Lawsupport Blog

Offshore Companies
in Switzerland

Discover Switzerland's highly respected jurisdiction and low tax rates for foreigners. Explore the benefits of investing in this desirable location.
Switzerland is usually considered one of the most favored jurisdictions for opening an offshore company. Switzerland is a highly regarded jurisdiction that provides foreigners with a quite low rate of taxation. This country is also known for delivering security, transparency, and high-quality services. Moreover, Switzerland is located in the central area of Europe.
Although not a member of the EU, Switzerland has concluded many contracts with the EU and lots of international agreements to enable double taxation to be avoided. This is a strong motive for many international legal entities to choose this country as a jurisdiction to establish a company. Front matter, or preliminaries, is the first section of a book, and is usually the smallest section in terms of the number of pages. Each page is counted, but no folio or page number is expressed, or printed, on either display pages or blank pages.
Fiscal Residency of the Company
Those who want to open a legal entity in Switzerland must take into account some aspects. For the companies seeking for advantages from double taxation treaties (DTT), it must be a tax resident in Switzerland. This means that the registered office should be in this jurisdiction, and the management decisions will also be taken in this country.

It is important to understand that in the case if tax inspectors find out that the company's management is done in another jurisdiction, then the taxes will be recalculated. The representatives of a company will face penalties, as the tax residence will be considered as being from overseas.

The companies that provide support concerning offshore entity setting up in Switzerland, offer corporate administration services, including company directors, secretaries, legal representatives. Such an approach to company formation for foreigners is required by Swiss legislation.

There is a possibility to benefit from the DTT in Switzerland. Treaty provisions are applicable to dividends, royalties, or interests paid by a company to European entities, including Germany, France, if a Swiss legal structure is relieved from cantonal tax, under tax reliefs that are applicable to some types of legal entities.

Considering all these facts, it's essential to obtain advantages from the DTT existing between Switzerland and other countries, as it delivers a great chance for legal entities looking for avoiding high taxes.

Switzerland is proving the adaptation of policies related to information exchange, tax fraud, and evasion. This is why various tax treaties were adjusted. In order to gain advantages under tax treaties, the income taxpayer, the recipient, and the local authorities in the treaty partner state should submit a document to confirm the residence of the recipient and to acknowledge that data concerning the recipient is valid. The document is later submitted to the Federal Tax Administration, prior to the payment is performed.
Under What Conditions Remain the Shareholders Anonymous?
The citizens of foreign states who are the real owners of the company do not appear in their acts if the request is made. The real shareholder could not be revealed by the director of the offshore company. It is possible only if there are reasons to believe that he is involved in illegal activities.

The legal entity that performs the service must sign with him a statement of confidence. In this document will be a provision about performing only the operations given by this shareholder. This legal entity is the only one that appears in the firm's official documents. The document also involves the email address. From this address, the orders from the actual shareholder will be obtained.

Fiscal Residency of the Company

An offshore company in Switzerland may not undertake, for instance, banking, insurance, and any other activity that suggests cooperation with the financial sector
Taxation in Switzerland
The standard rate of Value Added Tax (VAT) for the revenue made by a legal entity established in Switzerland is 8%. It can be different depending on cantonal taxation. It is important to know that there are reduced VAT rates, for instance, for hotels, and for basic products.
Annual Financial Statements and Other Registers
The accounting documents of an offshore company must be managed with the relevant authorities. For some legal entities, the audit requirements are also applicable. There are no activities allowed for trade in this jurisdiction and there are not permitted, without a license, activities affiliated with banking or insurance.
Types of Swiss Offshore Companies
Aktiengesellschaft (AG)
This legal form is delivering the benefits of a corporate framework with limited obligations and the wide possibilities of a partnership with tax advantages for all business partners. The management facilities are provided by company owners, it may vary depending on the board of directors.
Private limited liability company (GmbH)
This legal form provides shareholders with limited liability. This means that their liability is linearly proportional to the contribution to the seed capital, thus providing private assets with protection in the firm's insolvency.
This entity could be established if the assets are transferred to an administrator. This person obtains the status of a sole and absolute owner, he bears liability for operating the assets and distributing them to the beneficiaries of the trust. It may involve the individual or legal entity that may include the individual or firm that transferred the fund to the person who provides administration services. It should be done under the provisions of the Deed of Trust.
This legal form exhibits some similarities with a trust, at the same time it delivers some benefits in the same manner as a company. The foundation consists of a combination of particular aspects of a trust and a company. Foundation may be served as an efficient tool to manage the rights of shareholders, immovable property, or family inheritance.

The companies established abroad suggest many advantages, including the protection of offshore assets, confidentiality, tax optimization, and effective business development outside the EU.

A Swiss offshore company delivers great privacy advantages. Lots of offshore entities will not disclose the identities of company representatives to a third party or foreign authorities. However, there could be exceptions, for instance, in the case of a terrorism investigation.

It should be noted, that there are offshore jurisdictions that offer more stability than others. It is depending on political and economic realms. Moreover, there are many factors that could heighten the risks of money loss, including physical distance, authorities, local customers.

Additional risks for these legal entities are similar to those for onshore corporations. It involves risks related to the market, interest rates, credits. It should be noted that there are serious tax risks related to the management of non-Swiss firms from outside of the state. In accordance with the provisions of Swiss legislation, a legal entity has its tax residence where comprehensive administration and management of the company is brought into action. The legal entity requires the control of day-to-day activities.

Thus, setting up directors' meetings in Liechtenstein half-yearly, for instance, or submitting decisions on a remote island can not provide support with the formation of a place of administration outside Switzerland and control it in concordance with a tax law of Switzerland.

In order to gain success with offshore company formation, the assistance provided by experienced experts is needed. If the representatives of the offshore company are looking to reduce tax rates, tax optimization suggests legal support on every stage of business development. Moreover, specialists offer unique and effective solutions for businesses to comply with Swiss legislation. For more details and assistance concerning DTT and company formation in Switzerland, you can reach out to our specialists. Our team is ready to provide you with all the important information and assistance you might need.