Switzerland protects assets in an increasingly challenging world

Financial social and asset

Background

Switzerland is an attractive jurisdiction for international companies and high net worth individuals seeking economic and political stability.

Why Switzerland is a Preferred Location

Political, Financial, Social, and Economic Stability

The Swiss economy is one of the most developed in the world. The service sector plays an important economic role, especially financial services. The Swiss economy ranks first in the world in the 2019 Global Innovation Index and fifth in the 2019 Global Competitiveness Report.

The modern Swiss economy is recognized as one of the most stable in the world. In addition, Switzerland ranked second in the world in 2018 with a score of 0.944 on the Human Development Index, a statistical combination of life expectancy, education, and per capita income

In foreign policy, the country has a long tradition of neutrality and has been a constitutional democracy since 1848.

From an asset protection perspective, Switzerland’s stable political and economic environment makes it an attractive jurisdiction, with the added benefit of an attractive tax system for companies and individuals. These factors, combined with the country’s high emphasis on personal privacy and confidentiality, attract families and businesses from all over the world.

 Provide a favorable tax environment for companies and foreign investors

Switzerland has long been a popular location for international trading companies. Due to its friendly business environment, it has been home to all types of companies, from the headquarters of multinational corporations to small offices with only one employee.

Switzerland’s attractiveness for foreign investors will increase further in December 2020 with the implementation of Swiss tax reforms approved by Swiss voters. Actively operating companies will be taxed between 14% and 9%, which can be reduced to 14% through the application of means such as patent boxes.

Holding companies benefit from a “participation value deduction” when certain conditions are met. This means they do not have to pay corporate tax on dividends and capital gains from their shareholdings.

Dividend distributions by subsidiaries to shareholders located in EU jurisdictions or Switzerland are not taxed. If the shareholder is not in the EU or Switzerland, but in a country that has a tax treaty with Switzerland, the withholding tax is generally between 0% and 5%.

 Bank advantage

Switzerland is the premier financial destination for international investment and private asset protection. It also offers one of the strongest and most commercial banking centers in the world.

It has a long history and expertise in handling international currencies and opening capital markets. Many banks have dedicated service desks for specific jurisdictions that offer specific services to customers.

The main benefits of having a Swiss bank account are lower financial risk and a high degree of privacy

There are a wide variety of large domestic and foreign banks with experience in opening accounts in different industries; trade, commodity, commercial and private.

Switzerland is known for its private banking, an exclusive niche for high net worth individuals, offering sophisticated personal financial services and products to exclusive clients.

Different types of Swiss company structures

Like many countries, Switzerland offers several different corporate structures, including public limited companies (SA/AG), limited liability companies (Sarl/GmbH), and branches of foreign companies. Less common compared to other jurisdictions are Swiss “associations”: 

Association (Verein)

A Swiss association is a legal entity that can engage in commercial activities. The formation is simple and requires no share capital. Members are not responsible for the debts or actions of other members. The identities of the members and directors are not public. It is an ideal structure for business organizations consisting of multiple independent offices. This type of structure is often used by multinational professional companies, enabling them to operate globally under one branch, while maintaining separate profit pools and segregating liabilities in each country in which they operate.

Trusts and private trust companies as asset protection vehicles 

Widely used in Anglo-Saxon countries, trusts are flexible and can be an effective asset protection tool in the right circumstances. It provides anonymity to the family and confidentiality of the assets and/or companies held within it. Trusts can be a useful aid in succession planning and can assist with long-term succession matters.

A Private Trust Company (PTC) is a corporate entity authorized to act as a trustee. Clients and their families can actively participate in the asset management and decision-making process, as well as serve on PTC’s board of directors.

Switzerland recognized trusts by ratifying the Hague Convention on the Application of the Law of Trusts (1985) on 1 January 2007. Although Switzerland has no domestic law governing trusts, trusts from other jurisdictions and their specific rules are recognized and can be administered in Switzerland.

In Switzerland, the settlor (the individual who places assets into the trust for the benefit of the beneficiaries) can choose the law of any designated trust jurisdiction to administer the trust. For example, a Guernsey trust can be established with a Swiss trustee.

The tax benefits available for using a trust with a Swiss trustee mainly depend on the tax residency of the settlor and beneficiaries. Professional advice should be sought.

Dixcart Switzerland is a member of the Swiss Association of Trust Companies (SATC) and registered with the Swiss Association of Romande des Intermediaries Financiers (ARIF).

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By Daniel Lincoln

Daniel Lincoln is the founding member and Manager of Multiple Websites for First SEO Paper, also the owner of high-level quality sites focusing on General Categories only.

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