1. Swiss Joint Stock Company
The Swiss Constitution guarantees the economic freedom, foreign nationals can form a company or hold interest in one.
The most common choice for a foreign company locating in Switzerland is subsidiary in the form of a joint stock company (JSC) a corporation limited by shares similar to a public limited company in the UK.
JSC minimum capital is CHF 100’000 and minimum paid in capital must be CHF 50’000.
The formation of a JSC takes two to four weeks and the foundation costs including consulting, commercial register fee and fees for public notaries start from CHF 7’000.
The accounting regulations in Switzerland are concise and accept any internationally standards such as US-GAAP, IFRS, Swiss GAAP or FER.
Accounting costs are traditionally based on hourly rate, average hourly rate vary from CHF 120 to 160 per hour.
Audit costs depend on complexity and are usually anticipated by an indicative offer submit by fiduciaires or auditing companies.
JSC audit may be dispensed, subject to the approval of the shareholders, if the company has no more than an average of ten full-time positions over the year.
2. Corporate income tax
Switzerland has two levels of taxation
i) the federal and
ii) the cantonal/commune level.
Tax burden can considerably differs between cantons/ communes.
– Swiss company can deduct normal business expenses, depreciation and the federal, cantonal and commune tax on both income and capital paid in, this creates a substantial difference between nominal rate and effective rate.
The Swiss Federation levies corporate income tax at a flat nominal rate of 8.5% on profit.
Most cantons apply a flat base rate subject to a cantonal and commune multiplier, which is reviewed annually.
For company subject to the ordinary tax rules, the maximum combined effective tax rates on profit before tax range from 12 up to 24%.
An annual capital tax is levied at canton/commune level only. The tax rates vary from canton to canton and depend on the tax status of the company. Current range vary between 0.0010% to 0.525% for companies subject to ordinary taxation.
3. Personal income tax
The Individuals are subject to taxation on federal and cantonal/commune level if they have their residence in Switzerland. Individual tax rates are progressive.
The federal government apply a maximum tax rate of 11.5% and does not charge wealth tax.
The cantons set their own tax rates. The maximum applicable cantonal tax burden varies significantly from canton to canton (principal town of the canton about 12% to 30%).
Net wealth tax is only levied at cantonal/communal level according to the respective cantonal tax laws and rates. The tax burden therefore varies considerably and ranges from 0.0010% to 1%.
4. Withholding taxes
Under domestic law, dividends are subject to a 35% withholding tax.
Generally, the debtor is liable for the tax and is required to withhold the amount due, irrespective of whether the recipient is entitled to a full or partial refund. Refund is only possible provided that the respective earnings are properly declared for the purposes of income taxation.
– For Swiss resident corporate taxpayers withholding tax is reimbursed by way of refund
– For individuals the tax is credited against total tax liability through the regular taxation procedure
– For non-resident taxpayers partial or total refund may be granted based on an international double tax treaty or a bilateral agreement concluded by Switzerland with the country in which the recipient of the earnings is residing
Under domestic law, no withholding tax generally is levied on interest.
Switzerland does not levy withholding tax on royalties.
5. Taxe incentives in Valais
5.1 Partial and temporary exoneration
Tax incentives may be granted at cantonal and commune level for new presence or for an expansion project, which has particular economic relevance for the canton and do not create any competition within local market.
Such incentives are generally granted in connection with the creation of new jobs in the canton. Cantonal and commune can offer partial or full tax on a case-by-case basis.
– 5 years exoneration for less than 10 jobs created
– 8 years exoneration for 10 up to 19 jobs created
– 10 years exoneration for 20 jobs and more created
5.2 Holding company
The holding company tax status is available to Swiss companies (or permanent establishment of a foreign company), whose primary purpose is according to the by-laws to hold and manage long-term equity investments in affiliated companies.
As a matter of principle, the nominal tax rate of a holding is 8.5% (federal income tax) prior to participation relief for qualifying dividends and capital gains.
Valais exempt company of income taxes and apply a reduced capital tax on cantonal/commune tax level of 0.02% and (except income from Swiss real estate).
5.3 Mixed trading company
As a general rule, income from commercial activities must derive from non-Swiss and costs must be related to activities undertaken abroad.
The Swiss Federation levies corporate income tax at the nominal rate 8.5%.
On a case-by-case basis Valais canton/commune combined an effective tax rates on profit before tax not exceeding 3%.
Valais apply a reduced capital tax on cantonal/commune tax level applies of 0.02%.
5.4 Valais corporate tax table 2013
These rates are purely indicative, use for comparison and based on a specific example.
6. Valais Economic Development Office
Economic Development Office representatives are use to answer any question and guide foreign entrepreneur and company through any situation.
Valais economic development office gives personal attention to every project and support ranges from
– Studying the most advantageous tax conditions
– Identifying suitable industrial or office space, help with installation
– Helping work permits and staff search
– Facilitation of contacts, suggesting and making contacts with specialists
– Introduction to Cautionnement Romand (financial aid agency) to consider credit guarantee facility to develop business promotion
– Commercial credit guarantee up to CHF 500,000 and Investment credit or leasing guarantee up to CHF 4,000,000