax rulings.)
• Tax Ruling for Holding Companies: Holding companies are exempt from cantonal and communal tax on their entire income.
• Tax Ruling for Auxiliary Companies: These are defined as Geneva based companies conducting commercial activities outside Switzerland. Foreign source commercial income is taxed at between 2.6% and 5.6%. Dividend income is exempt from cantonal and communal income tax. Capital gains on durably held participations are also exempt from cantonal and communal income tax.
• Tax Ruling for Service Companies: Such companies provide affiliated companies with assistance relating to administrative, technical and scientific issues. A minimum remuneration is required in order to achieve a taxable income equal to 10% of expenses. Income derived from foreign sources is taxed at one-fifth of the standard rate. Income derived from a Swiss source is taxed at the standard rate.
FORMATION OF COMPANIES IN SWITZERLAND
A. SOCIETE ANONYME (SA) – SWISS STOCK COMPANY
• Law
Articles 620 to 763, Swiss Code Obligations
• Capital
Authorised share capital (minimum): CHF 100,000
Paid up capital (minimum): CHF 50,000
• Founders
A minimum of one.
• Shares
Registered shares and/or bearer shares are allowed.
• Shareholders
There must be one or more shareholders and they can be individuals or corporations. There are no requirements regarding the nationality or domicile status of the shareholders.
The names and domicile of the shareholders is not public.
• Directors
There must be one or more directors. They do not need to be domiciled in Switzerland. However, one manager entitled individually to sign on behalf of the company must be Swiss resident. Corporate directors are not permitted.
• Directors
There must be one or more directors. They do not need to be domiciled in Switzerland. However, one manager entitled individually to sign on behalf of the company must be Swiss resident. Corporate directors are not permitted.
The names and domicile of the directors is public.
• Incorporation
Approximately three weeks from receipt of all requisite information.
• Registered office
The registered office must be situated in Switzerland.
• Shareholders Meetings
A meeting of the ordinary shareholders must be held once a year.
• Accounting/Audit
Annual audited accounts are required depending on the volume of the business. The audit must be conducted by an independent, authorized Swiss domiciled auditor.
• Annual return
An annual return is required.
• Tax Status
Federal, Cantonal and Communal taxes can be levied.
Each Canton has its own taxation system.
A withholding tax of 35% is levied on dividends distributed to shareholders. This amount is reimbursed to shareholders domiciled in Switzerland who have declared an interest in the company.
If shareholders are domiciled outside Switzerland, the double tax treaties apply (generally the final taxation on distributions will amount to between 5% and 10%). However, if the shareholder is an EU company, there will be no withholding tax payable, due to the EU Parent/Subsidiary Directive.
• Double Tax Treaties
Access to a network of tax treaties with over 50 countries.
FORMATION OF COMPANIES IN SWITZERLAND
B. SOCIÉTÉ À RESPONSABILITÉ LIMITÉE (SÀRL) – LIMITED LIABILITY COMPANY
• Law
Articles 772 to 827, Swiss Code Obligations
• Capital
Authorised share capital (minimum): CHF 20,000
Paid up capital (minimum): CHF 20,000
• Founders
A minimum of one.
• Shareholders
Shareholders can be individuals or corporations. There are no requirements regarding the nationality or domicile status of the shareholders.
The names and domicile of the shareholders is public.
• Directors
There must be one or more directors. Directors domiciled outside of Switzerland are permitted, but at least one manager signing individually on behalf of the company must be Swiss domiciled. Corporate directors are not permitted.
The names and domicile of the directors is public.
• Incorporation
Approximately three weeks from receipt of all requisite information.
• Registered office
The registered office must be situated in Switzerland.
• Meetings
A meeting of the ordinary shareholders must be held once a year.
• Accounting/Audit
Annual accounts are required. An annual audit is required depending on the volume of the company.
• Annual return
An annual return is required.
• Tax Status
Federal, Cantonal and Communal taxes can be levied.
Each Canton has its own taxation system.
A withholding tax of 35% is levied on dividends distributed to shareholders. This amount is reimbursed to shareholders domiciled in Switzerland who have declared an interest in the company.
If shareholders are domiciled outside Switzerland, the double tax treaties apply (generally the final taxation on distributions amount to between 5% and 10%). However, if the shareholder is an EU company, there will be no withholding tax payable, due to the EU Parent/Subsidiary Directive.
• Tax Treaties
Access to a network of tax treaties with over 50 countries.
SUMMARY OF FEES SCHEDULE – SWISS COMPANIES
| SET UP COSTS |
CHF |
|
3000.00
4800.00
3000.00
|
| TOTAL SA
TOTAL SARL |
7800.00 6000.00 |
In addition, a consultancy fee will be charged. This will be based on time-occupied and will be dependent on the number of required meetings and the complexity of the corporate structure
| ANNUAL COSTS |
CHF |
| • Registered Office Fee • Annual Accounts, on time spent, but minimum • Annual Return, on time spent, but minimum
• Audit Fee (if applicable) |
1500.00
1500.00 1000.00
*
|
|
TOTAL |
4000.00 |
*The Audit will be conducted by a third party and the cost will depend on the complexity of the Annual Accounts.
| ADDITIONAL OPTIONAL COSTS |
CHF |
| Provision of Directors/Managers |
6000.00 |
| Nominee Shareholders |
750.00 |
| Audit fee (if necessary) |
3000.00 |
• Additional Optional Costs
These are charged on a time-occupied basis and depend on the level and complexity of the arrangements.
VAT at 7.6% will be charged on the above prices.