Enjoying healthy tax breaks are one of the most prominent reasons for forming an LLC, a Limited Liability Company. The tax breaks afforded to LLCs differ around the world so before you start to explore your tax break options, in fact, before you even start the process of forming a limited liability company, you should familiarise yourself with the tax breaks that are afforded to LLCs in the country in which your company is registered.
This means information that specifically affects your company in the country in which your LLC is registered and not general information, for as many businesspeople have found out, there are often unexpected surprises awaiting those that form an LLC without having a comprehensive understanding of the benefits of doing so.
Forming a Swiss LLC
Many businesspeople have found it advantageous to form a limited liability in Switzerland, and not only because of its reputation for being rather tax friendly to companies, but also because of its transparency – according to the 2012 Corruption Perception Index Switzerland ranks favourably as the sixth least corrupt country – and the fact that Switzerland has signed a wealth of double taxation treaties with regional economic powerhouses, and many up and coming economies, around the world.
Taxation in Switzerland
Like most countries, the taxation system in Switzerland is that of a classical corporate tax system, however, unlike in many other countries Swiss tax is levied on three levels: the national level (federal taxes), the cantonal level (cantonal taxes) and the communal level (communal taxes). This isn’t as complex as it might initially sound, though it’s advisable to have a consultancy firm on hand like co-handels zentrum to assist with matters concerning taxation on all levels, national, cantonal and communal.
Swiss taxes are among the lowest throughout Europe, which has, as mentioned above, made it appealing to foreign businesspeople looking to take advantage of low taxation rates – corporate taxes are 16-25% and individual rates 5-20%. However, it’s important to note that the largest portion of tax is levied at the canton and communal (municipal) levels, and that each canton has its own tax laws which are voted upon by the population in each canton.
Furthermore, companies are taxed in the canton in which they’re based, or where it carries out its business activities, which means that any businessperson looking to form a company in Switzerland should take note of this and register their company accordingly. This is yet another reason to work with a consultancy firm with strong experience in taxation for companies of all varieties including limited liability companies.
Corporate tax services in Switzerland
If you are planning to form a limited liability company in Switzerland, or have already formed one, you are advised to consult with a consultancy firm that offers a broad range of taxation services, moreover, as many consultancy firms are able to arrange company formations and provide taxation assistance, these are the consultancy firms that will prove most advantageous to have by your side.
One of the most common tax related services that consultancy firms provide is that of double tax treaties and treaty abuse and although Switzerland has entered into double taxation treaties with over 60 countries, including most of Western Europe, the need for assistance with this aspect of Swiss taxation is common amongst foreigners who have formed limited liability companies in Switzerland.
Seeing that limited liability companies are not taxed but rather the owners of the LLC, many foreign businesspeople who form limited liability companies in Switzerland require assistance with individual taxation issues and that’s another reason to have a consultancy firm on hand to assist with issues pertaining to taxation.
Moreover, although federal tax is calculated by income, cantonal and communal tax are calculated by the individual’s residence, their assets as well as their income, which can make ascertaining how much tax should be paid difficult, so once again foreign businesspeople are advised to seek assistance from a consultancy firm to assist with any issues pertaining to Swiss taxation.
Take note of these important taxation considerations regarding limited liability company formation in Switzerland and definitely don’t overlook the importance of forming a company and dealing with taxation issues with the assistance of a consultancy firm.
Zoe George is a freelance writer for CO-Handelszentrum GmbH on www.co-handelszentrum.com, a company in Switzerland that is dedicated to helping clients in dealing with concerns relating to IT, process optimisation, commercial strategy development and more.
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