Business Operations in Switzerland (Portfolio 7380)

Tax Management Portfolio Business Operations in Switzerland, No. 7380, contains general information and tax rules that will enable a business to determine the best method of conducting its operations in Switzerland from both a tax and legal perspective. To view this Portfolio, visit Bloomberg Tax for a free trial.

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Tax Management Portfolio Business Operations in Switzerland, No. 7380, contains general information and tax rules that will enable a business to determine the best method of conducting its operations in Switzerland from both a tax and legal perspective. The Portfolio analyzes the forms of doing business in Switzerland, and provides a detailed analysis of the tax rules applicable to corporations, individuals, partnerships, and other legal entities. In addition to a description of the income tax system, the Portfolio discusses capital and net wealth taxes, estate and inheritance taxes, stamp taxes, retail sales taxes, and real estate taxes.

The Worksheets in the Portfolio include standardized articles of incorporation for a Swiss corporation. They also include combined federal, cantonal and municipal rate tables for both corporate and individual income taxes, as well as combined cantonal and municipal rate tables for individual income taxes. The Worksheets further include important information relating to the Swiss tax treaty network as well as the wording of the tax treaties between Switzerland and the United States.

This Portfolio may by cited as Reinarz, Bader, Lehmann and Schreiber, 7380 T.M., Business Operations in Switzerland.


Peter Reinarz, Esq.

Peter Reinarz, University of Zurich (lic. iur., 1982); admitted to the Zurich bar (1987); Certified Swiss Tax Expert (1992); member of Zurich Bar Association (ZAV), Swiss Chamber of Chartered Accountants and Tax Experts, International Bar Association, Committee N (Taxes), International Fiscal Association (IFA), Swiss-American Chamber of Commerce, SwissCham Southern Africa.

Daniel Bader, Esq.

Daniel Bader, University of Zurich (lic. oec., 2003); Certified Swiss Tax Expert (2008); Secretary of the International Fiscal Association Swiss Branch (IFA Switzerland).

Daniel U. Lehmann, Esq.

Daniel U. Lehmann, University of St. Gallen (lic. iur., 1984); Certified Swiss Tax Expert (1992); University of St. Gallen (Dr. iur ., 1995); member of Swiss Chamber of Public Accountants and Tax Experts, Union Internationale des Avocats (UIA), Tax Law Commission, International Fiscal Association (IFA), Asociación Hispano-Alemano de Juristas.

Susanne Schreiber, Esq.

Susanne Schreiber, University of Munich (Germany) (ass. iur., 1998); attorney-at-law (Germany, 2001); German Tax Advisor (2006); Certified Swiss Tax Expert (2010); member of Swiss Chamber of Public Accountants and Tax Experts, International Fiscal Association (IFA), tax chapter of the Swiss-American Chamber of Commerce, Swiss Tax Expert examination board.

