Profit repatriation represents the actions of foreign citizens or companies conducting business activities in Switzerland sending the profits they make to their home countries and converting them to the domestic currencies. Companies repatriating profits are usually making a return on foreign investment. However, profit repatriation can expose foreign companies operating in Switzerland to risks for foreign exchange. Also, companies are frequently taxed on the profits they repatriate from other countries. Considering Switzerland is very advantageous from a taxation point of view many foreign enterprises often leave their foreign in the country.
You can request more information about the taxation system and corporate tax rates to our lawyers in Switzerland.
Foreign companies are taxed like domestic businesses in Switzerland. They will be subject to the federal corporate tax and also to the cantonal or municipal taxes. Additionally, foreign companies deriving income from certain activities in Switzerland is liable to pay withholding taxes on such incomes. When it comes to the repatriation of profits from Switzerland branches of foreign companies will not be taxed for taking their income out of the country. Swiss branches of foreign companies could, however, be taxed in their home countries on the repatriated profits. Our Swiss lawyers can offer you efficient tax planning solutions.
According to the Swiss Commercial Law foreign investors can set up several advantageous types of companies in the country. Among these, the Swiss holding company regime is one of the most advantageous. The holding company regime allows certain companies to benefit from exemptions from the local taxes. This exemptions is called the participation reduction and applies to the dividend income and incomes derived from capital gains. The exemption is calculated based on the total taxable profit and reduced to the proportion of the net participation income which usually is 10%. This way profit repatriation from Switzerland is advantageous for foreign companies.
For more information about the taxation of foreign companies you can contact our law firm in Switzerland.
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