Taxation of Foreign Companies in Switzerland

Foreign companies in Switzerland

Foreign companies have a significant presence in Switzerland due its regulatory framework and advantageous taxation system. Foreign companies are also attracted by the highly-educated Swiss workforce and specialized industries. Switzerland also represents a great logistics center for foreign companies seeking access to European markets.

The country also benefits from the presence of Swiss subsidiaries and branch offices of foreign companies because they account for an important percentage of the country’s Gross Domestic Product.

Tax liability of foreign companies in Switzerland

As a general rule, any individual or legal entity conducting a commercial activity is required to pay taxes in Switzerland. The same rule applies to companies registered in other countries conducting business operations in Switzerland. However, according to the VAT Act any foreign company with an annual turnover below the 100,000 CHF threshold is exempt from paying any taxes and is not required to register for taxation purposes in Switzerland. The exemption also applied to foreign companies providing services in Switzerland. These companies will only pay the import tax in Switzerland.

Foreign companies with an annual turnover exceeding 100,000 CHF is required to register with the Federal Tax Administration and must also appoint a Swiss tax representative. The tax representative may be a natural person or a legal entity such as a Swiss law firm.

What are the taxes a foreign company must pay in Switzerland?

According to the Swiss Commercial Code, foreign companies operating within the country will benefit from the same treatment as local companies. The Swiss corporate tax rate applied to foreign companies is set at an 8.5% rate. Foreign companies will only be taxed on the income made in Switzerland and on the immovable property held in the country. The taxable income of a foreign company with a permanent establishment in Switzerland is determined by the company’s statutory accounts.

Foreign companies also benefit from the provisions of the double tax treaties Switzerland concluded, which grant them further tax deductions or exemptions.

For complete details about all the taxes a foreign company must pay you may contact our lawyers in Switzerland.