What Is a Holding Company?
A Swiss holding company is a limited company (GmbH or AG) whose primary purpose is to hold and manage participation in other companies. To be classified as a holding company under Swiss tax law, the company should not conduct any other business activity in Switzerland.
At CO-Handelszentrum GmbH, our companies are held in the Canton of Zug. We chose Zug as our canton registration office to set up our Swiss company formations because of its low tax regime, established location and business-friendly environment. All these factors are by far the most popular for establishing a holding company in Switzerland – Zug accounts for 1 in 4 holding companies incorporated in Switzerland.
How Do You Obtain Holding Company Status?
Several other arrangements must be guaranteed to obtain status as a Swiss holding company from the Canton of Zug registration office, including:
- The investments held or the revenues earned from participation in other companies must represent at least 66.6% of the entire assets and/or entire income earned by the Swiss holding company.
- There must be at least one participation which exceeds 10%, the total shares of the participation or the entire value exceed CHF 1 Million to qualify.
- The minimum holding period of an investment must be more than one year.
To find out more about how CO-Handelszentrum GmbH can help guide you through the process of forming a company in Switzerland, please refer to our Company Formation page.
What Are the Benefits of a Swiss Holding Company?
Swiss holding companies in the Canton of Zug benefit from a reduced corporate tax rate across all levels (federal, cantonal and municipal) of 11.85% (as of March 2023), making it one of the most attractive Swiss capital tax rates today. The region also permits an additional deduction of 50% for research and development costs.
Net profit from patents and comparable rights can be included in the calculation of the taxable net profit with a reduction of 90%. The partial taxation of dividends from qualifying holdings in the case of natural persons remains at 50% in the Canton of Zug, while the direct federal tax increases from 60% to 70%.
Although Swiss holding companies are not permitted to conduct business activities in Switzerland, some activities are allowed, such as:
- Asset management, including the management of surplus cash and foreign intellectual property.
- Group management functions (mostly cost-plus method for transfer pricing purposes).
- Foreign (non-Swiss) business activities including the realisation of intellectual property.
Swiss holding companies may also be used for a wider range of activities than purely for the holding of shares in other companies. However, expert advice should be sought in advance of incorporation.
CO-Handelszentrum GmbH is a trusted administration service that streamlines the incorporation of a Swiss company. To find out more about us, read our corporate profile page. If you wish to request a quote or reach out for further information, please contact us via phone or email.
Comparison of Common European Holding Company Jurisdictions:
|
Switzerland |
Netherlands |
Cyprus |
Luxembourg |
Ireland |
|
|---|---|---|---|---|---|
|
Participation Exemption |
|||||
| Dividends |
Yes |
Yes |
Yes |
Yes |
Yes(conditions) |
| Capital Gains |
Yes |
Yes |
Yes |
Yes |
Yes |
| Passive Income |
Yes (Cantonal exemption only) |
No |
No(conditions) |
No |
No |
|
Qualifying Requirements for Dividend Exemption |
|||||
| Min % Holding |
10% or CHF 1 Mio |
5% |
None |
10% or EUR 1.2 Mio |
5% |
| Min Holding Period |
No |
No |
No |
1 Year |
No |
|
For Capital Gains Exemption |
|||||
| Min % Holding |
10% or CHF 2 Mio |
5% |
None |
10% or EUR 6 Mio |
5% |
| Min Holding Period |
1 Year |
No |
No |
1 Year |
1 Year |
|
Taxation of foreign subsidiary |
No |
No(conditions) |
No(conditions) |
Yes(conditions) |
Yes |
| Corporate taxes |
7.8% (Federal only) |
25% (20% on first EUR 200k) |
10% |
28.80% |
12.5-25% |
| Capital Taxes |
1% (Conditions) |
No |
No |
No |
No |
| Transfer Tax/Stamp Dutie |
No (yes for securites dealers) |
No(conditions) |
No(conditions) |
No(conditions) |
No |
| Permissable Deductions | |||||
| Capital Losses |
Yes |
No(conditions) |
Yes |
Yes |
Yes(conditions) |
| Interest Costs |
Yes |
Yes(conditions) |
Yes |
Yes |
Yes |
| Debt to Equity Ratio |
7:3 |
3:1 |
None |
6:1 |
None |
| CFC Legislation |
No |
No |
No |
No |
No |
| Advance rulings avaible |
Yes |
Yes |
Yes |
Yes |
Yes |
| Withholding Taxes Dividends | |||||
| Standard rate (reduction under DDT) |
35% |
15% |
None |
15% (conditions) |
20% |
| Lowest Non EU Treaty Rate |
0% |
0% |
None |
0% |
0% |
| EU Parent Exemption |
Yes |
Yes |
Yes |
Yes |
Yes |
| Min Shareholding Requirement |
25% |
5% |
None |
10% or EUR 1.2 Mio |
5% |
| Min Holding Period |
2 years |
2 years |
None |
1 year |
None |
| Liquidation (outside EU or DTT) |
35% |
15% |
None |
None |
None |
| Interest (outside DDT) |
No |
No |
No |
No (conditions) |
No |
| Royalties (outside DDT) |
0% |
No |
No |
10-12% |
20% (exemptions) |
| DTT’s |
80 |
92 |
34 |
64 |
63 |
Management for surplus cash and foreign intellectual property
Cost and method for transfer pricing purposes
Realization of foreign intellectual properties.
Benefit from a reduced income tax rate across all levels
Contact us for more information
Swiss Company Formation
We assist you with the formation of a Swiss Company, including registration, administration and operational services.