We offer the following services:
- Preparation and submission of VAT returns
- Preparation of either monthly, quarterly or yearly management accounts
- Preparation of accounts
- Registration of new businesses for tax and VAT
- Tax advice for small/medium sized businesses and individuals
- Resident and non-resident (Ja, aber nur bezüglich Schweizer Recht) tax advice
BUSINESS SET UP
You can set up the following types of business in Switzerland:
Stock Company, either Private or Public
Limited Liability Company
These businesses have a legal requirement to keep full and complete books and records.
LIMITED LIABILITY COMPANIES (SARL/GMBH/SRL)
An increased number of Limited Liability Companies are being incorporated as a result of a revision of the law, entered into force in January 2008.
In general, the Limited Liability Company may be well suited for a limited number of investors/contribution shareholders who intend to maintain control of the company. The company’s liability is limited to the amount of the registered capital – to be a minimum of 20,000 CHF. The companies are registered at a Cantonal level. Each Canton maintains a Commercial Register where company data is stored; for example, registered office location, managing officers, directors, capital structure as well as – in contrast to the Stock Company – the contribution shareholders. The register is public.
JOINT STOCK COMPANY (SA/AG/SPA)
The Stock Company is the more popular form of corporate entity in Switzerland. Foreign companies often use stock companies to create subsidiaries. Also, if the shareholders are more numerous or if a going-public is intended, a Stock Company would be the correct form. The question of being anonymous may also play a role as may the question of what form looks more creditworthy to financial institutions. The share capital must be at least 100.000 CHF, paid up at least to 50%. The company registration occurs at a Cantonal level. Each Canton maintains a Commercial Register where company data is stored; for example, registered office location, board members, directors, capital structure. The register is public.
MAIN TAXES IN SWITZERLAND
In Switzerland, taxes are levied by the three different federal jurisdictions: The Swiss Federation, 26 Cantons and roughly 2,500 communes and municipalities.
Corporate profit and personal income are taxed in Switzerland on all three federal levels. Corporate Tax rates vary depending on the canton of domicile (e.g. 12.7% in Appenzell Ausserrhoden and 24.2% in Geneva). Personal Income Tax rates vary depending on taxable income, on the Canton of domicile and on the civil status of the individual. The usual spread is between 25% and 35%, with Geneva leading the high tax Cantons with a maximum of 46%.
Corporate Capital Tax and individual Wealth Tax are levied exclusively on the level of Cantons and Municipalities.
VAT is a Federal Tax on the gross profit of most services and sales provided turnover from taxable goods or services exceeds CHF 100’000 p.a. The ordinary tax rate is 8%.
Further Federal taxes are Withholding Tax, Stamp Duties and Customs.
On the Cantonal level some special taxes apply on specific forms of income: Real Estate Capital Gain Tax; Inheritance and Gift Tax which all vary considerably from Canton to Canton.
Corporate Income Tax is taken from a company’s net profits, which consist of business/trading income, passive income and capital gains. Tax is imposed at all three federal levels. The Federal Tax rate of 8.5% is levied on net income. Since income and capital taxes are deductible in determining taxable income, the effective tax rate is 7.8%. Taking into account both the Federal and Cantonal/Communal Income Tax, the combined effective Income Tax Rate is typically between 12% and 24% for companies subject to ordinary taxation, depending on the place of residence.
The Corporate Tax year is the accounting year. Tax returns need to be filed for both Federal and Cantonal Income Tax purposes on the same form to the Cantonal Tax Authority at the corporation’s registered office.
Social security –the employer is required to pay 50% of an employee’s social security and pension fund contributions. The employer must deduct contributions from salary and send the total sum to the social security authorities.
CORPORATE CAPITAL TAX
Capital Tax is levied on the Cantonal and Municipal level. It applies to the net equity, comprising the corporation’s paid-in share capital, plus accumulated profits. The rates vary significantly between the Cantons (0.001 % Canton Uri – 0.525% Canton Basel Stadt).
No Capital Tax is levied on the Federal level.
Switzerland levies a Withholding Tax of 35 % on dividends and liquidation proceeds paid by a Swiss corporation. This tax at source is fully refunded to the shareholder if he/she is resident in Switzerland (provided that the dividends received are duly filed in the individual tax return).
If the recipient is domiciled in a country party to a double taxation treaty with Switzerland, the amount of the refund depends on the applicable treaty provisions. Swiss Withholding Tax duty on dividend payments to a parent company in the EU can be fulfilled through mere declaration of the dividends. It is also important to note that in order to qualify for a Form 823C-permit the EU-company should have some “substance” (personnel, office etc.) and the (minimal 25%-) holding must last for at least 2 years.
A Federal Stamp Duty of 1% is levied upon incorporation for share capital amounts exceeding CHF 1 Mio. and respectively upon capital increase of a corporation.
VAT is levied at federal level. Generally speaking, any corporate or individual professional achieving domestic turnover in excess of CHF 100,000 p.a. on provision of goods or services is subject to Swiss VAT at an ordinary rate of 8%. Certain goods and services are subject to a reduced rate of 2.5% and some are exempt. 3.8% rate applies to the hotel and accommodation industry.
For VAT purposes group taxation regimes are available for domestic corporations, allowing for exemption of intra group commerce in particular.
VAT Rules are very complex and must be discussed with an accountant before a business commences.
PERSONAL INCOME TAX
Swiss residents are taxed on their worldwide income except for profits from foreign businesses, foreign branches and foreign immovable property, which is deemed to be tax exempt. The latter is however relevant for determining the applicable tax rate. Non-residents are taxed on their income from employment in Switzerland, business profits and profits that is related to Swiss property.
A married couple is assessed jointly at rates which usually results in a higher tax burden.
PERSONAL WEALTH TAX
On the Cantonal and Municipal level Swiss residents pay wealth tax on their world wide net wealth, whereas foreign business, foreign branches and foreign immovable property is relevant only for determining the applicable tax rate.
No wealth tax is levied on the federal level.
CAPITAL GAINS TAX
Capital gains from privately held investments are exempt from of any Income Tax. This applies without restriction on the federal level (except for lottery gains). On the Cantonal level capital gain from disposal of real estate is subject to a distinct Capital Income Tax. The respective tax rates vary from Canton to Canton and depend on the holding duration.
Capital gains from the disposal of business assets is subject to Income Tax on all three federal levels whereby business expenditures do reduce the taxable basis.
INHERITANCE AND GIFT TAX
There is no federal inheritance and gift tax, whereas all Cantons (except Schwyz) levy an inheritance tax and a gift tax (except Schwyz and Luzern).
Swiss Federal Tax Administration(“SFTA”; english version, with limited information)
SFTA / Eidgenössische Steuerverwaltung (full german version)