Table of Contents

Detailed Analysis
I. Switzerland — The Country, Its People, and Economy
A. Geography, Climate and Population
B. Languages
C. Short History
D. Political System
E. Memberships
F. Switzerland and the European Union
G. Economy
1. In General
2. Switzerland's Resources
3. Foreign Inbound Direct Investment in Switzerland
4. Swiss Outbound Direct Investment in Foreign Countries
5. Foreign Trade
II. Operating a Business in Switzerland
A. Key Considerations for Foreign Investors Establishing a Business in Switzerland
B. Useful Addresses in Switzerland
C. Foreign Investment Regulations
1. Foreign Investment Policy
2. Incentives and Tax Privileges
3. Few Restrictions on Foreign Inbound Investments
D. Trade and Commerce Regulations
1. Imports
2. Customs Duties
a. Regular Rates
b. Preferred Rates
c. Customs Clearance — Documentation
d. Storage Facilities — Bonded Warehouses
3. General Regulation of Business
a. Unfair Competition
b. Monopolies and Antitrust
c. Price Control
d. Merger Control
e. Disclosure of Substantial Shareholdings
f. Tender Offers
4. Licensing and Franchising
a. Patents
b. Patent Licenses
c. Trade Names
d. Trademarks
e. Franchises
f. Trade Secrets and Know-How
g. Copyright and Neighboring Rights
E. Labor Relations and Work Permits
1. Availability of Labor
2. Unions
3. Work Permits
a. In General
b. European Union/European Free Trade Association Nationals
(1) Free Movement of Persons from European Union/European Free Trade Association Member States
(2) Categories of Permits
(a) Short-Term Residence Without Residence Permit but with the Obligation to Register
(b) Short-Term Residence Permits (“120-Day Permits”)
(c) European Union Short-Term Residence Permits (“EU L Permits”)
(d) European Union Residence Permits (“EU B Permits”)
(e) European Union Cross-Border Commuter Permits
(f) Settlement Permits (“C Permits”)
(3) Application Procedure
c. Third Country Nationals
(1) Categories of Permit
(a) Short-Term Residence Permits (“120-Day Permits”)
(b) Short-Term Residence Permits (“L-Permits”)
(c) Year-Round Residence Permits (“B-Permits”)
(d) Cross-Border Commuter Permits (“G-Permits”)
(e) Settlement Permits (“C-Permits”)
(2) Application Procedure
F. Banking and Finance
1. In General
2. Financial Markets
a. Securities Market
b. Conditions for a Swiss Stock Exchange Membership
c. Listing Requirements
d. Capital Market
e. Single European Currency — Euro
f. Money Market
g. Insider Trading
h. Stock Price Manipulation
i. Disclosure of Shareholdings
3. Swiss Banking Secrecy
a. Scope of Swiss Bank Secrecy
b. Disclosure of Customer's Identity
c. Money Laundering
d. Swiss Bank Secrecy and Foreign Disclosure Requests
G. Real Property Laws
1. Real Property Register
2. Mortgage Loans
3. Limitations on Foreigners Acquiring Swiss Real Property
III. Forms of Doing Business
A. Principal Business Entities
1. Statutory Restrictions
2. Incorporated Entities
a. Stock Corporation (Aktiengesellschaft)
b. Limited Liability Company (Gesellschaft mit beschränkter Haftung)
3. Unincorporated Entities
a. (Simple) Partnership (Einfache Gesellschaft)
b. General Partnership (Kollektivgesellschaft)
c. Limited Partnership (Kommanditgesellschaft)
4. Other Business Organizations
B. Stock Corporation (Aktiengesellschaft)
1. Formation
a. Corporate Name
b. Purpose Clause
c. Share Capital
d. Shares
e. Participation Certificates
f. Profit Sharing Certificates
g. Incorporation Procedure
h. Costs of Incorporation
2. Operation
a. License
b. Shareholders’ Meetings
c. Board of Directors
d. Statutory Auditors
e. Books and Records
f. Regular Increases in Share Capital
g. Increases in Authorized Share Capital
h. Conditional Increases in Share Capital
i. Reduction of Share Capital
3. Dissolution and Liquidation
4. Dissolution by Merger
a. Statutory Merger
b. Exchange of Shares
C. Limited Liability Company (Gesellschaft mit beschränkter Haftung)
1. Introduction
2. Formation
a. Purpose Clause
b. Company's Share Capital
c. Shares
d. Incorporation Procedure
e. Appointment of Auditors
f. Company Name
g. Organizational Bylaws
h. License to do Business
i. Costs of Incorporation
3. Organization
a. Members’ Meeting and Resolutions
b. Management and Supervision
c. Books and Records
d. Increase or Reduction of a Limited Liability Company's Share Capital
4. Withdrawal
5. Dissolution and Liquidation
