TAXATION OF HOLDING COMPANIES
UNDER SWISS JURISDICTION
The holding facilities provide formation and optimal taxation
of income represented by dividends as well as solution for entire complex of other tasks:
- optimizing taxation within the group of companies
- promoting a single brand name of the group of companies
- financial security under Swiss jurisdiction
- protection from creditors and bankruptcy
- integration of companies with various activities into a single structure, etc.
The term holding company denotes a joint stock company, which performs no commercial
activity in Switzerland, and whose effective activity is to acquire financial participations (shareholding)
in other companies.
Financial participations include all types of shares, voting and non-voting, as well as long-term loans
to other companies.
|Holding companies benefit from reductions in
corporate income tax and capital gains at federal and cantonal / communal levels.
For federal tax purposes a company is defined as a holding company, if it holds either
a minimum of 20% of the share capital of another company, or if its shareholding in
another company has a market value of at least 2,000,000 Swiss Francs.
Holding companies pay a reduced corporate income tax on the earned dividends
The reduction of the tax payable depends on the ratio of the net dividend income from shareholding to
total profit generated.
For cantonal tax purposes holding companies are exempt from all income taxes
The end result is that all dividends, and any profit from sale thereof, and even interest income,
etc. are tax-free at the cantonal and communal levels.
To benefit from this tax ruling, a
holding company must fulfill one of the following conditions:
- 2/3 of the corporate assets consist of shareholding, or
- at least 2/3 of its income is derived from the shareholding
With the agreement of the cantonal tax authorities, other income may also be eligible for the holding