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Switzerland

Tax Mitigation Jurisdictions

Synopsis:

Federal Republic made up of 20 full and 6 half cantons. Obtained independence from the Holy Roman Empire in 1648. Current constitution originates from 1848. Policy of neutrality has existed since 1815. Population: 6,850,000. Size: 16,000 square miles. Capital: Bern. One of the world's wealthiest countries famous for its private banking facilities, confidentiality, pharmaceutical, watch, food and high technology industries. Despite its small size the Swiss Franc is often used as a reserve currency by major central banks. Population one of the most educated in the world. Four indigenous languages: German (68%), French (18%), Italian (12%) and Romansh (1%). Strategic location surrounded by France, Italy, Germany, Austria and Liechtenstein. Voted not to become a member of the European Union. Extensive and very sophisticated double taxation treaty network. Pre-emptive legislation in 1962 requiring a genuine local presence by undertakings wishing to take advantage of domestic treaties has prevented Switzerland being viewed as a de facto tax haven.

Star Ratings

Corporate registration efficiency:
Cost:
Confidentiality:
Local banking facilities:
Legal system:
Political stability:
Reputation:

Location

Central Europe, east of France, north of Italy.

Relationship with the UK

In 1996, the Swiss electorate, despite strong government advocacy, declined to become part of the European Union. Nevertheless, the EU and Switzerland enjoy close relations and there is generally freedom of trade between it and the EU. Obtaining a Swiss Residency Permit is very difficult with no more than 8,000 to 10,000 being issued each year.

Advantages of Swiss Company

  1. Unparalleled air communications. Zurich being one of Europe's major 'hub' airports.
  2. Some of the world's most sophisticated private and commercial banking facilities.
  3. Stable democratic government.
  4. One of Northern Europe's most educated and multilingual populations.
  5. Excellent telecommunications.
  6. Low crime rate.
  7. Favourable tax treaties with other countries.
  8. Tax system basically 'territorial'.
  9. Back-to-back loans can often be arranged and benefit from zero withholding taxes on
  10. Repayments back to Switzerland.
  11. Flexible cantonal and communal tax systems (but see above comments).
  12. Low federal taxes.
  13. Ideal geographical location between 3 of Europe's 4 major countries; France, Germany and Italy.
  14. Banking confidentiality backed up by both civil and criminal law.
  15. Currency is one of the most stable in the world.
  16. Location of many international bodies.
  17. Leading tax planning centre in Europe together with London and Amsterdam.
  18. Well qualified professionals, albeit expensive.
  19. One of the wealthiest countries in the world with a per capita income double that of either the United Kingdom or Italy.
  20. Has the highest concentration of multi-national companies on a per capita basis in the world.
  21. Leading scientific research centre.
  22. All leading Swiss banks enjoy an AAA rating. The highest in the world.
  23. Excellent motorway network.

Taxation

In Switzerland there are three levels of taxation: federal, cantonal and communal. Unlike most other western federations the national income tax rate on company profits is less than that imposed by the regional cantons/communes. In feet, so complex is the indigenous tax system that it has been necessary for cantons to develop tax treaties with one another. Ironically, it is probably this very complexity that has allowed Switzerland to both maintain very favourable international tax treaties and yet offer significant tax benefits for those involved in many extraterritorial activities.

Annual Fees and Government Taxes

Given the three-tier nature of the Swiss tax system, and the wide variations thereof it is only possible to provide general guidelines as to annual fees and taxes. In particular, it must be remembered that apart from variations in cantonal and communal taxes, very often even the methods of assessment vary from region to region. In addition, different types of companies are subject to different fiscal treatment.

How to Incorporate an S.A. Swiss Company

Companies are generally registered by notary publics. No company can be registered if its name is similar to an existing company. The company name must be cleared prior to the meeting with the notary public. Certain words such as 'Bank', 'Insurance', 'Swiss' and 'International' are sensitive. When the notary has formulated the requisite deeds, minutes and articles of association these will be lodged at the local Commercial Registry, together with a 'Payment of Capital' Certificate from a local designated bank. Issued share capital is liable to a 1% Stamp Duty (the first CHF250,000.00 of capital is exempted from any duty), together with a standard Company Registration Office fee. Under Swiss law there must be at least 3
initial subscribers at the time of registration, although this can be subsequently reduced to one. After lodgement, a 'Certificate of Trading' or 'Extract' will normally be issued within 2-3 weeks. Only then can access be gained to a company's capital. Incorporators can be of any nationality, juridical or personal. Documents lodged at the Registry are open to public inspection.

Corporate Requirements

Name: The name of the company should be checked with the Registrar. Certain words such as bank, insurance, Swiss and international are sensitive and may have different capital requirements.

Capital: The minimum share capital for a SA is CHF100,000.00 of which, at least, SF 50,000.00 must be fully paid up. Where share capital is over CHF100,000.00 a minimum of 20% must be fully paid up subject, of course, to the CHF50,000.00 minimum

Registered Office: All companies must have a Swiss registered office for service of process. All changes must be notified. Details are kept in the Commercial Registry and also printed by the Commercial Gazette. Full notification must be given of any change. Failure to do so will result in a potential fine.
Registered Agent/Nominees: To ensure the continued acceptance by treaty partners it is a requirement that there must be a majority of resident Swiss directors and generally one resident secretary. Local lawyers and/or accountants normally meet resident director requirements. Because of the need for veracity Swiss management and domiciliation fees tend to be higher than in most other 'tax planning' jurisdictions.

Board of Directors: Minimum one resident Swiss national. Where there is a non-Swiss director there must be at least two other Swiss directors to satisfy the requirement that the majority of directors are Swiss. Directors must be natural persons. The secretary is normally also a natural person. Under Swiss kw directors must have a minimum of one share each or as required by the company articles. All directors owe a fiduciary duty to the company.
Shareholders: Subject to the caveats relating to directors and share holdings (see above) there are no restrictions on non-Swiss juridical or natural persons holding shares in a Swiss SA, unless such a company intends to own Swiss real estate. Where bearer shares are required, it should be noted that the share capital of the company must be fully paid up. However, even when shares are listed this information is not available to third parties. Single subscriber companies are possible, although two initial nominees will still be needed.

Books, records and seal: A full register of members and charges must be kept at the registered office. There is no requirement for a company seal

Powers of Attorney: All companies may grant a general or specific power of attorney to any person to act on it's behalf to execute contracts, agreements, deeds and other instruments. These powers are not a matter for public record. Nevertheless, it should be noted that certain functions, particularly those relating to actual decision making, cannot be delegated to third parties under the 1991 legislation.

Certificates of good standing:   These are available upon proper application to the Commercial Registry.

Bearer Shares: SA's can issue bearer shares; however, such shares must be fully paid up.

Annual Meetings: An Annual General Meeting of the shareholders must be held within 6 months of the end of the financial year. Generally 20 days notice must be given of an intended meeting unless all appropriate parties are represented directly or by proxy. Meetings may be in or outside of Switzerland.

Accountancy/Audit requirements: All SA companies must appoint independent qualified auditors registered in Switzerland. It is, however, not necessary that the auditors are licensed fiduciaries unless bonds have been issued and/or the company's issued share capital is over CHF5,000,000.00. General management accountants are virtually always appointed to bring accounts up to trial balance.