• Posted By : Admin
  • Tax havens
  • 08-03-2018
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Switzerland is a sovereign country that doesn’t belong to the European Union. It is located in Central Europe, bordering Italy, France, Liechtenstein, Austria and Germany. Switzerland enjoys being one of the most economically stable countries in the world and one of the best countries to live according to New York Times ranking. Due to the latest developments related to the exchange of financial information between countries, Switzerland was forced to stop implementing laws on bank secrecy and has been eliminating the banking secrecy with the countries of the European Union.

General information

Official language
German, French, Italian, Romanche, English
41,277 km2
Form of government
Federal parliamentary directorial
Swiss Franc (CHF)
UTC time zone
UTC + 1
Legal system
Federal state

Taxes for non-residents in Switzerland

Switzerland maintains highly competitive foreign investment and tax residence programs. The Swiss authorities do not subject to tax payment natural and legal persons with bank deposits in Switzerland, provided that they do not carry out commercial activities with Swiss natural and legal persons on the territory of the country. Investors who decide to register a company in Switzerland will enjoy a reduced tax rate, depending on the Canton where they register their company. In Switzerland there are several sections of corporate tax, for example in the Canton of Zug the privileged company tax is 8.5% and in Geneva all companies are subject to 30% tax. The mandatory taxes that a Swiss company will have to assume are the corporate tax and VAT, whose amount depends on the Canton. There are no taxes for the repatriation of dividends, inheritances, donations and neither will it support any type of tax withholdings for subsequent years. Switzerland offers very simple solutions for tax savings as it has numerous tax treaties on double taxation.

Characteristics of Swiss Companies

Types of companies
For foreign investments the country offers 2 types of companies: Limited Liability Company (SARL or SGL) and Limited company (AG).
Share capital
The minimum share capital for SARL is 20,000 CHF, for limited companies, SA, 100,000 CHF. At least 50% of the share capital must be paid up when the company is registered.
Constitution time
15-20 days
Switzerland has adopted three levels of taxes: federal, cantonal and municipal. All companies are required to pay a tax that is prescribed in the form of a flat rate of 8.5%. Other taxes depend on the canton and can vary from 1.5% to 25%. However, the total maximum tax rate does not exceed 30%.
At least 1 director is required. It is possible to appoint a Director (Nominee) to maintain anonymity. This has to be a Swiss resident.
1 shareholder minimum. The shareholders can be individuals or companies with residence in any country.
Registered and Bearer.
Legal address
Companies incorporated in Switzerland must have the address in the canton where they are registered and they must designate a Swiss registered agent.
In case of the Limited Company the identity of the shareholders is not available to the public, only that of the director. The SARL companies do not offer this level of privacy and the information on both, director and shareholder, has an open character. The commercial registry is available on the Internet.
Board meetings
Meetings of directors or shareholders are not mandatory and can be held anywhere in the world.
Accounting / annual audit
Swiss companies have to present the accounts annually, keep the VAT records every 3 months and depending on the turnover of the company audit will be mandatory or not.

Financial system in Switzerland

Financial services
Banks in Switzerland are specialized in Forex and stock exchange investments. The client may request any type of financial services: checking accounts, savings accounts, credit cards, foreign currency accounts, stock exchange accounts, credits etc.
Limitations of cash payment
There are no limitations on cash payments nor there is exchange control. Swiss banks can open accounts in numerous currencies Euros, US $, GBP, AUD, CAD, CNY, JPY.
Deposit guarantee
Swiss banks cover total amount of client´s deposits.

Automatic information exchange in Switzerland

Switzerland has signed the automatic exchange of information treaty that has entered into force on January 1 of 2017 and it has also signed 38 bilateral agreements of automatic exchange of information.

The signatory countries of the agreement

Year 2017
Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Groelandia, Guernsey, Hungary , Iceland, India, Ireland, Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, Holland, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovakia, Slovenia, South Africa, Spain, Sweden, Turks and Caicos Islands, United Kingdom.
Year 2018
Andorra, Antigua and Barbuda, Aruba, Australia, Austria, Bahamas, Barein, Belize, Brazil, Brunei, Canada, Chile, China, Cook Islands, Costa Rica, Curaçao, Dominica, Ghana, Grenada, Hong Kong (China), Indonesia, Israel, Japan, Kuwait, Lebanon, Marshal Islands, Macao (China), Malaysia, Mauritius, Monaco, Nauru, New Zealand, Panama, Qatar, Russia, Saint Kitts and Nevis, Samoa, Saint Lucia, Saint Vincent and the Grenadines, Saudi Arabia, Singapore, San Maarten, Switzerland, Trinidad and Tobago, Turkey, United Arab Emirates, Uruguay and Vanuatu.

Automatic exchange of banking information agreement does not affect the fiscal status of the country, that is, Switzerland has programs to encourage foreign investment and considers that natural persons and companies not resident in Switzerland are not obliged to pay taxes or to submit any type of tax declaration. As we have mentioned before, the companies and the individuals residents in Switzerland would be the ones obliged to pay the tax. The treaty of automatic exchange of information is causing many problems between countries since it is NOT a treaty in which automatic information will be reported to each other or all to all, that is, each country will have to sign a bilateral information agreement automatically with another country. What does this mean? If, for example, Russia is interested in exchanging information with Switzerland but Swiss banking sector is not interested in reporting information to Russia, there will be NO information exchange and clients privacy will be protected. Currently, 08.03.2018 Switzerland has signed 38 bilateral agreements on the automatic exchange of information, mainly with European Union countries. You can see the updated list of countries that have signed bilateral agreements to exchange information automatically with each other.

The bilateral agreements with Switzerland

Year 2017
Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, Ireland, Isle of Man, Italy, Japan, Jersey, Korea , Latvia, Lithuania, Luxembourg, Malta, Holland, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom.
Year 2018
No bilateral agreement has been signed for this year.

The countries most affected by the signature of the automatic exchange of information treaties are going to be the countries of high taxation and not the offshore jurisdictions. It is expected that high tax countries sign bilateral agreements with each other with the corresponding problem that these have: competition in investments, tax competition and abandonment of investments in other jurisdictions by countries with lower or no taxation allowing legal repatriation of them to the country of fiscal residence.

Using offshore jurisdictions what can be achieved is a reduction and postponement of tax payments. As a general rule high-tax countries force natural and legal persons to declare all the world's income. But what happens when you have an offshore company and you do not divide dividends or have gone bankrupt? For example, a person has a company and account in Switzerland, the company has generated annual benefits and the final beneficiary doesn’t want to repatriate them to his country of residence. So what happens? The answer is very simple: there will not be any kind of tax payment until the benefits obtained from Switzerland reach the territory of a tax residence of the final beneficiary. Therefore, if you are required to report benefits obtained from abroad, it is advisable to inform your tax agency so when you will be offered a tax advantage in your country of residence to repatriate them.

Advantages of Switzerland

Switzerland is one of the best offshore jurisdictions to invest for the following reasons: 

  • Professional but very expensive financial services.
  • Legal security guaranteed by law. 
  • Privacy, except for the countries of the European Union.
  • Jurisdiction specialized in asset protection and tax planning.
  • Good telecommunications infrastructure. 
  • There is no restriction by nationality. 
  • Excellent geographical location. 
  • Economically stable financial center