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Knowledgebase
Swiss Holding Company: Tax Benefits & Setup Guide 2025
Alex Buri, Off-Counsel
2 April, 2025
Table of Contents
1. The main characteristics of holding companies in Switzerland
2. Taxation of Swiss holding companies
3. Taxation at cantonal level in Switzerland
4. Taxation of Swiss holding companies in the canton of Zug
5. Conditions for obtaining tax exemptions of the Swiss cantonal tax
6. Why open a Swiss holding company?
7. Why choose Switzerland as an investment destination?
8. FAQ: Swiss Holding Companies
2. Taxation of Swiss holding companies
3. Taxation at cantonal level in Switzerland
4. Taxation of Swiss holding companies in the canton of Zug
5. Conditions for obtaining tax exemptions of the Swiss cantonal tax
6. Why open a Swiss holding company?
7. Why choose Switzerland as an investment destination?
8. FAQ: Swiss Holding Companies
The main characteristics of holding companies in Switzerland
A holding company in Switzerland is typically created as a limited liability company (GmbH) or a joint stock corporation (SA). Its main purpose is the ownership and management of shares or voting rights in other domestic or foreign companies. This type of company structure is highly favored by both local and international investors due to the extensive legal advantages and favorable tax treatment it enjoys.
In Switzerland, investors can establish different types of holding entities, including pure holding companies, financial holding companies, and operational holding companies, each serving strategic business purposes.
A pure holding company is exclusively established to own long-term participations in subsidiaries. To qualify under this category, at least two-thirds of the total income and assets must derive from its holdings. Furthermore, it must not conduct any commercial activity in Switzerland.
If a company earns income outside of the qualifying participation income, this portion is taxed at the standard federal corporate income tax rate of 7.83%.
In Switzerland, investors can establish different types of holding entities, including pure holding companies, financial holding companies, and operational holding companies, each serving strategic business purposes.
A pure holding company is exclusively established to own long-term participations in subsidiaries. To qualify under this category, at least two-thirds of the total income and assets must derive from its holdings. Furthermore, it must not conduct any commercial activity in Switzerland.
If a company earns income outside of the qualifying participation income, this portion is taxed at the standard federal corporate income tax rate of 7.83%.
Quick Overview of Holding Companies in Switzerland
Holding companies are often used to facilitate centralized control, asset ownership, IP holding, and intragroup financing. They can also be set up to manage intellectual property rights, offer debt financing, or operate within the grant mechanisms of larger groups.
In order to proceed with incorporation, the following documents are generally required:
In order to proceed with incorporation, the following documents are generally required:
- Articles of association and statutory documents;
- Identification documents of shareholders and directors;
- Confirmation of a Swiss-registered address;
- Proof of capital deposit (bank statement);
- Outline of the management structure.
Taxation of Swiss holding companies
One of the main reasons entrepreneurs choose to set up a Swiss holding company is due to the extremely favorable taxation regime. Both federal and cantonal levels offer generous deductions and exemptions, making Switzerland a preferred location for international holding structures.
Cantonal and Communal Taxes:
At the federal level, a corporate income tax of 7.83% is applied. However, companies that qualify as holding entities can benefit from participation exemptions, meaning income such as dividends, capital gains, and liquidation proceeds from qualifying subsidiaries are either partially or completely exempt from taxation.
To benefit from this regime, the holding company must:
In addition, shareholding rights with a market value of CHF 2,000,000 or more may qualify for further federal deductions.
These benefits are intended to eliminate economic double taxation and encourage group consolidation through Switzerland. Our local consultants can guide investors on how to properly structure the participation to meet these thresholds.
To benefit from this regime, the holding company must:
- Hold at least 10% of the share capital of the subsidiary, or
- Possess a participation valued at minimum CHF 1 million.
In addition, shareholding rights with a market value of CHF 2,000,000 or more may qualify for further federal deductions.
These benefits are intended to eliminate economic double taxation and encourage group consolidation through Switzerland. Our local consultants can guide investors on how to properly structure the participation to meet these thresholds.
Other Fiscal Advantages
- Access to Switzerland’s double taxation agreements (over 80 worldwide), allowing for reduced or eliminated withholding tax rates on cross-border dividends;
- No transfer taxes in most situations;
- Capital gains exemptions on shares held in subsidiaries, provided the participation conditions are met;
- Additional tax planning opportunities via interest expense deductions and loss carryforwards.
Taxation at cantonal level in Switzerland
Switzerland is composed of 26 autonomous cantons, each having its own taxation rules and corporate tax rates. However, the federal law permits cantons to offer preferential tax treatment to holding companies, which makes the choice of canton a key strategic factor when forming a Swiss holding company.