D. Agency and Distributorship
1. Penetrating the Swiss Market
2. Agency
3. Distributorship
E. Branches of Foreign Entities
1. General Remarks
2. Registration of a Swiss Branch
3. Jurisdiction
IV. Accounting and Auditing
A. Overview
B. Accounting
1. Accounting Rules and Principles
2. Form and Content of Statutory Financial Statements
a. General Remarks
b. Statutory Profit and Loss Statement
c. Statutory Balance Sheet
d. Appendix
e. Additional Requirements for Larger Undertakings
3. Statutory Asset Valuation Principles
4. Provisions and Reserves
a. Contingency Provisions
b. Reserves
c. Hidden Reserves and Inflation Accounting
5. Recognized Financial Reporting Standards
a. Duty to Apply Recognized Financial Reporting Standards
b. Choice and Application of a Recognized Financial Reporting Standard
6. Consolidated Financial Statements
a. In General
b. Duty to Prepare Consolidated Financial Statements
c. Accounting and Consolidation Principles
7. Publication of Financial Statements
C. Auditing
1. Audits
2. Reviews
3. Professional Requirements for Auditors
4. Liability of Auditors
V. Overview of Tax System
A. Revenues from Direct and Indirect Taxes
B. Legal System
1. Constitutional Basis
2. Principal Tax Statutes
a. Federal and Cantonal Laws on Direct Taxes
(1) Income Taxes
(a) In General
(b) Corporate Tax Reform III — Rejected by Referendum
(i) Background and Objective of the Corporate Tax Reform III
(ii) Summary of Rejected Reform Package
(c) Tax Proposal 17: Public Consultation Initiated
(2) Net Worth and Capital Taxes
b. Federal Act on Tax Harmonization
c. Federal Withholding Tax Act
(1) In General
(2) Dividends
(3) Interest
(4) Royalties
(5) Distributions Made by Swiss Collective Investment Vehicles (Investment Funds)
d. Federal Stamp Duties
(1) Issuance Stamp Duty
(2) Turnover Stamp Duty
e. Value Added Tax
3. Ordinances and Circular Letters
4. Tax Rulings
5. Case Law
C. Tax Administration
1. Tax Authorities and the Collection of Tax
2. Direct Taxes on Income and Net Worth or Capital
a. Tax Returns
b. Tax Assessment
c. Administrative Appeals Procedure
d. First-Level Judicial Appeal
e. Second-Level Judicial Appeal
f. Public Law Appeal to the Federal Supreme Court
3. Federal Withholding Taxes
4. Value Added Tax
a. Assessment and Filing Requirements
b. Appeal Procedures
5. Tax Audits
D. Basic Elements of the Income Tax System
1. Time Periods Relevant for Income Taxation
a. Base Period
b. Tax Period
c. Assessment Period
2. Postnumerando System
3. Basic Principles of Swiss Income Taxation
a. Economic Performance Principle (Leistungsfaehigkeitsprinzip)
b. Worldwide Income Taxation — Sources of Income
c. Taxation of Capital Gains
d. Shareholders and Corporations — The “Classical” System
e. Intercompany Transactions — Dealing at Arm's Length
f. No Filing of Separate Tax Accounts
g. The Relevant Commercial Form Principle (Massgeblichkeitsprinzip)
h. Imparity Principle (Imparitaetsprinzip)
4. Tax Avoidance, Penalties and Professional Secrecy
a. Tax Avoidance
b. Penalties
(1) Late Filing
(2) Tax Evasion
(3) Tax Fraud
c. Protection of Professional Secrecy
VI. Taxation of Resident Corporations
A. Definition of Resident Corporations for Tax Purposes
B. Tax Base
C. Calculation of Gross Income
1. Inventory Valuation
2. Capital Gains
3. Interest
4. Intercompany Interest Income
5. Dividends
a. In General
b. Participation Deduction
c. Calculation of Participation Deduction
6. Royalties and Service Fees
7. Foreign Exchange Gains and Losses
8. Nontaxable Items
9. Transactions Having No Impact on Taxable Income
D. Business Expenses
1. In General
2. Tax Write-Off of Inventories
3. Depreciation
4. Provisions
5. Investment Credit Allowances
6. Interest Expense
a. Debt-to-Equity Requirements
b. Intercompany Interest Charges
7. Intercompany Management and Service Fees
8. Royalties
9. Rents and Leasing Expenses
10. Charitable Contributions
11. Incorporation Expenses
12. Social Insurance Contributions
13. Taxes
14. Nondeductible Items
a. In General
b. Hidden Profit Distributions
c. Payment of Bribes
d. Financial Sanctions with Penal Character
15. Losses
E. Computation of Corporate Income Tax
F. Computation of Capital Tax
VII. Taxation of Nonresident Corporations
A. Definition of a Nonresident Corporation
B. Federal Withholding Taxes — Refund System
C. Federal Withholding Tax — Notification System for Intercompany Dividends
