How to Setup a Tax-Free Holding Company in Switzerland

Swiss holding companies are as popular as they always have been, with many business owners seeing them as vital to staying competitive in increasingly difficult markets. The process to establish a holding company is relatively straightforward but there is still a procedure that needs to be adhered to and certain criteria met.

If you feel the formation of a holding company could benefit your business operations, keep reading and in this article we’ll provide an overview of the process.

What Is a Swiss Holding Company?

A holding company refers to any company that acts as an umbrella for another company or set of business interests. The purpose is to act as a vehicle for regulatory and tax compliance with the aim of making the businesses concerned more tax efficient.

Switzerland is a popular location for the formation of a holding company as the tax laws present are very attractive and are usually much lower than anywhere else you could choose to operate a business from. For this reason, many large international corporations form part of and sit underneath a holding company which has a stake in its assets.

How Do I Qualify?

To qualify for such a beneficial tax regime, several criteria must first be met. These include;

  • The corporation must state that the main fiscal activity of the company is the long-term management of equity investments.
  • The corporation concerned must not be involved with the operational business activity in Switzerland. This essentially means that no business activities relating to the companies covered by the holding company can be conducted in Switzerland. Certain activities however, such as the management of the company itself and its investments as well as providing services on behalf of the consolidated group may be possible.
  • Finally, either the company’s involvement must represent two-thirds of the assets in its balance sheet based upon a market valuation, or the income derived from such participation such as dividends and capital gains must constitute at least two-thirds of its total income. The ownership of shares of corporations, various limited liability companies, cooperatives, and certificates of participation are considered to be permissible or qualifying participations.

The Formation of Your Company

The minimum share capital on a holding company’s balance sheet for the incorporation of a company must be at least CHF20,000 for a private limited company and CHF100,000 for a public limited company.This means that much smaller companies who aren’t in possession of such assets would not qualify for being held under a Swiss holding company.

If you feel as if you’re able to meet the criteria we’ve outlined, your next step is to get in touch with a specialist who can further assist you in the process. Swiss company formation can be handled by one of several consultancy firms who operate within Switzerland and are familiar with the laws and regulations of the country. They will also be able to offer any further services you may require such as the administration and day to day running of the holding company.

Your tax liability can be reduced considerably under a holding company so seek further advice on how much you stand to benefit.

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