Holding Company Matrix by Jurisdiction - Switzerland

Corporate income tax rate (effective) for holding companies
(Federal, state, cantonal
tax etc.)

For holding companies with special tax status: 7.83% on income, other than qualifying dividends and capital gains.

Possible "other income", i.e. interest and royalty income, up to 1/3 of the total income.

CFC rules No CFC rules
Treatment of domestic/foreign dividends

Participation relief, if

> holding of at least 10% of the domestic / foreign corporation's equity or

> fair market value of the participation is at least CHF 1m

No subject to tax clause

WHT on dividends

Ordinary rate: 35% for dividends from a Swiss entity
Within the EU:

Reduced to zero percent under the EU Saving Tax Agreement, if the EU parent company holds at least 25% of share capital in the Swiss company for at least 2 years and both companies are subject to CIT.

Reduced under double tax treaties if the respective conditions are fulfilled.

Treatment of capital gains resulting from the disposal of domestic/foreign shares Participation relief if holding of at least 10% of the domestic / foreign corporation's equity and if holding period of at least 1 year
WHT on interest payments No WHT on interest deriving from regular loan agreements.
WHT on royalty payments No WHT
Thin capitalization rules and debt-to-equity ratio Thin cap rules published by the FTA in a circular letter (applicable for operating companies); 6:1 safe haven for finance companies
Deductibility of interest expenses / limitation of interest deduction Deductible

Interest rates may not exceed arm's length rates (FTA publishes safe haven rates periodically).

Advance ruling regime and timing

Yes, advance rulings are given by the respective tax authority (FTA and / or cantonal tax authorities)

Timing of ruling approx. 4-8 weeks (depending on work load)

Treaty network

Switzerland has a broad treaty network with currently 84 tax treaties, e.g.:

- China (10% on dividends)
- Hong Kong (0% on dividends from substantial holdings)
- Japan (5% on dividends on substantial holdings)
- Malaysia (15% on dividends on substantial holdings)
- Thailand (10% on dividends on substantial holdings)

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