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Juerg Kradolfer, CPA
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CH-2563 Ipsach

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Tax and Legal Advice in Switzerland

Domicile Company
 

·         A domicile company in Switzerland, canton Berne, city Biel, pays 8.5% annually in federal taxes on profit and 0.0521% capital-taxes to the state (state, municipality and church).
The tax is roughly the same throughout Switzerland for (small) domicile companies. In order to receive this privileged tax status, the following criteria must be generally be met:

- the company does not have any commercial activities in Switzerland
- the company does (profitable) business in foreign markets and can get royalties
- the company has (virtually) no personnel in Switzerland
- the company does not own any residential property in Switzerland.
- Some flexibility in meeting these criteria are possible in individual cases.

  • A domicile company can demonstrate the following yields, and claim the tax privilege:
     
  • Investment profits (dividends) and revaluation earnings on participation (shares owned)
  • Royalties
  • Commercial yields (on foreign business)
  • Interest and capital returns on own fortune or on fortunes of third. 
  • The following three examples show concrete tax figures:

Shareholders' equity

 

100'000

500'000

2'000'000

Profit 

 

10'000

100'000

500'000

Federal profit tax 8,5%

 

850

8'500

42'500

State municipality + church tax 0.0521% (of the capital) *

 

307

307

1'042

Total Annual Tax

 

1'157

8'807

43'542

  •  * at least CHF 307. -

·         VAT

·         VAT must be paid on any commodity coming into Switzerland. On exports, these VAT payments may be returned. If goods in transit through Switzerland (stored duty-free), no VAT must be declared.
 

·         Withholding Tax

·         If a domicile company makes profit and from it pays dividends to shareholders, a withholding tax of 35% is owed. This tax can be claimed retroactively at the domicile of the shareholder. This depends on the double taxation treaty between Switzerland and the country in which the shareholders have their fiscal domicile.
 

·         Administrative Expenses

·         At least one member of the board of directors of a Swiss corporation must be of Swiss nationality. Compliance with this mandate can cost, ordinarily CHF 3'000. - per year. Administrative expenses, handling of the business formalities, payments and bookkeeping, are therefore billed after expenditure. With a small number of transactions, this amount can be between CHF 5'000. - and CHF 10'000.- per year, and CHF 3'000.- must be allotted for the annual audit. Together, the cost is approximately CHF 12'000.- annually. This amount can vary considerably in individual cases, and must be discussed. If you do some of this work yourself, the cost will be reduced accordingly.
 

·         Foundation charges

·         The cost to set up a domicile company, including incorporation, statutes, consultation and entry in the trade register is approximately CHF 5'000.-. This amount is unique.
 

·         The specifications given here can only general. A discussion of your individual situation will clarify many points and enable a more accurate estimate of the overall financial benefits of a domicile company.
 

I look forward hearing from you. You can get additional information by e-mail:


freeanswer@tax-advice.ch