Switzerland Fact-File Part 2:
Individual Business Domestic Taxation

2.2 Switzerland Permanent Establishment

Creation of a Permanent Establishment

The definition of a permanent establishment in Switzerland is a fixed place of business from where the activities of the business entity are carried out, either in full or in part. This includes branches, manufacturing sites, workshops and other ancillary offices or units. Such locations, or sites, are classified as a permanent establishment if in existence for more than 12 months.

Business models that involve ‘distance selling’, that is selling products or services via the Internet, could be set up as being run by a company formed, registered and based in Switzerland, and thus benefit from the lower corporate taxation structure in the country. For this to be accepted by the tax authorities, there would have to be some permanent personnel attached to the Swiss location of the business. If a company were to locate say, only a server in the country, through which it is linked to a main server elsewhere, then it is likely that this would not be classed as a permanent establishment and that tax liability would be incurred in another country.

Ultimately, the Swiss tax authorities retain the right to decide upon the status of whether an operation constitutes a permanent establishment. Cases in which two countries attempt to classify a business as having a permanent establishment are generally resolved through Double Tax Treaties.

Introductory Guides

Switzerland Artist Tax Guide

Switzerland Contractor Tax Guide

Switzerland Entrepreneur Tax Guide

Switzerland Professional Tax Guide

Switzerland Small Business Tax Guide

Switzerland Sportsperson / Entertainer Tax Guide

Fact-File

Part 1: Switzerland Business Formation for Individuals

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