D. Special Liabilities of Foreign Corporations to Federal and Cantonal Income Taxes — An Overview
1. Income Derived from Swiss Partnerships
2. Income Derived from Swiss Real Property Operations
3. Income from Swiss Mortgage Loans
4. Foreign Dealer in Swiss Real Property
5. Income Derived from a Swiss Permanent Establishment
a. Treaty Taxation Principle
b. Definition of a Permanent Establishment
(1) In General — National Law Definition
(2) Tax Treaties
c. Principles of International Taxation as Regards Permanent Establishments
d. Income Attribution Methods
(1) In General
(2) The Direct Method
(3) Unitary Method
(4) Swiss Tax Treatment of Foreign Head Office Losses
e. Expense Allocation Method
f. Determination of Capital Subject to Tax
g. Tax Rulings
h. Tax Rates
i. Branch vs. Subsidiary in an International Context
VIII. Taxation of Acquisitions, Reorganizations and Liquidations
A. Acquisitions
1. “Quasi-Merger,” Share-for-Share Exchange
2. Acquiring the Assets of a Swiss Target
3. Acquiring the Shares of a Swiss Target
a. Domestic Sellers
b. Foreign Sellers
B. Reorganizations
1. Converting an Operating Company into a Holding Company
2. Insertion of a Swiss Holding Company
a. Domestic Issues
b. International Issues
3. Mergers
a. Regular Mergers
b. Parent-Subsidiary Mergers
4. Spin-Offs and Split-Offs (Demerger)
a. Demerger to a Swiss Sister Company
b. Transfer to a Controlled Swiss Subsidiary
c. Transfers Among Swiss Consolidated Group Companies
5. Transformation
a. Transformation of a Sole Proprietor Business or a Partnership into a Legal Entity
b. Transformation of a Legal Entity Into Another Legal Entity
C. Liquidation of a Swiss Company
1. Income Tax
2. Liquidation Tax
3. Withholding Tax
IX. Special Corporate Tax Regimes
A. In General
B. Privileged Cantonal Tax Regimes
1. Holding Company
2. Domiciliary Companies
3. Mixed Companies
4. Tax Holidays for Newly Established Enterprises
C. Special Regimes at the Federal Level
1. Participation Deduction
2. Finance Branches
3. Principal Companies
X. Taxation of Foreign Operations
A. In General
B. Exemption with Progression Method
C. Foreign Tax Credit
D. Foreign Tax Deduction
XI. Taxation of Partnerships and Joint Ventures
A. Swiss Partnerships — Resident Partners
B. Swiss Partnerships — Nonresident Partners
C. Foreign Partnerships — Swiss and Foreign Resident Partners
D. Swiss Joint Ventures Involving Resident and Nonresident Partners
XII. Taxation of Resident Individuals
A. Overview of Direct Taxes Affecting Resident Individuals
1. Income Taxes
2. Taxation of Capital Gains
3. Federal Withholding Taxes (On Passive Income)
4. Relief from Foreign Withholding Taxes on Dividends, Interest and Royalties
5. Wage Withholding Taxes
6. Other Taxes
B. Tax Residence of Individuals
1. Provisions of Swiss National Tax Laws
2. Tax Treaty Law
C. Income Taxes
1. Income
a. Business Income of Self-Employed Individuals
b. Employment Compensation
(1) Salaries
(2) Lump-Sum Expense Allowances
(3) Cost-of-Living Allowances
(4) Housing and Schooling Allowances
(5) Company Pension Plan Contributions (“Second Pillar”)
(6) Use of Company Car
(7) Tax-Equalization Payments
(8) Severance Pay
c. Employees’ Stock Purchase and Stock Option Plans
(1) General Remark
(2) Stock Purchase Plans
(3) Stock Option Plans
d. Other Relevant Income Items
(1) Income from Ancillary Activities
(2) Capital Gains on Movable Nonbusiness Property
(3) Capital Gains on Immovable Property
(4) Income from Portfolio Investments Including Foreign Currency Gains
(5) Rental Income
(6) Deemed Rental Value (Eigenmietwert)
(7) Alimony and Support Payments
(8) Social Security, Pension Plan, and Insurance
(9) Other Income
2. Deductions
a. General Principle
b. Business-Related and Professional Deductions
c. Special Deductions for Expatriates
d. Special Deduction for Double-Income Spouse and Registered Partners
e. Interest on Debt
f. Alimony and Support Payments
g. Social Security Contributions (AHV/IV/EO/ALV) (First Pillar)
h. Pension Scheme Contributions (Second Pillar)
i. Contributions to Pillar 3a
j. Insurance Premiums
k. Costs Charged by Custodians
l. Noncreditable Foreign Withholding Taxes
m. Contributions to Political Parties
n. Contributions to Legal Entities of Public Interest
o. “Social” Deductions
p. Nondeductible Items
