Holdings and tax privileges

Switzerland is a jurisdiction with the respectable reputation of combining stability and safety with distinct tax advantages.
Switzerland has a classical corporate tax system, thus profits are subject to corporate income tax and distributed dividends are subject to income tax again at the shareholder level. To avoid multiple taxation, the Swiss tax law grants a participation deduction on dividend income and capital gains on qualifying participations.

The maximum effective corporate income tax rate currently ranges from 11,4% to 24,4% depending on the canton of residence. But if a company qualifies for a special tax regime, the corporate income tax rate can be reduced significantly to as low as 8%.

The Swiss Holding Company’s main purpose and activity is to hold and manage long-term participations in affiliated companies. It may not be actively engaged in business within Switzerland. The conditions to obtain the holding status vary from canton to canton.

The Swiss tax system grants holding companies privileged tax status at the cantonal level, under which such companies are exempt from cantonal tax and therefore only subject to federal tax.

Due to this status, dividends received from qualified subsidiaries may benefit from participation exemption which exempts such income from tax. Holding companies are also exempt from tax on income from capital gains.