Any good setups in Switzerland?
- Thread starter JustAnotherNomad
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Even if you don't pay any income tax on dividends?
"If the Swiss company has capital contribution reserves and the dividend is distributed from these capital contribution reserves, then the dividend, under the current law, will be completely free of Swiss dividend withholding tax. These dividend distributions are also income tax free for individuals in Switzerland."
The good news is that a Swiss branch doesn't have any capital contribution reserves so you are free to distribute dividends whenever you please.
If you pair that with the fact the soon Nidwalden canton will beat Hong Kong as best company tax haven i would re-think your long term strategy.
You could domicile your branch in Nidwalden and hire a director for the branch while you live in the canton that suits you most.
I plan to follow that route too.
What? You write there only is no tax if there ARE capital contribution reserves, then you say your plan is to do it without capital contribution...? If this worked, it would be amazing, but I strongly doubt it.
Do you have some confirmation from an accountant for your idea?
Do you have some confirmation from an accountant for your idea?
I don't believe you find anyone in Switzerland with knowledge about there system, tax and laws for CHF 1000 for such work.
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Sure? Hong Kong is already 8.5% bellow 2m HKD (260k USD) in profits.
Also if prove that you don't do business in Hong Kong, the tax is 0%
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I'm also not convinced it's really necessary to incorporate in Nidwalden or Zug as the corporate income taxes have been lowered everywhere under pressure from the EU. The differences between the cantons should be quite small now.
Do you think so?
From 21% in Bern to 11.90% in Zug there is a big difference.
I'll forward your message to Bloomberg's journalist. I'm sure she will be interested to know that.
You can see that almost all other cantons have CIT rates of 12-14%.
A quick Google search shows that even Bern was supposed to reduce its CIT, but that this was delayed due to the pandemic (sounds like a pretty weak excuse, but whatever).
Unless you're making millions, what's the difference between Nidwalden and Geneva?
Even Zurich will reduce its CIT down to 18.19% in 2023. Which is still high of course, but you still have a lot of choice.
And yes, the thing with Hong Kong is obviously that people from this forum at least don't pay tax there at all.
What I meant was your recommendation of “incorporate in Nidwalden and pay for some substance, then live in another canton.”
Once you add the substance costs, those 2% may quickly seem cheap. And I guess even within Switzerland, there is a risk that your home canton may require proof that you're not secretly running the company from where you live. So for just 2%, this seems like not such a good idea. If you live in Zurich or Bern, it may be different. So it would all depend on where you want to live, but as you can see, many municipalities are in the 12-14% range.
But I guess the big savings lie in the fact that Switzerland doesn't have CFC rules as well as tax incentives (80% discount I think) for IP. The big question is if you can set it up properly without paying through your nose, only making it worthwhile for profits upwards of a couple million.
Once you add the substance costs, those 2% may quickly seem cheap. And I guess even within Switzerland, there is a risk that your home canton may require proof that you're not secretly running the company from where you live. So for just 2%, this seems like not such a good idea. If you live in Zurich or Bern, it may be different. So it would all depend on where you want to live, but as you can see, many municipalities are in the 12-14% range.
But I guess the big savings lie in the fact that Switzerland doesn't have CFC rules as well as tax incentives (80% discount I think) for IP. The big question is if you can set it up properly without paying through your nose, only making it worthwhile for profits upwards of a couple million.
@marzio
I recently met a guy from Liechtenstein who told me of what is probably the best loophole with Switzerland:
If you live in Switzerland, but you register your company in Liechtenstein and you have an office in Liechtenstein (could even be in a co-working space) and there is no permanent establishment in Switzerland (=you don't work from Switzerland), then you only pay 12.5% corporate income tax in Liechtenstein and no tax on the dividends the company pays you.
This is due to special rules for the taxation of dividends that are set in the tax treaty between the two countries.
Obviously I guess that for this to be believable, you can't be living too far away from Liechtenstein and you should probably actually go to your office from time to time.
I recently met a guy from Liechtenstein who told me of what is probably the best loophole with Switzerland:
If you live in Switzerland, but you register your company in Liechtenstein and you have an office in Liechtenstein (could even be in a co-working space) and there is no permanent establishment in Switzerland (=you don't work from Switzerland), then you only pay 12.5% corporate income tax in Liechtenstein and no tax on the dividends the company pays you.
This is due to special rules for the taxation of dividends that are set in the tax treaty between the two countries.
Obviously I guess that for this to be believable, you can't be living too far away from Liechtenstein and you should probably actually go to your office from time to time.
That's definitely good, but it has more to do with Lichtenstein than with Switzerland, more details https://www2.deloitte.com/content/d...Tax/dttl-tax-liechtensteinhighlights-2020.pdf
You could do the same you describe also by living in Austria and commuting to Vaduz
I think that owning a company in Liechtenstein (geez how difficult that name is?) will trigger CFC rules in Austria. In Switzerland there are no CFC rules so if you don't create a PE in Switzerland and do the work in Liechtenstein you're golden.
In case you commute regularly and have an office/substance in Liechtenstein, would that not be sufficient proof the company is not managed out of Austria?
Management is one thing, another thing is control. If you control 100% of a foreign company while being resident in Austria i guess it will trigger CFC rules in Austria.
Yes, this should also work with Austria. Seems like it may even work with Germany.
It shouldn't trigger Austrian CFC rules as they require the company to have at least 30% passive income.
If it's a proper operative business and you commute to Liechtenstein to work (don't work or have an office where you live), then I don't think there should be an issue.
This is due to the tax treaties signed by Liechtenstein with its neighbors: The treaty says that in a case like the above, the dividends shall not be taxed as dividends in the person's country of residency. Instead they shall be taxed as business income. But business income can only be taxed in the country of residency if there is a permanent establishment (=an office).
I would even guess that you can work from home up to a certain degree, as long as you don't have a lot of local customers in the country where you live.
I have heard that this was a deal they negotiated because there are many employees from Switzerland etc. who commute to Liechtenstein for work. These people all pay tax in their country of tax residency - Liechtenstein doesn't get any taxes from them. So this was intended to compensate for that.
It shouldn't trigger Austrian CFC rules as they require the company to have at least 30% passive income.
If it's a proper operative business and you commute to Liechtenstein to work (don't work or have an office where you live), then I don't think there should be an issue.
This is due to the tax treaties signed by Liechtenstein with its neighbors: The treaty says that in a case like the above, the dividends shall not be taxed as dividends in the person's country of residency. Instead they shall be taxed as business income. But business income can only be taxed in the country of residency if there is a permanent establishment (=an office).
I would even guess that you can work from home up to a certain degree, as long as you don't have a lot of local customers in the country where you live.
I have heard that this was a deal they negotiated because there are many employees from Switzerland etc. who commute to Liechtenstein for work. These people all pay tax in their country of tax residency - Liechtenstein doesn't get any taxes from them. So this was intended to compensate for that.
Looks like you are right, both Austria and Germany enforce CFC rules on passive income.
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