Corporate tax Switzerland
The mixed company
Definitions and implementation
Mixed companies are companies, whose business focus lies in foreign business and where Switzerland plays a minor role.
As legal form of limited companies, limited partnerships, ltd., cooperatives and establishments of foreign corporations come into question.
The business must be predominantly (80 %) done abroad, meaning at least 80 % of the sale and purchase shall be proceeded abroad. Mixed companies shall not perform their own production and business activities in Switzerland.
The income from abroad is taxed according to the number of the employees from abroad (full-time employments) of the group in Switzerland:
|Number of employees
||Proportion of taxable proceeds
|up to 5 employees
||10 % (rest exempt from tax)
|6 – 10 employees
||15 % (rest exempt from tax)
|11 – 30 employees
||20 % (rest exempt from tax)
|above 30 employees
||25 % (rest exempt from tax)
Net income from significant interests (dividends and capital gains), taking the contributuion into account, are exempt from tax.
The mixed company and Germany
From a German point of view particularly the provisions of the German Foreign Transaction Tax Act (AStG) for the functional shift and adding taxes are to be considered in order to ensure the favorable Swiss tax rate until after Germany. With as Swiss establishment one could at least save the German business taxes.
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Legal entities (companies), which carry out administrative activities, but no business activity in Switzerland, will be taxed as domicile company. A foreign control is (no longer) required.
Foreign companies with a Swiss permanent establishment, if the conditions are met, can be taxed in Switzerland according to the taxable factors according to StG 89a. Since neither effective nor virtual double taxation is present, foreign trading companies and persons without legal personality can not be taxed as domicile company. Executive functions, in connection with investments according to the StG 88, are compatible with the taxation of domicile companies.
The domilice company may engage in administrative work in Switzerland, but no business activities. She may own real estate in Switzerland.
Administrative operations are by definition the administration of the goods, which the domicile company already owns and which it additionally acquires without active commercial activities.
Corporate income tax
The domicile company pays no cantonal- and municipal taxes. You only pay the direct federal income tax of 8,5% on the net profit.
Taxed at the ordinary rate (for the set determination the total profit is decisive!):
- Investment income (interest, dividends and capital gains) from Switzerland
- Income of intangible rights (licence- and trademarks) from Switzerland
- DBA-favored income (interest and licence fees), which is required for taxation in Switzerland
- The administrative costs and taxes are usually placed in a flat rate deduction
- Income from real estate in Switzerland
Taxfree are the following (net losses from investments may not be offset against the domestic and / or foreign income!):
- Income from abroad for pure domiciliary companies (see definition)
- Net income on significant interests (dividends and capital gains) under consideration of equity losses (depreciation and provisions)
A principal structure goes one step further than the mixed company.
For principal structures functions, responsibilities and risks of a affiliated group are combined into a central company, in which a large proportion of net income is taxed.
In this way the overall tax burden can be further reduced to approximately five to nice percent. Besides the sustained engagement in the business processes this structure is hard to be implemented due to the German standards (particularly the AStG), and therefore is mostly only attractive for large international companies.
Do you want to found a principal structure in Switzerland?
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Switzerland and its cantons support settlements and expansion projects with attractive tax breaks.
In this way a tax break of up to 100 percent may be granted (“Tax holidays”) for a period up to ten years. The tax reliefs are granted at the cantonal level.
For specific economic development areas reliefs are also available from the Federal Government (“Lex-Bonny-Areas”); these areas tend to be found in rural areas. The tax breaks are bound to certain prerequisites. Establishments and formations of companies, which are innovative and align their activities in a new way are particularly supported.
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