3. Tax Computation and Tax Rates
a. Three-Tier Taxation
b. Federal Income Tax
c. Cantonal and Municipal Income Taxes (Taking the Canton and City of Zurich as an Example)
(1) Base Amount (Determined in Accordance with Progressive Rates)
(2) “Factor” or “Multiplier”
(a) Cantonal Multiplier
(b) Communal Multiplier
(c) Calculation
d. Examples from Other Cantons
D. Net Wealth Taxes
1. Federal Level
2. Cantonal Level
3. Assets Included
a. Bank Accounts
b. Securities
c. Household and Personal Effects
d. Life Insurance
e. Real Property
f. Real Property Situated Outside the Taxpayer's Canton of Residence
4. Personal Debts
5. Calculation
E. Withholding Taxes Affecting Passive Income
1. Income from Domestic Sources
2. Income from Foreign Sources
F. Social Security and Pension Arrangements
1. General Overview
a. First Pillar
b. Second Pillar
c. Third Pillar
2. The First Pillar — Old Age, Survivors and Disability Plan
a. Contributions
b. Lump-Sum Payments
c. Periodic Pension Benefits
(1) Federal Income Tax
(2) Cantonal Income Tax (Taking Zurich as an Example)
3. The Second Pillar — Company Pension Plans
a. Contributions
b. Lump-Sum Benefits (“Capital Payments”)
(1) Federal Income Tax
(2) Cantonal Income Taxes (Taking Zurich as an Example)
c. Periodic Pension Benefits
4. The Pillar 3a: Individual Pension Plans
a. Scope
b. Contributions
c. Lump-Sum Benefits (“Capital Payments”)
d. Periodically Paid Benefits
G. Taxation of Life Insurance (Pillar 3b)
1. Scope
2. Deductibility of Premium
3. Taxation of Benefits
a. Capital Insurance
(1) Redeemable Capital Life Insurance (Rückkaufsfähige Kapitalversicherungen)
(2) Non-Redeemable Capital Insurance (Risk Life Insurance)
b. Annuity Insurance
H. Special Income Tax Regime for the Taxation of Resident Aliens
1. General Remarks and Preconditions
2. Income Tax Computation
a. Computation Based on Cost-of-Living Expenses
b. Alternative Computation Based on Certain Categories of Income
XIII. Taxation of Nonresident Individuals
A. Nonresidents
B. Categories of Income Taxable in the Hands of Nonresidents
1. Taxation of Active Income
a. Swiss Payroll
b. Participation in Active Swiss Businesses
c. Ownership of Swiss Real Property
d. Trading in Swiss Real Property
e. Permanent Establishment
f. Cross-Border Employees
g. Directors’ Fees
h. Performing Artists, Athletes, and Speakers
i. Employees of Swiss Carriers
2. Taxation of Investment Income
a. Dividends and Interest Payments
b. Mortgage Interest
c. Retirees Deriving Benefits from Swiss-Based Pension Plans
(1) Lump-Sum Payments
(a) Federal Tax
(b) Cantonal Tax
(c) International Double Taxation
(2) Annuities
(3) Beneficiaries of Swiss Life Insurance Plans
XIV. Taxation of Estates, Gifts, Foundations, and Trusts
A. Inheritance Taxes and Estate Taxes
B. Inheritance Tax System
C. Gift Taxes
D. Resident Family Foundations
E. Taxation of Trusts
1. Introduction
2. Civil Law Considerations
3. Civil Law Recognition of a Trust Settled by a Resident Alien Settlor
a. Revocable Trusts
b. Irrevocable Trusts
4. Limitations on Setting Up a Trust in Switzerland
a. Applicable Law
b. Public Policy Issues
(1) Forced Heirship
(2) Infringement of Creditors’ Rights
(3) Rule Against Perpetuities
5. Tax Considerations
a. General Principles
b. Taxation of Resident Beneficiaries
c. Resident vs. Nonresident Settlors and Beneficiaries
d. Withholding Tax
e. Tax Treaties
XV. Indirect Taxes
A. Federal Stamp Duties
1. Introduction
2. Issuance Stamp Duty
a. Taxable Transactions and Rates
b. Tax Liability
3. Securities Turnover Stamp Duty
a. Important Features
b. Taxable Transactions
(1) Securities Dealers
(2) Exempt Persons
(3) Taxable Securities
(4) Exempt Transactions
(5) Basis of Turnover Stamp Duty
(6) Tax Rates
(7) Primary and Secondary Market Transactions
4. Stamp Duty on Insurance Premiums
B. Federal Value Added Tax
1. Guiding Principles
2. Territoriality
a. In General
b. Place of Supply of Goods
c. Place of Supply of Services
3. How the Value Added Tax System Works
4. Output Tax Rates
5. Persons Subject to Value Added Tax
a. Enterprises Carrying on Independent Activity
b. Consolidated Value Added Tax Returns (Group Taxation)
c. Autonomous Divisions of Public Authorities
d. Import of Services
6. Persons Exempt from Value Added Tax
7. Transactions Subject to Value Added Tax
a. Imports of Goods and Services
(1) Imports of Goods
