Benefits of a Holding Company in Switzerland
While many people know that there are benefits to setting up a holding company in Switzerland, there are very few people who understand what these benefits are. Due to the legal structure of these companies, it is possible for the company to have control of financial investments for extended periods of time in additional companies. While there are some limits on holding companies in Switzerland and what kind of business activities they are allowed to conduct, for the right person and in the right situation, this is a wonderful way to decrease the amount of taxes you have to pay.
Enjoy Deductible Tax Payments from Your Company
One main reason for establishing a Swiss holding company is that you can enjoy deductible tax payments. Because of these deductible tax payments, the maximum federal income tax that you will have to pay can be reduced down to 7.8%. The federal corporate income tax has a rate of 8.5%, but deductible tax payments make it much easier to lower this. There may be additional levies that you have to consider, including a capital duty levy or an increased tax rate due to transfer shares.
Due to double tax treaties that have been signed by the European Union and Switzerland, along with other jurisdictions, it is possible for subsidiaries of a holding company in Switzerland to enjoy tax exemptions on dividends. This means that any dividends that the holding company subsidiaries receive can be subject to a federal tax reduction.
Overall Tax Reduction
Holding companies in Switzerland can enjoy the reduction of corporate tax depending on how much of the capital they own from another entity. By owning a minimum of a 20% share of capital in another entity, the company itself can benefit from a reduced corporate tax rate. This occurs at the federal level.
What to Consider
While setting up a holding company in Switzerland may sound like the perfect way to decrease the amount of taxes that you have to pay, it is important to make sure you speak to an expert before attempting this on your own. Setting up a holding company by yourself is very difficult, and it is important that you speak to a professional about how to do this correctly so that you do not accidentally set yourself up to pay more taxes than necessary.
Holding companies in Switzerland can be used not only for holding shares in another company, but for other activities as well. It’s important to get expert counselling before setup. This will ensure that you enjoy all of the benefits of a holding company in Switzerland, including privileged annual capital tax and cantonal taxes as well, without making any major expensive mistakes during setup.