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Taxation of domiciliary
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| The international domiciliary facilities provide exclusively administrative services, i.e. serve as a hub for the activity of foreign companies. Their purposes may be varied: - purchase and sale - exploitation of intellectual property rights (patents, etc.) - granting loans, etc. |
| Definitions |
| The term domiciliary company denotes a joint stock company, which is economically dependent on another country and pursue its business primarily or exclusively abroad. Domiciliary companies do not pursue any commercial activity in Switzerland and have practically no Swiss revenue (less than 5%): - are both foreign-controlled and managed from abroad - have a registered office in Switzerland (i.e. at a lawyer's premises) - have neither a physical presence nor staff in Switzerland - receive only foreign source income |
| Treatment of domiciliary companies for tax purposes |
| The use of domiciliary companies can result in savings in corporate income tax levied on income and capital gains. At the federal level there are no tax advantages in terms of corporate income tax payable on income and gains (i.e. federal tax is determined by the rules applicable to ordinary companies valid throughout Swiss territory – 8.5%). On the other hand, the cantons grant domiciliary companies extensive tax privileges. Income (and capital) are taxed at a reduced rates. At the cantonal level a domiciliary company pays a tax of up to 15% of the regular cantonal income tax (i.e. effective 3.0-3.5%). If significant interests so justify, the cantons may additionally grant domiciliary company a special tax reduction, whose scale and duration may be fixed freely. |
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