General Information

Switzerland is a landlocked, independent country strategically located at the heart of continental Western Europe and measuring 15,941 square miles. It is bordered on the west by France, on the north by Germany, on the east by Austria and the principality of Liechtenstein, and on the south by Italy.

The country lies at the center of Europe's transalpine routes with two-thirds of its frontiers following the natural contours of mountain ridges, crests, lakes and rivers and with one quarter of its area consisting of scenic high alps, lakes and barren rock.

The 'Holding' Company is a Stock Corporation with a particular tax status (see Offshore Legal and Tax Regimes). Holding companies benefit from reductions in corporate income tax and capital gains at federal and cantonal levels, and from a reduction in net worth tax at cantonal level.

The Swiss holding company was a particular target of the OECD's 'unfair tax competition' initiative, and in 2004 an agreement was reached between Switzerland and the OECD whereby information about holding companies would be shared by Switzerland in circumstances where there was prima facie evidence of fraud.

For federal tax purposes a company is defined as a holding company if it holds either a minimum of 20% of the share capital of another corporate entity or if the value of its shareholding in the other corporate entity has a market value of at least 2m Swiss Francs (known as a "participating shareholding"). The reduction in the level of corporate income payable tax depends on the ratio of earnings from "participating shareholding" to total profit generated.

Although the definition of a holding company varies among cantons, broadly speaking a corporate entity is a holding company for cantonal corporate income tax purposes so long as it either:

derives 51%-66% of its income from dividends remitted by the subsidiary; or holds 51%-66% of the subsidiary's shares

The Savings Tax Directive applies in Switzerland through a separate agreement reached between the country and the EU, under which Switzerland applies a withholding tax (20% since July 1, 2008) to returns on savings paid to the citizens of EU Member States, and which in various other ways is less onerous than the original Directive.

Switzerland is the world's largest private banking center. It is home to over 500 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 SWF10 trillion