General Cantonal Tax Exemptions
In most cantons, holding companies are exempt from cantonal and communal income tax, provided the following conditions are met:
While cantonal tax on capital still applies, the applicable rate is typically very low, ranging from 0.001% to 0.2%, depending on the canton.
Holding companies must include their tax-exempt purpose in their articles of association, which is verified by the cantonal tax authorities.
- At least two-thirds of the company’s income is derived from qualifying shareholdings;
- At least two-thirds of total assets are invested in subsidiary shares;
- The company does not engage in commercial activities in Switzerland.
While cantonal tax on capital still applies, the applicable rate is typically very low, ranging from 0.001% to 0.2%, depending on the canton.
Holding companies must include their tax-exempt purpose in their articles of association, which is verified by the cantonal tax authorities.
Key Cantons for Holding Companies
Some of the most favorable cantons for establishing a holding company include:
Each canton has specific procedures and interpretations regarding the tax exemption status. Our team of Swiss company formation experts can assist you in selecting the most appropriate canton for your holding company based on your long-term investment and operational strategy.
- Zug – One of the most attractive jurisdictions due to its ultra-low capital tax rates and well-established financial infrastructure;
- Schwyz – Offers low tax rates and no inheritance tax, which benefits family-owned structures;
- Vaud and Geneva – While offering higher base tax rates, they provide excellent access to global markets and human capital.
Each canton has specific procedures and interpretations regarding the tax exemption status. Our team of Swiss company formation experts can assist you in selecting the most appropriate canton for your holding company based on your long-term investment and operational strategy.
Taxation of Swiss holding companies in the canton of Zug
The canton of Zug is widely regarded as one of the most favorable regions in Switzerland for setting up a holding company, thanks to its ultra-competitive tax environment, advanced infrastructure, and pro-business government policies.
According to official statistics, approximately one in four Swiss holding companies are incorporated in Zug, highlighting its leading role in the sector.
According to official statistics, approximately one in four Swiss holding companies are incorporated in Zug, highlighting its leading role in the sector.
- Full exemption from cantonal income tax, provided the company qualifies as a pure holding entity and limits its operations to owning and managing participations;
- The federal corporate tax rate remains at 8.5%, but effective taxation can be significantly reduced due to participation exemptions;
- Capital gains and dividend income from qualifying subsidiaries can be fully exempt at both federal and cantonal levels;
- Zug imposes minimal capital tax, typically in the range of 0.001%–0.02%, depending on the equity structure;
- The canton offers quick processing times for rulings and favorable interpretations of corporate structuring strategies.
In addition, if the company engages in real estate investments, it may still qualify for tax benefits under the double taxation treaties signed by Switzerland.
These treaties can reduce withholding tax on dividends received from foreign subsidiaries from the standard 35% rate to as low as 5% or 0%, depending on the partner country and structure of ownership.
Our company formation agents in Zug provide end-to-end services, including:
These treaties can reduce withholding tax on dividends received from foreign subsidiaries from the standard 35% rate to as low as 5% or 0%, depending on the partner country and structure of ownership.
Our company formation agents in Zug provide end-to-end services, including:
- Incorporation and local representation;
- Tax ruling negotiations with the cantonal authorities;
- Setup of accounting systems and payroll;
- Coordination with banks for capital deposit and account opening.
Get in touch
Please contact us directly or via email if you require assistance. We are here to help you move forward.
Conditions for obtaining tax exemptions of the Swiss cantonal tax
To obtain cantonal tax exemptions, a Swiss holding company must meet specific legal and operational requirements defined by both federal and cantonal legislation. These requirements ensure that only companies genuinely pursuing a holding activity benefit from the special tax treatment.
Legal Conditions:
1. The company’s articles of association must explicitly state that its primary purpose is long-term equity participation in other legal entities.
2. The company must avoid engaging in commercial operations within Switzerland that are unrelated to its holding activities.
3. At least two-thirds of both total income and total assets must come from qualifying shareholdings.
These criteria are reviewed and verified by the cantonal tax authorities upon submission of the tax file and must be maintained each fiscal year to preserve the tax-exempt status.
2. The company must avoid engaging in commercial operations within Switzerland that are unrelated to its holding activities.
3. At least two-thirds of both total income and total assets must come from qualifying shareholdings.
These criteria are reviewed and verified by the cantonal tax authorities upon submission of the tax file and must be maintained each fiscal year to preserve the tax-exempt status.
