When you've decided to start your own business, but your financial resources are limited or simply want to make cost-effective choices, it's very important to calculate and analyze the costs the company is about to make. Under these circumstances, tax planning comes into play, especially if the company is undertaking business operations in various jurisdictions or if it’s part of a group structure.
Due to the federal structure of the state, Switzerland doesn't have a centralized tax system, which means that certain taxes that are perceived only by the federal authorities, while other taxes are levied based on competitive criteria, at cantonal level. Even though the federal tax rate is consistent, the rates applied in. each canton are differentiated.
As a consequence, since the current differences in the Swiss tax system are significant, the choice of the canton is important in everything that implies tax planning. According to international standards and the OECD, the tax rates levied in Switzerland are relatively low. In addition, Switzerland has concluded a great number of double taxation avoidance treaties with most industrialized countries from all over the world in order to avoid further tax burdens.
Tax rates vary considerably in Switzerland depending on different types of companies. For example, holding companies, mixed companies or domicile companies benefit from certain tax privileges and can apply for tax deductions.
Taxes are levied on the taxable net profit of a company and on the paid up share of the foundation capital for each founding member. In addition, hidden and disclosed reserved are also subject of taxation. Some companies can claim tax deductions in certain cases, for example holding companies. This is one of the main reasons why tax planning must be externalized to a specialized firm or assigned to a specialized company department to ensure compliance with regulations in order at federal and cantonal level.
Companies that conduct commercial activities in Switzerland are required to register for VAT purposes, while the VAT is levied on gross sales of goods and services in Switzerland. The Swiss VAT rate is one of the lowest from Europe and for certain goods and services it can go as low as 2.5%.
The tax planning services provided by our firm include, but are not limited to:
- Tax planning, tax optimization and consulting
- Local representation before Swiss tax authorities
- Accounting of Swiss VAT and EU VAT and consulting
- Accounting of Swiss withholding tax and EU withholding tax
- Creation and submission of tax returns