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

hugo.schauli[@]wirtschafts-treuhand[.]ch
www.wirtschafts-treuhand.ch

This year’s General Annual Meeting of the IAPA took place on May 28th and 29th in Moscow. It was the first meeting of the IAPA in Russia. Host was Kosmos Audit. The participants of the meeting enjoyed Kosmos Audit’s outstanding hospitality.

The photo shows the participants on the Red Square in front of the Kremlin.

This year’s meeting focussed on the question how to provide clients, associated partners and other interested parties with interesting topics. The information center will provide details regarding tax and legal systems in member states, international tax planning as well as accounting and auditing issues in an international context. In the next months various articles will be published on this website.

Author: Peter Scheller, Editor-in-Chief

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.