If you’re planning on making any sort of business deal in Switzerland, it’s incredibly important that you understand Swiss tax laws beforehand. According to Swiss regulations, all corporations are taxed on both their income and their equity, and non-resident corporations are taxed to the same standards as resident corporations. However, Swiss law makes it possible for holding companies to avoid paying taxes completely, making them an incredibly beneficial part of any business planning that occurs in the country. Here are a few things to know about holding companies that could greatly influence your future business decisions.
What Is a Holding Company?
A holding company is a business which holds onto significant investments in the overall capital of outside corporations. Their income must be almost entirely made up of investments. In order to maintain the status of a holding company and the tax privileges that go along with it, the company must show that their main endeavour is in the managing of investments. They absolutely cannot take part in any sort of operations in any other business-related activity within the country of Switzerland. Finally, at least two thirds of the company’s entire assets must be made up of investments held or revenue earned from working with other companies outside of their own. When all these factors are met, than a business can be considered a holding company.
What Is Allowed?
While business in a standard sense can certainly not be conducted by these companies, certain activities within Switzerland are still allowed. This includes asset management of things such as surplus cash and foreign intellectual property, group management functions, and foreign business activities that have no relationship to profits gained in Switzerland itself. While it’s true that these activities are allowed, it’s always important to make sure you have expert advice when dealing with opportunities within Swiss holding companies. The last thing these companies want to do is put their status at risk for a bad business move. As long as the company stays true to these rules and expectations, they can continue being considered part of this category and receive the tax privileges that go along with that status.
Doing any sort of business in Switzerland can come with a wide range of benefits, but it’s important to make sure you understand all the ins and outs of the system before you get started so that you can really take advantage of every offer available to you. Holding companies are a great example of ways in which businesses can save themselves from paying corporate taxes. Find out as much information as you can and start figuring out how working with a holding company can work to your benefit today.