Income taxes

The basic rate of the corporate income tax imposed on federal level in The Swiss Confederation is 8,5%.

The taxation rates in the Zug canton are about 2%-4%, and their level depends among others on the scope and form of conducted business activity. It is worth stating here that the rate of the cantonal tax is negotiable. In particular, entrepreneurs who are going to run their business activity on a larger scale may count on goodwill of local tax authorities.

In the Zug canton both the joint-stock company [AG] and the limited liability company [GmbH] may conduct business activity adopting the form of a holding company, domicile company or mixed company. The canton offers tax privileges for each of these forms of conducting business activity.

 

  • holding company – is an enterprise which conducts business activity through making investments in other enterprises and does not conduct business activity in the territory of The Swiss Confederation. An additional condition assumes that the holding company must make investments or obtain incomes from them constituting at least 2/3 of their total initial capital or 2/3 of the income. These enterprises are totally exempt from cantonal tax. On the federal level as well, depending on the size of the investments made, the holding company may be taxed with the reduced rate of income tax.
  • domicile company – their characteristic feature is that they have an address in the territory of the Zug canton, where their seat is. They do not conduct any business activity in the territory of Switzerland, nor have any personnel or their own office.
  • mixed company – they most frequently create a branch of foreign enterprises, which conduct their business activity mostly outside the boarders of The Swiss Confederation. Usually they adopt a form of a limited liability company [GmbH] or a general company. They cannot be involved in production or rendering services. The volume of products sold and rendered services outside the borders of Switzerland must constitute at least 80% of their turnover.