In most jurisdictions there is a requirement under local company legislation that directors should prepare accounts and present them to the shareholders at the Annual General Meeting. However, where there is no tax to be assessed on the profits of the company, there is rarely a requirement to present the accounts to any government authority or file them on the public register. Even if the accounts do not need auditing it is good business practice for them to be prepared in accordance with the relevant companies law so that all shareholders and directors have access to – and can be seen to have access to – relevant financial information upon which proper business decisions can be made.
Advance Tax Rulings
To gain certainty about taxation it is sensible to discuss and negotiate difficult tax issues in advance with the tax authorities. Advance rulings are binding for the signing tax authority. Such rulings are processed rapidly, generally within four to eight weeks.
Gibraltar-based RegisterAnAircraft.com (RANA) is the aviation division of The Sovereign Group. Combining the experience acquired over 20 years in the field of aircraft registration and offshore company management, RANA offers a complete range of professional and highly tailored services to aircraft owners and operators worldwide.
Sovereign can provide introductions to a number of Swiss banks with which we have long-term relationships and can also assist with account opening procedures. To register a new established Swiss company it is necessary to provide confirmation from a Swiss bank that the initial share capital has been paid in to a Swiss bank account. Where it is not practical to meet this requirement, Sovereign can set up a company that is capitalised through a non-cash contribution. In such cases, Sovereign will provide the new company with an approved bank loan of over CHF20,000, which will be accepted by the registry. Sovereign will then repurchase the loan after registration such that the client has no extra costs except for a CHF500 charge to cover the loan approval.
EU Entry Services
Switzerland is an ideal geographical hub for starting business within the EU. European and Swiss nationals both enjoy the right of entry, residence, access to paid work, establishment on a self-employed basis and the right to stay in the territory after their employment has finished. The right of entry and residence applies to everyone, including those without an economic activity in the host country.
The Foundation is the continental law counterpart of the Anglo-Saxon Trust and has to be registered with the Federal government, which accepts no private foundations.
Luro AG, domiciled in the canton of Obwalden, is a subsidiary of Sovereign that can be used as a trust holding company for different purposes. (e.g. it can act as a nominee shareholder to avoid disclosure of a beneficial owner on a public register).
Lump Sum Tax Agreements
In November 2014 Swiss voters rejected, by referendum, a proposal to end the “lump sum” tax regime under which wealthy foreigners pay a fixed annual sum according to their Swiss living expenses, ignoring overseas earnings or accumulated wealth. However new federal rules, due in force at the start of 2016, will tighten up qualification for lump sum tax status and increase the levy, such that the minimum taxable basis (deemed income) will be CHF400,000. Furthermore, living expenses will be assessed as at least seven times the annual rental cost or rental value of the taxpayer’s dwelling in Switzerland, or at least three times the costs for a hotel. The new law also stipulates that worldwide living expenses must be taken into account to determine the tax base and requires the cantons to introduce rules to determine the tax base for income and wealth tax purposes. Cantons Vaud, Valais, Geneva and Ticino are home to the majority of Switzerland’s estimated 5,500 lump sum tax beneficiaries.
Gibraltar-based RegisterAYacht.com (RAY) is the marine division of the Sovereign Group. It was formed in 2000 to provide marine corporate and administration services to yacht owners, as well as to maritime law firms, yacht managers and brokers and other professional firms involved in the yachting industry. RAY is able to assist with transfer of ownership and all registration formalities. Initially established to register vessels under the British Red Ensign, RAY is now registering, administering and managing yachts – both pleasure and commercial – on a worldwide basis.
Sovereign assists many of its clients with the acquisition of real estate worldwide. We advise on tax and structuring and can manage the transaction process and financing arrangements. With our regional knowledge of property ownership laws and regulations, along with our tax planning expertise, we can help you reduce any potential exposure. Most people who own or intend to own property abroad will not be fully conversant with local legal procedures or taxes – stamp duties, municipal and wealth taxes – and may not fully recognise the longer term implications in terms of potential exposures to capital gains tax, inheritance tax or forced heirship rules. Substantial benefits may be derived through the use of corporate, trust or foundation structures to address these issues.
By outsourcing your payroll you can free up your valuable time and resources to concentrate on the important business of running your company. Sovereign can provide a comprehensive yet flexible outsourced payroll service tailored to each of our client’s specific requirements.
Personal Tax Planning
There are two main tax incentives available to individual taxpayers: capital gains on the sale of privately held assets are generally free of Swiss taxes; and certain foreign Swiss residents may apply for a taxation based on expenses rather than actual income (the “lump sum” tax regime). As the right of taxation is not exclusively allocated to the federal government, the cantons remain free to set the applicable tax rates in different areas such as wealth, gift and inheritance. The way in which this is calculated varies from canton to canton. Some have none.
All Swiss companies are obliged to have at least one Swiss-based director. Sovereign can provide professional directors as required.
A 35% withholding tax is imposed mainly on dividends distributed by resident companies. Interest on loans and royalty payments are not subject to withholding tax. However, through Switzerland’s extensive treaty network, WHT is reduced to 15% under most Swiss Double Tax Treaties (5% with Singapore and 0% with Hong Kong). Since Switzerland has concluded the savings agreement with the European Union, access to the EU parent/subsidiary and EU interest and royalty directive is permitted, which leads to a 0% WHT between Swiss and EU group companies on dividend, interest and royalty payments. Switzerland has no controlled foreign corporation rules that apply to income generated abroad that would tax such income in Switzerland. Paid WHT has to be reclaimed within a time limit of three years.
Trademark and Intellectual Property
The intellectual property (IP) associated with a business name or system can be one of its most valuable assets – but only if it is properly protected. Any business that wishes to establish a national or international identity should take steps to protect the use of its name, logo or other IP, such as patent rights, formulae/processes, designs, trademarks, franchises, licence agreements, “know-how” and copyrights. Given the importance of IP to modern businesses, Sovereign has established an intellectual property division that specialises in registration, monitoring, advice and proactive assistance.
Income from IP rights may be derived by way of royalties. As with other sources of income, the tax planning of IP should focus on maximising the after-tax profits. To ensure that arrangements made to receive royalties are effectively constructed, it is necessary to analyse how various countries treat the payments of royalties, whether tax is withheld on such payments and how the income receipts and expenditures are treated.