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Tax Planning

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 25%. 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 not deductible.

Federal corporate income tax rate in Switzerland is 8.5% flat. Each Canton has its own tax laws, tariffs, tax rates and exemptions.

Today, all Cantons can offer tax relief as an incentive to attract foreign investors, 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, Geneva, Luzern, Vaud (Lausanne), Ticino (Lugano) 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.

Deductions

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.

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 a high-qualified accountant to manage your book- keeping 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.