Permissible Activities for Holding Companies:
In addition to shareholding, certain ancillary activities are permitted, including:
However, if these activities become predominant, the company risks losing its holding company status, which would eliminate tax benefits and subject the business to regular income tax.
Our specialists in Swiss company law can assist in drafting compliant corporate documents and provide ongoing compliance support to maintain your tax-advantaged position.
- Exploitation of intellectual property (IP ownership, licensing);
- Debt financing within a corporate group (intragroup loans);
- Management of subsidies or grants allocated to subsidiaries;
- Holding of real estate, if part of a group structure and not linked to active development or resale in Switzerland.
However, if these activities become predominant, the company risks losing its holding company status, which would eliminate tax benefits and subject the business to regular income tax.
Our specialists in Swiss company law can assist in drafting compliant corporate documents and provide ongoing compliance support to maintain your tax-advantaged position.
Why open a Swiss holding company?
Opening a Swiss holding company offers a combination of strategic, financial, and legal advantages, making it a highly attractive vehicle for both international investors and multinational corporations.
Main Advantages:
- Favorable tax environment: Significant exemptions on dividends, capital gains, and passive income;
- No withholding tax on qualifying dividends, provided ownership exceeds 10%;
- Capital gains tax exemption for sales of participations that meet legal thresholds;
- No transfer tax on most asset movements;
- Access to EU and global tax treaties, reducing cross-border withholding taxes;
- Possibility to offset capital losses and interest expenses, optimizing group finances.
Swiss holding companies also qualify under the EU Parent-Subsidiary Directive, which enables full exemption from dividend taxation within group structures operating across the EU and Switzerland.
From a corporate planning perspective, Swiss holdings serve as ideal platforms for group centralization, IP management, and financing. They provide strong legal security, a reputable international image, and predictable regulatory compliance.
Combined with simplified administrative requirements — such as the absence of a local hiring obligation — this makes Switzerland an unparalleled hub for building long-term corporate ownership structures.
If you are considering this path, our team of Swiss tax advisors and company formation specialists is ready to guide you through the setup and optimization phases.
From a corporate planning perspective, Swiss holdings serve as ideal platforms for group centralization, IP management, and financing. They provide strong legal security, a reputable international image, and predictable regulatory compliance.
Combined with simplified administrative requirements — such as the absence of a local hiring obligation — this makes Switzerland an unparalleled hub for building long-term corporate ownership structures.
If you are considering this path, our team of Swiss tax advisors and company formation specialists is ready to guide you through the setup and optimization phases.
Why choose Switzerland as an investment destination?
Switzerland stands out as a top-tier investment destination due to its economic stability, political neutrality, and world-class legal and financial infrastructure. These characteristics make it particularly appealing for foreign investors looking to set up holding companies or other corporate vehicles.
Key Factors that Attract Investment:
- A stable and transparent political system, with low corruption levels and a business-friendly climate;
- Switzerland maintains over 100 bilateral investment treaties, ensuring protection against expropriation and unfair treatment;
- According to the OECD, Switzerland ranks among the top countries for investor protections, with a shareholder power index of 8.0, higher than the global average;
- The manager liability index matches that of Germany (5.0), confirming strong governance standards;
- More than 112 investment protection agreements are currently in force;
- In 2017, the holding sector was among the most preferred investment vehicles, contributing to over 56% of all foreign investments in Switzerland;
- Switzerland also attracted 137 "green investments" in renewable energy, sustainable technologies, and environmental innovation.
With its central European location, multilingual workforce, reliable infrastructure, and vast network of double taxation treaties, Switzerland provides a robust platform for regional headquarters, R&D centers, and financial holding activities.
Our business consultants in Switzerland offer personalized assistance to help you choose the most suitable canton, navigate the regulatory landscape, and stay updated on any legislative or fiscal developments that may affect your operations.
For comprehensive guidance on establishing a Swiss holding company or any other entity type, don’t hesitate to contact our expert team.
FAQ: Swiss Holding Companies
CHF 20,000 for GmbH and CHF 100,000 for SA.
Approximately 12 weeks, including documentation and approval.
7.83%, with exemptions on qualifying participation income.
Yes, if at least 2/3 of income and assets come from participations.
Yes, 100% foreign ownership is permitted.
Yes, at least one director must reside in Switzerland.
Between 0.001% and 0.02%, depending on equity.
Yes, Switzerland has over 80 double tax agreements.
No, not if it wants to maintain holding company tax status.
Due to tax exemptions, legal stability, and international reputation.
Legal disclaimer. This article does not constitute legal advice and does not establish an attorney-client relationship. The article should be used for informational purposes only.