Taxation requirements:

1. Corporate Income Tax – Federal Level:

The Swiss federal government levies corporate income tax at a flat rate of 8.5% on profit after tax of corporations and cooperatives. For associations, foundations, and other legal entities as well as investment trusts, a flat rate of 4.25% applies. At the federal level, no capital tax is levied.

1. Taxable Persons:

Taxable persons include Swiss resident legal entities, i.e., Swiss corporations, limited liability companies and corporations with unlimited partners, cooperatives, foundations and investment trusts with direct ownership of immovable property. As partnerships are transparent for tax purposes, the partners are taxed individually. Companies which have their registered office or place of effective management in Switzerland are considered resident.

1. Taxable Income:

Resident companies are subject to corporate income tax on their worldwide income with the exception of income attributable to foreign permanent establishments or foreign real estate (immovable property). Such income is excluded from the Swiss tax base and is only taken into account for rate progression purposes in cantons that still apply progressive tax rates[1].

Taxation details for different legal forms can be found here:

• Single-owner company or sole proprietorship (Einzelunternehmen/L’entreprise individuelle)
• General partnership (Kollektivgesellschaft/Société en nom collectif)
• Limited partnership (Kommanditgesellschaft/Société en commandite)
• Corporation/Joint-stock company (Aktiengesellschaft/Société Anonyme) (AG/SA)
• Limited liability company (Gesellschaft mit beschränkter Haftung/Société à responsabilité limitée) (GmbH/Sàrl)
• Foundations (Stiftung/fondation)

Typically, companies are required to pay tax to 3 tax authorities, which include the federal government, the canton, and the municipality. The taxable elements, types of tax and the corresponding responsible tax authority can be found in the Guide to starting a business in the canton of Geneva 2015 edition

Value Added Tax (VAT):

All business enterprises – irrespective of their legal form – are subject to VAT. However, business enterprises which lie under a turnover of CHF 75,000 per year will be exempt from the duty to pay VAT[2].

Businesses are required to register for VAT by the end of the calendar year during which revenue reaches the threshold amount. The company is responsible for registering for VAT as soon as it meets the conditions for mandatory registration.

• The following information is required to file VAT:
• Information on the company such as extract from the commercial register and UID number
• For legal forms such as sole proprietorship, association or foundation you need the social security number. These can be found on your insurance card AHV / IV or your health insurance card.
• Sales forecast for the first financial year or for companies already active Balance sheet and income statement for the last six years at most
• Foreign companies: To complete the statement of authority you need the data of your tax representative.

Information on services and technical information related to VAT can be found on the federcal council website for tax. Current VAT rates can be found on the federal tax administration website. The online form for filing VAT can be found on the federal tax administration website. All other VAT related online forms can be found on the federal tax administration website . VAT is not charged on any bitcoin transactions. Comprehensive guidelines for taxation of bitcoins and other tokens in Switzerland can be found on the MME website.

Tax Relief[3]:

Tax relief can be granted at cantonal and communal level and in explicitly defined regions at federal level for qualified new investments for up to 10 years. Federal Level The federal government has defined economically weaker regional community centers and regions which are entitled to grant business incentives including partial or full corporate income tax breaks for up to 10 years. Tax breaks for investment projects that meet certain requirements are provided for. Besides the creation of new production related workplaces or investing, these also include conditions, for instance, that a competitive situation among existing companies should not arise. Cantonal and Municipal Level Most cantons offer partial or full tax breaks for cantonal/communal tax purposes for up to 10 years on a case-by-case basis. In particular, incentives may be obtained for creating a new presence or for an expansion project with particular economic relevance for the can- ton. Most importantly, however, business incentives are generally granted in connection with the creation of new jobs locally, i.e. requirement of at least 10 to 20 new jobs in most cantons.

Audit requirements[4]:

Companies must present accounts for the current and the preceding financial year to the general meeting of shareholders. Companies listed on the stock exchange or with outstanding bond issues must publish annual and consolidated accounts approved by the annual general meeting and the auditors’ report in the Swiss Commercial Gazette, or must provide such information upon request. Additionally, companies listed on the stock exchange must publish consolidated accounts based on an international accepted accounting standard (IFRS, Swiss GAAP FER, US GAAP or IPSAS) if required by the stock exchange, or if the company has a certain economic relevance. For Swiss tax purposes, only Swiss GAAP accounts are relevant. Depending on the size of the corporation and on whether it qualifies as a public company, the shareholders must elect a supervised auditing firm, an admitted audit expert or an admitted auditor. According to the Swiss commercial law, a company is subject to a full audit if it qualifies as a public company or if it meets two of the three following thresholds in two consecutive business years:

• A balance sheet total of CHF 20 million;
• Revenue of CHF 40 million; and
• 250 full-time employees.

A full audit for a public company must be conducted by an admitted Swiss audit expert, and a supervised audit firm must be elected. For nonpublic companies that meet two of the above criteria, only an admitted Swiss audit expert can be elected.

A company that is not subject to a full audit generally will be subject to a limited audit, which can be carried out by an elected admitted auditor. A company that does not have more than 10 full- time employees can opt out of a limited audit.

Shareholders may elect one or more auditors. The auditors must be independent, which means they may not be board members or employees, and at least one must be resident in Switzerland. Auditors must prepare a report for the board of directors and must be present at the annual general meeting, unless the shareholders unanimously waive their presence.

Auditor requirements for Limited Liability Company(LLCs) and Corporation (AG/SA) The company is in principle required to appoint an auditor to perform an audit, which can be either ordinary or limited. AG/SA and LLCs may also “opt out” of appointing an auditor if they meet all three of the following conditions:

• All the company members give their consent.
• The company is required only to perform a limited audit.
• The company does not have more than ten full-time employees on annual average.

Why establish your startup in Crypto Valley provides information on tax and financial benefits of starting a blockchain related company in Switzerland. Tax benefits and regulations in the particular case of Blockchain companies differ by canton.

SOURCES

[1] Information quoted from Switzerland Global Enterprise Handbook for Investors

[2] Information quoted from Swiss-company.ch

[3] Information quoted from Switzerland Global Enterprise Handbook for Investors

[4] Information quoted from Deloitte-Taxation and Investment in Switzerland 2015