(2) Services Supplied by Nonresidents
(3) Triangular Transactions Involving European Union Suppliers
b. Domestic Transactions
(1) General
(2) Supplies of Goods
(3) Domestic Supply of Services
(4) Corporate Reorganizations
8. Transactions Not Subject to Value Added Tax
a. Unremunerated Transactions
b. Exempted Transactions (Without Credit)
c. Option for Voluntary Inclusion of Exempted Transactions
d. Zero-Rated Transactions (with Credit)
e. Export Documentation
9. Input Tax Credits
a. General
b. Deduction of Input Tax
c. Mixed Use
d. Self-Supplies
e. Predetermined Input Tax Credit Rates (Net Tax Rate Method)
f. Subsequent Right to Deduction of Input Tax
10. Accounting
11. Value Added Tax Refunds for Foreign Businesses
C. Cantonal Real Property Transfer Taxes
1. Real Property Taxes
2. Real Estate Transfer Taxes (RETT)
3. Cantonal Real Estate Gains Taxes (REGT)
XVI. Avoidance of International Double Taxation
A. Swiss Tax Treaty Policy
1. Avoidance of Double Taxation
2. Intercantonal Taxation Principles
3. Withholding Tax Exemption Applicable with Respect to European Union Member States
4. OECD Model Convention
5. Types of Tax Treaties
B. Income Tax Treaties
1. Scope of Switzerland's Treaties
2. Taxes Covered
3. Persons Entitled to Treaty Protection
a. Individuals
b. Corporations
c. Partnerships
d. Investment Funds
4. Taxation of Business Income
a. General Principle
b. Permanent Establishments Located in Switzerland
c. Foreign Permanent Establishments of Swiss Companies
d. Transfer Pricing
(1) Arm's-Length Principle
(2) Initial Adjustments
(3) Correlative and Secondary Adjustments
5. Taxation of Swiss-Source Investment Income
a. Investment Income Defined
b. Taxation Principles
c. Dividends
d. Interest
(1) Interest on Swiss “Bonds”
(2) Interest on Swiss Bank Deposits
(3) Relief from Swiss Withholding Tax
(4) Impact of EU Savings Tax Treaty
e. Royalties
f. Capital Gains
6. Personal Services
a. Income from a Profession
b. Athletes and Performing Artists
c. Employment Remuneration
d. Director's Fees
e. Pensions
7. Other Income Items
8. Methods of Avoiding Double Taxation
9. Anti-Abuse Provisions
a. Introduction
b. The 1962 Abuse Decree
c. The 1999 Abuse Circular
(1) Active Company Exemption
(2) Public Company Exemption
(3) Holding Company Exemption
d. The 2010 Circular Letter
e. Treaty Clauses/Non-Applicability
f. EU Savings Tax Agreement
10. Exchange of Information in Tax Matters
11. Mutual Agreement Procedure
a. General Remarks
b. Request by Taxpayer
c. Preliminary Examination of a Taxpayer's Request
d. Mutual Agreement Procedure
e. Request by Competent Authorities
f. Advance Pricing Agreements
g. Arbitration Procedure
XVII. European Union Taxation
A. Switzerland's Bilateral Approach
1. Taxation Issues in General
2. Non-Application of EU Directives
B. EU Code of Conduct
C. EU-Switzerland Savings Tax Agreement
D. EU Cooperation Agreement to Combat Fraud
E. Tax Decisions of the European Court of Justice
1. Role of the European Court of Justice
2. Swiss Views
XVIII. Tax Treaties with the United States
A. Income Tax Treaty
1. Sources of Law
2. Selected Provisions
a. Personal Scope
b. Business Profits
c. Dividends, Interest and Royalties
(1) Reduction of Source Country Withholding Taxes
(2) U.S. Source Income — Qualified Intermediary System and Additional Swiss Withholding
(3) Swiss Payments to United States Beneficiaries
(4) Interest
(5) Dividends
d. Capital Gains
(1) In General
(2) Alienation of Immovable Property
(3) Property Attributable to a Permanent Establishment (PE)
(4) Sale of Ships and Aircraft
(5) Other Capital Gains
(6) Transfer Due to Restructuring
e. Limitation on Benefits
(1) In General
(2) The 1962 Abuse Decree
(3) Categories of Eligible Persons
(4) Predominant Interest Test
(5) Headquarters Company Test
(6) Public Company Test (Stock Exchange Test)
(7) Swiss Family Foundations
(8) Activity Test
(9) Derivative Benefits Test
(10) Triangular Cases
(a) Guiding Principles
(b) Exceptions
(11) Pension and Retirement Funds
f. Relief from Double Taxation
(1) General Principles
(2) United States Tax Credit Method
(3) United States Citizens Residing in Switzerland
(4) Swiss Relief Methods
g. Exchange of Information
(1) 2009 Protocol
(2) 1996 Income Tax Treaty
(3) FATCA Intergovernmental Agreement
B. Estate and Inheritance Tax Treaty
C. Social Security Treaty

