Switzerland is known to be an ideal investment destination. Switzerland is a federal republic which means the federal constitution delegates the powers to the federal state, also known as the Confederation. The Swiss Confederation, the Cantons and the Municipalities are the major bodies that levy taxes in Switzerland. Obtaining residency or citizenship by investment in Switzerland can be done in two ways, either by forming a company in Switzerland or through tax payment.
Citizenship by Investment
There are two ways one can attain residency or do citizenship planning through the route of investment.
Forming a company: Switzerland opens up its land for foreigners to set up companies that will contribute to the skill-building and economic development of their country. It also helps them to create more local employment opportunities. To encourage people to form a company, low corporate tax rates are levied and the owner of the company can become a resident of the country. The Zug canton is the most popular to form a company because of the low Swiss tax rate.
Tax payment: Switzerland offers the option of obtaining residency/citizenship by a lump sum tax payment between CHF 1,50,000 and 1 million depending on the canton. Anyone can pay this minimum fee and obtain residency under this category. Some cantons famous for such residency options are Geneva, Bern, and Zug.
Benefits of citizenship by investment
Swiss tax rate privileges have always attracted foreign investors. It offers various benefits for taxpayers and fewer restrictions. The cost of doing business in Switzerland and living there is also favorable as compared to other countries. The country holds a highly positive reputation for investment and international business. Despite the low Switzerland income tax and corporate tax, the infrastructure and facilities are state-of-the-art and world-class.
Switzerland is not just known for its cheese and chocolate. It is also known to be a haven for foreign and individual taxpayers because of the low tax rates, financial privacy, and benefits provided to store the money in the country. It is not at all surprising that among the Fortune 500 companies, almost 30 percent have operations in Switzerland.
Switzerland Income Tax levels
The residents of Switzerland are subject to pay an unlimited tax liability. The non-residents for taxation purposes are charged taxes on their Swiss sources of income and earning. In Switzerland income tax is paid on global income.
For private individuals, a direct tax is levied by the federation on their private income. Cantons do it on behalf of the federation. In Switzerland, the tax rate is different for single and married taxpayers. For married couples, the income tax rates in Switzerland are different. The tax is assessed jointly for both individuals in the marriage instead of individual taxes. They lie in the range between 1 percent and 11.5 percent. It is safe to assume that the total tax does not exceed 40 percent.
In order to save the taxpayers from paying taxes twice for income being generated in two countries, Switzerland has entered into agreements with over 80 countries including the U.S. and most countries from Europe. The non-resident taxpayers can obtain the benefits of these agreements by claiming a refund held by the Switzerland income tax authorities.
Switzerland Tax Rate for foreigners
In Switzerland, if you are a foreign worker employed by a company, the tax is directly deducted by your employer at the source. The income tax rate for foreigners is progressive in nature. In general, the tax system is very attractive to foreign workers. The tax is charged only on their local income generated in Switzerland itself.
Corporate Swiss tax rate
Foreign companies are liable to limited tax if they hold ownership of real estate or other permanent holdings. However, a company that has its administration or registered office in Switzerland is subject to paying unlimited taxes i.e. taxes on their global income. Corporate Income Tax (CIT) is levied in Switzerland at three levels, federal, cantonal and communal.
In general, the range of total swiss tax rate for corporates is between 11.4 and 24.2 percent, as per the company’s status and residence. Research and development companies are offered generous deductions from their taxable income because the country considers it to be the vital cog in the machinery of innovation and gives it the importance it deserves.
Even though the terms are stringent if one wishes to apply for citizenship by investment program and the level of required investment is higher, getting the golden visa is still a dream for many because of the benefits like lower tax rates and low cost of living. Switzerland is the ideal residency option for many wealthy individuals because of its low inheritance taxes, the option of lumpsum tax payment, and most importantly, financial privacy.
Contact us for a private consultation on wealth management via Switzerland citizenship or dual citizenship.