How to reduce tax rates in Switzerland
Swiss taxes are much lower than
those of our European neighbors (both for companies and individuals). In comparison with the most countries
of the EU and with the USA, where the tax is between 30% and 55% on net income, total taxes in Switzerland
amount to approximately 22%. Furthermore, taxes themselves can be deducted from the income as an expense,
that results in significantly lower effective tax rate, compared to most other countries where taxes are
Federal corporate income tax rate in Switzerland is 8.5% flat. Each Canton has its own tax laws,
tariffs, tax rates and exemptions.
The incentives for holding, domiciliary and other structures
were in place until tax period 2019.
As of the year 2020,
they are abolished. That is why most of the Cantons reduced
tax rates, in order to compensate this. Today,
all Cantons can offer tax relief, to attract foreign
as well as to encourage the start-up of new companies.
We are ready to assist you settle down and benefit from
business-friendly tax regulation in the most attractive Cantons, like Zurich, Zug, Basel, Luzern, and some others.
Income subject to tax
Corporate income tax is based on worldwide gross income (comprises of all types of income,
including sales income, dividends, interest, rents, royalties, foreign-source income, domestic and foreign capital gains).
Dividend received and capital gains are taxable as ordinary income.
However, there are some exceptions under the participation exemption.
Swiss branch of a foreign company pays the same rates of corporate income tax on profits, income
and capital gains as would be paid by a Swiss-resident corporate entity.
However, profit repatriated abroad by the branch, is not subject to any tax in Switzerland.
Generally, all expenses incurred in the normal course of business are deductible from
taxable income. Corporate income tax as well as salary and provisions for future employee
retirement liabilities are also considered a deductible expense in computing taxable income.
Losses of the foreign branch can be set off against the profits of the Swiss-resident
company. Where there is no double taxation treaty in place, withholding tax deducted in a foreign
jurisdiction on remittances paid to a Swiss entity, give rise to a tax credit in Switzerland.
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For both federal and cantonal tax purposes, deductions are allowed for the depreciation
of property, plant and equipment (excluding land) and for the amortization of certain
intangible assets, such as purchased goodwill related to the purchase of net assets, but not for the
purchase of shares. Special accelerated depreciation might be negotiated with the tax
authorities for major new manufacturing investments, particularly when such investments will create jobs
or maintain current employment.
Negotiating tax arrangements
We provide personalized assistance in registration with the Swiss tax authorities and finding
accountant to manage your bookkeeping in accordance with the internationally accepted standards.
You can also obtain a number of tax exemptions in Switzerland. These exemptions can reduce the
already moderate tax burden in Switzerland to extremely attractive levels. We can negotiate these arrangements with
the tax authorities to help you benefit from the unparalleled Swiss tax environment.