Tax Considerations for a Branch Office in Switzerland
Determining tax liabilities is crucial before establishing a branch office in Switzerland. Here’s what you need to know about tax considerations:
Corporate Income Tax (CIT)
Branch offices are subject to taxes on the income they generate through local operations in Switzerland. The tax rate varies depending on the jurisdiction (canton or municipality) of the branch office. The federal corporate income tax rate in Switzerland is 8.5%. Moreover, overall taxes can vary as all the Swiss cantons have different tax rates.
The Swiss branch office is subject to a VAT rate of 8.1% if it complies with the following conditions:
- Involvement with taxable goods and services.
- Turnover surpasses the specified threshold (CHF 100,000 per year).
Note: It must be noted that the annual turnover here refers to the worldwide turnover of the foreign company of which the Swiss branch office is an extension.
There is no withholding tax on the profit transfer from the Swiss branch office to the foreign head office. This is because the branch office is considered an extension of the head office and not a separate legal entity. Thus, the profit transfer from the branch office to the head office is deemed as the internal movement of the fund.
Documents Required for Opening a Branch Office in Switzerland
- A copy of the Articles of Association of the foreign company.
- An extract of the company registration in the Company Register of the home country.
- Appointment of managing director(s); at least one authorized representative must be a Swiss resident.
- A certified signature specimen of any signatory of the branch.
- The certified copy of the minutes of the meeting, including the details of the decision to establish a branch office in Switzerland.
- Commercial register extract or notarized list of directors.
All required documentation must be notarized, apostilled, and translated into the official language of the canton. Many Commercial Registers accept English translations, though this depends on the individual’s experience.
