This is difficult to say because different types of companies are
taxed at different rates in Switzerland, and also there are regional variations which can
affect the amount of tax a company has to pay. The rate of income tax can be as low as 5%
if you strike a deal with the canton in which your company is located to waive cantonal
tax. But it can climb up to 30% if you do things the wrong way. It is most important to
have professional advice when you are in the process of incorporating your company,
because what you do then will determine how much tax you will be required to pay in later
years. A ballpark figure for a sizeable domiciled corporation would be around 8%.
Dividends are taxed at 35%. When a company pays dividends, it is
legally required to withhold that 35% and forward it to the government on behalf of the
payee. However, some countries have signed double
taxation treaties with Switzerland so that their nationals can be exempt from paying
Swiss withholding tax.
The trick is to own the share of your Swiss corporation through a
holding in another country which has a double taxation
treaty with Switzerland. A popular option is called the "Dutch sandwich",
where a Netherlands holding company holds the Swiss shares, and a Netherlands Antilles
company holds the Netherlands company shares. Thus your dividends will flow untaxed from
Switzerland to the Netherlands, and then to the Antilles where they can be paid out
without being subject to withholding tax. Of course, your company has to be above a
certain size to make this worthwhile.
When setting up an SA (share corporation), you have to pay a
so-called stamp tax, about 2% of the share capital. However, capital under a
certain amount is not taxed so the total tax you will be required to pay will be quite
Company taxes are levied at municipal level, cantonal or state
level, and federal level, although you pay to only one office. Rates vary widely depending
on where you incorporate your company. The federal tax rate cannot be negotiated, but it
is only a modest 4 to 8%, depending on your income. Cantons, however, offer privileged
taxation rates to new foreign companies and in many cases, you can arrange your affairs so
that you pay no cantonal or municipal tax at all.
There are several way to pay minimal tax in Switzerland, and many
foreign companies have used these with great success. We can advise you on the best
locations for your company to be based and the best types of company to use. We can then
negotiate on your behalf with the fiscal administration to ensure that you pay less tax.
Tax breaks (government exemptions from some taxes) are available at
the cantonal and municipal level, and must be negotiated with the proper authority. They
are often possible for foreign companies who want to incorporate in Switzerland,
especially in Fribourg, Zug, and Glaris.
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