A holding company is one that strictly owns assets such as shares of stock in other companies, bonds, and real estate, among others. A holding company is sometimes referred to as a parent company. Sometimes the holding company holds assets for another company that merely operates but does not have any assets itself. If you are considering starting a holding company, begin by placing the wealth of your companies into the holding company and start investing. Switzerland is one of the best places in the world to operate a holding company or get involved in a holding company, due to the amazing tax benefits in place to help such businesses succeed.
Holding companies reduce risk for the business owner and also allow for ownership and control of multiple companies under one roof.
What Is a Swiss Holding Company?
A Swiss holding company is one that holds and manages participation in other companies. Swiss holding companies cannot conduct any other business in Switzerland, according to the Swiss tax law.
What Are the Benefits of a Swiss Holding Company?
Switzerland tends to be a favorite country to conduct international business. Mainly, it is well respected because the economic, political, and social climate of Switzerland offers stability. They also offer high-quality workers, and many are multilingual, making conducting business simple and efficient.
Under Swiss tax law, holding companies are given privileged tax status so long as the company’s main activity consists of managing equity investments, they do not operate additional business activities in Switzerland, and at least two-thirds of the company’s total income is derived from the participation of its assets.
If you manage a majority of shares from other countries, making use of a Swiss holding company can be beneficial in terms of tax benefits, including reduced tax payments. Holding companies enjoy a reduction of the corporate tax rate at the federal level as long as the company owns at least twenty percent of the share capital of another business. The holding company can also benefit from lower tax rates if its market value is at two million Swiss francs. Swiss holding companies also benefit from the double tax treaty.
What Is the Double Tax Treaty?
Owning a business that makes money in two different countries may make you subject to double taxation, one tax payment for each country. This can be costly. Yet, according to Switzerland’s double taxation treaty, the withholding of tax on income and capital can be reduced or exempt for companies with shareholders with residency in a number of countries. These countries range from the United States and Canada to numerous countries across Europe, Asia, Australia, South America, and others.