Working Papers

Table of Worksheets
Worksheet 1 Prototype Articles of Incorporation for Swiss Corporations (AG)
Worksheet 2 Corporate Income Tax Return 2016 for Resident Corporations (Taking the Canton of Zurich as an Example)
Worksheet 3 Corporate Income Taxes — Effective Rates for Federal, Cantonal,* and Municipal Taxes (Combined)
Worksheet 4 Individual Income Tax Return 2016 for Swiss Residents (Taking the Canton of Zurich as an Example)
Worksheet 5 Individual Income Taxes — Federal, Cantonal and Municipal Taxes Combined
Worksheet 6 Swiss Forms 1222 and 1223 — Request for VAT Refund
Worksheet 7 List of Countries with Which Switzerland Has In Force Income Tax Treaties and Other Tax-Related Agreements as of March 31, 2018
Worksheet 8 Swiss Forms 82 C, E, I, R (filed by U.S. Residents)
Worksheet 9 Swiss Form 823 (filed by U.S. Companies)
Worksheet 10 1996 Switzerland-United States Income Tax Treaty
Worksheet 11 1951 Switzerland-United States Estate and Inheritance Tax Treaty
Worksheet 12 2003 Switzerland-United States Mutual Agreement Regarding the Administration of Article 26 (Exchange of Information) of the Swiss-U.S. Income Tax Convention of October 2, 1996
Worksheet 13 Protocol to the 1996 Switzerland-United States Income Tax Treaty, Signed September 23, 2009 [Not Yet in Force] and Exchange of Notes
Worksheet 14 Agreement Between Switzerland and the United States of America for Cooperation to Facilitate the Implementation of FATCA
Worksheet 15 Swiss Form 102 — Reporting of extraordinary dividends and liquidation surplus
Worksheet 16 Swiss Form 103 — Reporting of ordinary dividends by joint stock corporations (AGs)
Worksheet 17 Swiss Form 106 — Notification of dividend paid to Swiss parent company owning at least 20% of the dividend paying company's stock
Worksheet 18 Swiss Form 108 — Notification of dividend paid to qualifying foreign parent company under a tax treaty
Worksheet 19 Swiss Form 110 — Reporting of ordinary dividends by limited liability companies (GmbH)
Worksheet 20 Swiss Form 823B (English and German versions) — Basic request to apply notification in lieu of withholding payment for dividends to non-U.S. parent companies, pursuant to a Swiss bilateral tax treaty
Worksheet 21 Swiss Form 823C (English and German versions) — Basic request to apply notification in lieu of withholding payment for dividends to EU resident parent companies, pursuant to art. 15 (1) of the EU-Switzerland Savings Tax Treaty