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Switzerland / Switzerland


Location and infrastructure

Switzerland is a federal parliamentary republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western and Central Europe where it is bordered by Germany to the north, France to the west, Italy to the south, and Austria and Liechtenstein to the east. Switzerland has a highly developed transportation system, with a dense road network and comfortable, efficient trains. Hundreds of finely engineered tunnels and bridges cross the country’s rugged terrain. Its highway system is equally first-rate. Roads totaled 71,011 km (44,124 mi) in 2000. International air transport is provided by Swiss International Air Lines, which is owned jointly by public and private investors. Switzerland’s international airports are in Zurich, Geneva, and Basel.


Switzerland has a population of 8.02 million as of 2012.


Four languages are recognised as official in Switzerland: French, German, Italian and Romansh. Native speakers number about 64% (4.6 million) for German (mostly Swiss German dialects), 20% (1.5 million) for French, 7% (0.5 million) for Italian and less than 0.5% (35,000) for Romansh.


The official currency in Switzerland is the Swiss Franc (CHF).

Tax system

The main characteristics of the Swiss tax system are the following:

  • There is no specific capital gains tax levied at the federal level. Capital gains on the sale of assets are treated as ordinary income (and losses are deductible) regardless of how long the assets have been held. If assets are sold to a shareholder or related corporation at a price below market value, gains may be reassessed for tax purposes. Capital gains derived from the sale of a participation of at least 10% in a resident or nonresident company benefit from participation relief if the participation has been held for more than one year;
  • Losses may be carried forward for seven fiscal years and may be used against any capital gains or income. Losses may not be carried back;
  • Tax is imposed at both the federal and cantonal/communal levels. The federal tax rate of 8.5% is levied on net income. Since income and capital taxes are deductible in determining taxable income, the effective tax rate is 7.8%. Taking into account both the federal and cantonal/communal income tax, the combined effective income tax rate is typically between 12% and 22% for companies subject to ordinary taxation, depending on the place of residence.
  • Dividends generally are taxable for the recipient company, although relief is granted for dividends received from a qualifying participation in a resident or nonresident company. A participation is qualifying if the company owns at least 10% of the capital of the company paying the dividends or the participation has a value of at least CHF 1 million.
  • There is a holding company tax privilege, granted to companies whose primary statutory purpose is the holding of participations (i.e. when at least 2/3 of the total assets consist of investments in subsidiaries or, alternatively, at least 2/3 of income consists of dividends) and that have no active trade or business in Switzerland. A company that enjoys the holding company privilege is fully exempt from cantonal and communal income taxes;
  • The effective federal income tax rate on non-dividend income is 7.8%.
  • There is no capital duty;
  • A 1% stamp duty is levied on contributions to the equity of a Swiss company, whether in cash or in kind. A CHF 1 million exemption threshold applies to the issuance of shares. Reorganizations, such as mergers, spin-offs of corporate assets, or transfers of a company’s domicile from abroad to Switzerland typically are exempt from stamp duty.
  • VAT applies to the sale of goods and services in Switzerland, and to the import of goods and services into Switzerland. Exports of goods and services are, in principle, zero-rated. The standard VAT rate is 8%. Certain goods and services are subject to a reduced rate of 2.5% and others (e.g. most banking services) are exempt. A special 3.8% rate applies to the hotel and lodging industry.

Withholding tax:

  • Under domestic law, dividends are subject to a 35% withholding tax. Under the Switzerland-EU savings agreement, which provides Switzerland access to benefits similar to those in the EU parent-subsidiary directive, withholding tax is reduced to 0% on cross-border payments of dividends between related companies residing in EU member states and Switzerland when the capital participation is 25% or more and certain other criteria are met; 
  • Under domestic law, no withholding tax is levied on interest;
  • Exceptions apply to interest derived from deposits with Swiss banks, bonds and bondlike loans, which are subject to a 35% withholding tax at the federal level. The 35% withholding tax levied under domestic law can be reduced under a tax treaty to typically 0% or 10% with most investor countries;
  • Switzerland does not levy withholding tax on royalties.

Double tax treaties

Switzerland has Double Taxation Treaties with over 80 other countries, more than 30 of which are based on the OECD model. The general effect of the treaties for non-residents from treaty countries is that they can obtain a partial or total refund of tax withheld by the Swiss paying agent.

The following countries are among those which have double-tax treaties with Switzerland, although not all have been ratified at the time of writing:

  • Algeria
  • Armenia
  • Australia
  • Austria
  • Azerbaijan
  • Bangladesh
  • Belarus
  • Belgium
  • Bulgaria
  • Canada
  • Chile
  • China
  • Colombia
  • Costa Rica
  • Croatia
  • Czech Republic
  • Denmark
  • Ecuador
  • Egypt
  • Estonia
  • Finland
  • France
  • Fyrom
  • Georgia
  • Germany
  • Ghana
  • Greece
  • Hong Kong
  • Hungary
  • Iceland
  • India
  • Indonesia
  • Iran
  • Ireland
  • Israel
  • Italy
  • Ivory Coast
  • Jamaica
  • Japan
  • Kazakhstan
  • Kuwait
  • Kyrgyzstan
  • Latvia
  • Lithuania
  • Luxembourg
  • Malaysia
  • Malta
  • Mexico
  • Moldova
  • Mongolia
  • Montenegro
  • Morocco
  • Netherlands
  • New Zealand
  • Norway
  • Oman
  • Pakistan
  • Peru
  • Philippines
  • Poland
  • Portugal
  • Qatar
  • Romania
  • Russia
  • Serbia
  • Singapore
  • Slovakia
  • Slovenia
  • South Africa
  • South Korea
  • Spain
  • Sri Lanka
  • Sweden
  • Taiwan
  • Tajikistan
  • Thailand
  • Trinidad and Tobago
  • Tunisia
  • Turkey
  • Turkmenistan
  • Ukraine
  • United Arab Emirates
  • United Kingdom
  • United States
  • Uruguay
  • Uzbekistan
  • Venezuela
  • Vietnam
  • Zimbabwe

Legal system

Switzerland has a civil law legal system. Therefore, enacted or written law is the primary source of law. Swiss law is divided into public and private law.

Public law governs the organization of the State, as well as the relationships between the State and private individuals (or other entities such as companies). Constitutional Law, Administrative Law, Tax Law, Criminal Law, Criminal Procedure, Public International Law, Civil Procedure, Debt Enforcement and Bankruptcy law are sub-divisions of public law.

Private law governs the relationship between individuals. Swiss civil law is mainly comprised in the Swiss Civil Code (which governs Status of Individuals, Family Law, Inheritance Law, and Property Law) and in the Swiss Code of Obligations (which governs Contracts, Torts, Commercial Law, Company Law, Law of checks and other payment instruments). Intellectual property law (copyright, patents, trademarks, etc.) are also areas of private law. Labor law is governed by private and public law.


Switzerland is the world's largest private banking center. It is home to 312 major banking institutions and is estimated to hold up to 35% of the world's private wealth. Assets under management of Swiss banks are estimated to top CHF10 trillion.

Legal Entities

There are various legal entities in Switzerland:

  • Switzerland Stock Corporation
  • Switzerland Holding Company
  • Switzerland Domiciliary Company
  • Switzerland Auxiliary Company
  • Switzerland Service Company
  • Switzerland Mixed Company
  • Switzerland Branch