Switzerland: Special Feature

European Tax Reduction – Purchasing through a Swiss Company

Opportunities for European Importers, Wholesalers and Distributors

Contributed by: Chris Doyle, CEO Co-Handelszentrum GmbH

In these uncertain economic times and in light of the increasing tax burdens being levied on companies and individuals, national or international importers, wholesalers or distributors may want to give consideration to the significant tax savings that may be available through establishing a Swiss Company from which to undertake their international purchasing.

Such a company might be used to conduct business mainly outside Switzerland or conducting certain of its administrative activities from within Switzerland. Aside from its internationally accepted jurisdictional status and association with security and quality, tax privileges may be available under the “Mixed” company regime resulting in exemption from Cantonal taxes and a relatively low rate of overall corporation tax (typically 8- 11%) on foreign source income.

This may be of interest in many situations to mitigate existing high tax burdens or future increases in taxes and should be of particular interest to international trading companies, wholesalers, importers and distributors, as well as companies providing products or services over the internet, headquarter companies, finance and IP companies to name but a few.

The establishment of such a company may not initially require the need to transfer or hire local staff as services required might be partially contracted to a Swiss Fiduciary Agent and/or be partly performed by existing staff within the group under contract.

For example an importer of goods from outside the EU into a relatively high tax EU country may decide to incorporate a Company in Switzerland through which it may conduct its international purchasing and wholesale operations in Switzerland.

Goods then may be sold on a wholesale basis to distribution, retail or other sales channels in other EU countries leaving a margin of profit to be taxed at a relatively low rate in the Swiss Company. If physical goods are involved, these would not need to be imported directly into Switzerland but could be shipped directly to the markets where needed. Over time additional services might be provided from the Swiss Company resulting in higher revenues/ margins and increased tax savings.

A similar opportunity is available for businesses supplying products or services over the Internet. If these were made available through a Swiss Company (which owned and operated the web site), trading profits would be taxed at a relatively low rate in Switzerland. Localised support or fulfilment services might be provided to the Swiss Company by a local contractor/company.

Longer term opportunities may also exist for business owners or senior executives to become resident in Switzerland and enjoy the benefit of lower income taxes and Zero Capital Gains Taxes following the Agreement on the free movement of persons and permitting EU/EFTA nationals the right of residence, and the right to work, study or retire in Switzerland.

Further information and a free consultation on establishing a Company in Switzerland and other forms of tax privileged Companies can be found by contacting Co-Handelszentrum GmbH at info@co-handelszentrum.ch or visiting their website at www.co-handelszentrum.ch

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