Introduction
Switzerland is a preferred jurisdiction for company registration because it offers reliability, respectability and privacy, together with limited liability and tax advantages. The Swiss Constitution guarantees economic freedom and allows anyone, including foreign nationals, to form or hold an interest in a Swiss company.
Switzerland acts as a magnet for qualified workers from abroad and retains the talent it nurtures. Swiss workers are generally well-educated, motivated and reliable employees, and Switzerland’s labour market is characterised by liberal legislation, light-touch regulation, and exceptional social stability.
Switzerland’s federal tax system is a successful model: taxes are determined and levied at the federal, cantonal and municipal levels. Domestic tax competition plays a significant role in the very low rates of taxation. The most attractive cantons in tax terms are international leaders in respect of both corporate taxes and the tax imposed on highly skilled workers.
Sovereign Trust (Switzerland) can assist companies that are considering internationalisation or are already globally active to exploit Switzerland’s potential as a location for technological innovation and future growth. Thanks to versatile high-tech clusters in a manageable space, companies in Switzerland are in an excellent position to establish close contact with market leaders and innovation drivers and test new applications in an open market or optimise processes.
Corporate Income Tax (CIT)
Swiss Corporate Income Tax (CIT) is levied at three levels: federal, cantonal and communal. The federal statutory CIT rate is 8.5%, but taxes are deductible when calculating taxable to give lower income effective tax rates. The cantonal and communal tax rates vary per canton and municipality, such that the total (federal, cantonal and communal) effective CIT rate generally ranges between 12% and 22%.
Corporate capital tax is only levied at the cantonal and the communal levels and is based on the net equity of a company. The ordinary capital tax rates vary between 0.001% and 0.5%, depending on the company’s location of corporate residence in Switzerland.
VAT is generally payable on annual turnover generated in Switzerland more than CHF100,000.
Under the Swiss tax reform of 2020, the introduction of an OECD-compliant patent box regime was mandatory for all cantons, reducing CIT on income from qualifying patents upon request. This provides tax relief of a maximum of 90% of the income derived from patents and similar rights at cantonal level. In most of the cantons there is also a further option to apply for an ‘R&D super deduction’ of up to 50% for qualifying R&D costs.
Sovereign Switzerland
Sovereign Trust (Switzerland) is located in the Canton of Zug, which has the lowest CIT rate in Switzerland. The effective rate of tax is 11.91%.
We provide our clients with the following corporate services in Switzerland:
Please contact us if you have any questions or queries and your local representative will be in touch with you as soon as possible.
