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Switzerland Fact-File Part 2:
Individual Business Domestic Taxation

2.14 Switzerland Individual Business Tax-Efficient Profit Distribution

Choosing Between Dividends, Salary and Fringe Benefits

Dividends are subject to a 35% withholding tax, whether paid to residents or non-residents, including ‘hidden’ profit distributions (as defined under Swiss thin capitalization rules).

Dividends paid from a Swiss subsidiary to its parent company need only be reported and the dividends can be paid gross. To qualify for this exemption, the parent company must have a minimum 20% capital holding in the subsidiary. The exemption applies only to cash dividends.

Given the relatively low personal income tax rates in Switzerland, it would not appear to be financially attractive to make dividend payments with any great frequency due to the high rate of withholding tax.

The provision of so-called fringe benefits by companies to their key employees is also a less attractive tax option now. Benefits such as paying for travel, a company car, mobile phone or membership of a sports club or gym might be ways of providing benefits as opposed to a salary increase. However, the tax authorities will examine such benefits closely to determine whether they are genuine fringe benefits or should be liable to tax.


 

Introductory Guides

Brief, clearly written summaries with links to relevant sections of the Fact-File. The Fact-File itself is linked in full below.

 

Fact-File

Part 1: Switzerland Business Formation for Individuals

  1. Switzerland Individual Business Structures
  2. Switzerland Individual Business Registration
  3. Switzerland Individual Business Registration Cost
  4. Switzerland Individual Business Licensing
  5. Switzerland Foreigners in Business
  6. Switzerland Business Organisations
  7. Switzerland Business Accounting
  8. Switzerland Family Business Ownership
  9. Switzerland Venture Capital
  10. Switzerland Individual Business Franchises

Part 2: Switzerland Individual Business Domestic Taxation

  1. Switzerland Individual Business Tax Residence Rules
  2. Switzerland Permanent Establishment
  3. Switzerland Individual Income Tax Rates and Bands
  4. Switzerland Personal Allowances and Business Deductions
  5. Switzerland Husband and Wife Partnerships
  6. Switzerland Partnership Income Taxation
  7. Switzerland Limited Companies Income Taxation
  8. Switzerland Business Profit Retention
  9. Switzerland Business Losses
  10. Switzerland Value Added Tax (VAT)
  11. Switzerland Individual Business Capital Gains Tax (CGT)
  12. Switzerland Individual Business Other Taxes
  13. Switzerland Individual Artists Royalties
  14. Switzerland Individual Business Tax-Efficient Profit Distribution

Part 3: Switzerland Individual Business International Taxation

  1. Switzerland Individual Business International Tax Liability
  2. Switzerland Individual Business Withholding Taxes
  3. Switzerland Double Tax Treaties

Part 4: Switzerland Individual Business Tax-Efficient Structures

  1. Switzerland Individual Business Tax-Efficient Structures
  2. Switzerland Individual Business Trusts and Foundations
  3. Switzerland Individual Business for Non-Residents
  4. Switzerland Individual Business use of Offshore
  5. Switzerland Controlled Foreign Corporation (CFC) Rules
  6. Switzerland Personal Estate and Inheritance Planning

Part 5: Switzerland Small Business Incentive Programs

  1. Switzerland Small Business Support Schemes
  2. Switzerland Training Incentive Schemes
  3. Switzerland R&D Tax Credits
  4. Switzerland Individual Business Tax Holidays

Part 6: Switzerland Individual Business Employment Issues

  1. Switzerland Individual Business Employer Responsibilities
  2. Switzerland Employment vs Self-Employment Tax Issues
  3. Switzerland Apprenticeship and Work Experience Schemes
  4. Switzerland Employee Dismissal Rules
  5. Switzerland Business Owner Employment and Invoicing Rules

Part 7: Switzerland Business Owner Welfare and Lifestyle

  1. Switzerland Business Social Security
  2. Switzerland Business Domestic Pensions
  3. Switzerland Offshore and International Pensions
  4. Switzerland Individual Business Healthcare
  5. Switzerland Individual Business Banking Services
  6. Switzerland Education
  7. Switzerland Individual or Business Leaving Switzerland
  8. Switzerland Domestic Real Estate
  9. Switzerland International Real Estate