What are holding companies in Switzerland?
Swiss holding companies are legal entities established as joint stock companies or limited liability companies, which have as a major economic activity the purchasing shares in other companies, foreign or local.
The purely holding companies established in Switzerland
have as objective the long-term management of participations. They have at least 2/3 of the total assets and income derived from these participations and the company does not have a commercial activity in Switzerland
. The capital,
which is not qualified as participation income, is taxed with a 7.83% corporate tax.
What are the characteristics of holding companies in Switzerland?
The qualified income such as dividends
, capital gains and liquidation
dividends can remain exempt from the income corporate tax
if certain conditions are met, such as receiving dividends from a subsidiary
where the holding company
keeps at least 10% of the nominal share capital or the value of the participation has a market value of at least CHF 1 million. Unlike other jurisdictions, there is no minimum holding period
. The exemption is also granted on the capital gains which come from the concession of at least 10% of the subsidiaries nominal share capital
but in this case the shares must have been held for at least 12 months.
Advantages of Swiss companes
Besides the above advantages, the commercial interest, even though it is related to loans from foreign shareholders paid by a Swiss company, is not subject to withholding tax. Also there is no withholding tax on payments of royalties made by a Swiss company.
Other advantages granted to the Swiss holding companies are related to the VAT refunds.
According to the regulations for VAT registration in Switzerland
, the holding companies located
can choose to calculate recovery rates on a standalone basis or to take into account the business activities of their subsidiaries. Therefore, the holding companies situated in Switzerland
can choose to reclaim the input tax incurred in relation to the holding or sale of qualifying investments.