ACG Business & Management

A.	DOMICILIARY COMPANIES
B.	HOLDINGS
C.	SUBSIDIARIES

A. DOMICILIARY COMPANIES

These possess a structure long appreciated by trading companies and many others. The domiciliary company has its registered office in Switzerland but has no Swiss-based activity, office or personnel; income must come from abroad in the form of dividends, copyright, commissions, etc. Such an arrangement enables you to pay very little tax whilst remaining in an OECD country which enjoys a good reputation as well as an excellent business network. Federal taxation on profits remains the same, that is to say moderate, but in some cantons it may drop to zero. Zug canton affords the best location for this type of company, offering major tax exemptions.

A domiciliary company (i.e. an offshore company or business address) is established in Switzerland but there is no actual office. Such companies obtain permanent tax exemptions and pay only 8% of net profits in tax where a company has been founded in Zug and has no commercial activity in Switzerland.

This form of company is used for example to:

Buy goods and raw materials in one country to re-sell them in another, the profit being held in Switzerland .
Hold shares in other companies outside Switzerland and to receive dividends from them, as arranged by major international groups.

Normally, a domiciliary company has the legal status of a public limited company and is based in Zug, a small canton close to Zürich where taxation is low. In Zug, domiciliary companies, like holdings, are exempt from municipal and cantonal taxes and pay an all-inclusive tax rate of around 8% on profits. In order to obtain such advantages, the company must base its commercial activities outside Switzerland.

B. HOLDINGS

These offer numerous advantages but implementation and set-up terms limit holdings to commercial enterprises with multiple branches, a structure which bears little resemblance to the average individual's profile. A holding is seen as such if it consists of a minimum of a 20% stake in another company or if the value of its shares in another company exceeds 2 million Swiss francs. This type of company enjoys fiscal advantages including reduced federal tax on profits and zero municipal tax on profits if these are paid in dividends.

It should be added that the majority of these conditions, in particular the exemptions from cantonal laws, are negotiable. Switzerland offers one of the best environments in the world for holding companies - low taxes, stable government and good infrastructure. In the cantons of Fribourg, Zug and Glaris, you pay less than 8% tax on holding company profits and no capital gains tax.

C. SUBSIDIARIES

There are obviously other solutions available if you wish to establish a company in Switzerland, as for example setting up a foreign company subsidiary.

Swiss law allows you to create a subsidiary of your company in Switzerland even if the registered office is abroad. Some people prefer this option to creating an entirely new Swiss company because the minimum capital requirement is lower and the creation process simpler.