Big Tax Advantages For Foreigners Looking To Set Up a Swiss Asset Management Company In Switzerland

Many foreigners are opening or purchasing Swiss asset management companies in Switzerland for their non-Swiss business activity. Such companies, called mixed companies, are corporations with the majority of their business activity abroad where any business activity that might be conducted in Switzerland is considered of secondary nature. Foreign citizens are allowed to open mixed companies in Switzerland and, indeed, foreign shareholders are allowed to have a dominant influence on a mixed company.

Swiss asset management companies may have their own offices and staff and are often organized as mixed companies.

Conditions of taxation

The main condition for a Swiss asset management company to operate technically as a mixed company is that most of the business activity be performed outside of Switzerland (at least 80% of the revenue must be made outside of Switzerland).

Tax rates for mixed companies

The profit of a mixed Swiss asset management company is established in accordance with the divisional calculation. Taxable at ordinary rate are the following: (1) Income from investments (interests, dividends and capital gains) in domestic sources; (2) Commissions on fiduciary businesses; (3) Income from intangible rights in Switzerland, up to 20%; (4) Income from trading in Switzerland; (5) Income from real estate in Switzerland (including a hypothetical rental value of the property); and (6) Income protected by double taxation treaties, if the treaty requires that the income is fully taxed in Switzerland.

Costs which were related to specific income will be allotted, or if it’s not possible, a lump-sum deduction for management costs and taxes is made.

Income from outside Switzerland is taxed on a scale calculated in accordance with the number of employees from Switzerland of the mixed Swiss asset management company, which is often low in such cases, as employees can also be resident outside Switzerland.

If a mixed Swiss asset management company has fewer than six employees, the taxable scale is only 10%, for 6 to 10 employees, it is 15%, for 11 to 30 employees, it is 20% and for more than 30 employees, it is 25%.
If the Swiss asset management company is under Swiss control whereby for example one or more of the shareholders is a Swiss resident with decisive influence, then the tax scale is increased by 10%. However, in any case, the scale will not exceed 25%.

The income of the Swiss asset management company derived from outside of Switzerland that exceeds the CHF 200 million annually is always taxed 10%, notwithstanding any other circumstances.

Tax exemptions

Where the Swiss asset management company has net proceeds out of specific participations in accordance with Swiss tax law (capital gains and dividends) after deduction of the losses from the participations are tax free.

Capital Tax

The taxable basis for capital tax is the equity of the company and equals 0.1% of the taxable equity, subject to a minimum of CHF 250. The equity consists of the paid-in capital, participation capital, declared and hidden reserves created from taxed profits and retained earnings. At the minimum, the paid-in capital along with the paid-in participation capital is taxable. The funds of the Swiss asset management company’s shareholders are calculated only at the end of the relevant tax period.
 

 
No Legal or Tax Advice Intended. The contents of this press release are intended to convey general information only and not to provide legal or tax advice or opinions. The contents of this press release should not be construed as, and should not be relied upon for, legal or tax advice in any particular circumstance or fact situation. The information presented in this press release may not reflect the most current legal or tax-related developments. No action should be taken in reliance on the information contained in this press release and we disclaim all liability in respect to actions taken or not taken based on any or all of the contents of this press release to the fullest extent permitted by law. An attorney should be contacted for advice on specific legal issues.

Contact Information

Jim White

Media relations

Swiss AMF AG

info@swissamf.com