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