Why changes in German VAT law lead to impounding of Swiss cars

Due to a change of German VAT law Swiss employers have to be sure, that their employees in leading positions are not living in Germany. OK, the thing is, that under German VAT law the use of a Swiss car by a person living in Germany leads to the fact that the Swiss company has to register for VAT in Germany. This fact alone is not really a big problem. But if the car is used by a leading employee there must also be paid customs on this car. If this is not made, the car might be impounded by the German customs while entering Germany.

Law changes in Switzerland as of 2014:

  • Switch on the light on your cars and motorcycles also during the day
  • No more tax on lottery wins
  • Shareholders have to proof the salaries of the board of directors, golden parachutes and golden welcomes are forbidden
  • Outdoor guides have to register

Look ahead:

  • USTR III (Reform of enterprise taxes, part 3): The fee on the issue of shares shall be waived; to improve international acceptance there shall not anymore be different taxation on income from abroad and from Swiss for Holdings and management companies.

Author: Christian Zeller, WIRTSCHAFTS-TREUHAND AG, Basel

Doing business in Switzerland: What’s so special on a Swiss Holding-Company?

Some people must have asked themselves, what’s so special about a Swiss Holding Company compared to an EU-Holding-company. However it’s a fact, that the Swiss holdings are criticised and flacked by the politicians and tax authorities of foreign countries – even though most of the people do not know why – except that it is a “Swiss Holding Company” and there must be something wrong with it.

First we need to know, that Swiss taxes are divided in different tax-authorities that raise taxes: federal taxes, cantonal and communal taxes. The tax-rate for federal taxes of corporate entities is 8.5%. The regular cantonal and communal taxes vary between 8 and 25%.

Second we need to understand that the Swiss Holding Company does not differentiate between whether it is domestic or foreign-owned and managed. Foreign shareholders are non-privileged towards Swiss owners. Furthermore , the Holding Company exempts – as well as the counterpart in the EU – all dividends from applicable participations from taxation.

 Now what the cantonal and communal taxes additionally exempt from taxation is ”other income” as for example interests, licence-fees or management-fees but only under the condition, that the company has the “holding-privilege” which is tied to the following requirements:

  • 2/3 of the assets of a company have to be in qualifying shareholdings or
  • 2/3 of the income have to come from qualifying shareholdings (dividends)

Then we have to consider, that the tax-exemption of other income is not valid for the federal taxes. This is a consquence of the existing autonomy of the cantons which prohibits Switzerland and the federal taxes to intrude into cantonal matters.

By the way: Dividends from a Swiss corporate entitiy are taxed with 35% source-tax (Verrechnungssteuer) – if the receiver of the dividends is not another corporate entitiy within the EU. In this case the ”notification procedure” is applicable. Of course the source tax can be refunded and/or applied for if there is a double taxation treaty between the two countries involved.

Author: Hugo Schauli, dipl. Wirtschaftsprüfer and Partner der Wirtschafts-Treuhand AG, Basel, Switzerland


The first post

This is the first post from IAPA. In the future there will be blog-like information in this section. Everything around our claim „Audit, Tax and Accounting in Europe. And worldwide.“

You will find posts from Austria, Belgium, the Czech Republic, Denmark, France, Germany, Great Britain, Greece, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden and Switzerland.

The information comes from dozens of Chartered Accountants and Tax Advisers from numerous European IAPA members. Have fun with their posts. Comments are deactivated but, please, feel free to contact any individual author or other member of IAPA for questions or further assistance.