Hi all,

First post here, although I have lurked for a while, gathering a lot of useful information.

I'd like some generic advise on the following:

1: I am an EU national living in the Far East for the last decade. I have two offshore companies, that my wife and I are sole directors of.

2: Looking at coming to Switzerland to reside on the non-working option, which requires a minimum annual income of CHF60K.

3: For income tax purposes (we're looking at Valais), am I correct that we would pay income tax on our director salaries and not on the offshore companies turnover?

4: For example, if we have an income of CHF100K from our companies, that is what we would pay tax on, regardless of the gross earnings of the companies?

Thanks in advance for any replies.

If you come to Switzerland and you are mega rich; you would want to avoid Capital tax and Income Tax.

One should put the shares of your companies and assets into a "Foundation". n Dividends of companies then stay in foundation.

You can then pay whatever you like as a pension or investment income or salary (whatever the terms the Swiss want to hear).

Don't think of Switzerland as a Tax Haven; its Tax is not that low (bit of a myth) and it will be under more and more pressure (Especially the EC) to disclose and Switzerland in my opinion has already started going against its secretive word (UBS is a fine example of what is happening to the Americans).

Thanks Cashboy...

The Dividend route or Lump Sum Taxation look like the most attractive options. I am also aware I need to seek first hand professional advise before coming over...

cheers...

The salary or benefits received from the foundation are taxable. On top of that by not disclosing that you are the beneficiary or a foundation, you create a tax evasion. I don't really see where the tax planning lies in that structure...

Lump sum may be the best option for you, but you will be taxed on more than CHF 60'000 income (in Valais, at least CHF 300'000). Anyway, lump-sum taxation is permitted only if you don't have a gainful activity in Switzerland. If you manage your offshore company while in Switzerland, it is considered as a gainful activity in Switzerland, which goes against the lump-sum taxation.

Managing your offshore company from Switzerland implies a taxation of the offshore company directly in Switzerland due to effective place of management in Switzerland. If you can arrange effective management abroad, the company won't be taxable in CH and you will be taxed only on the income you receive from the company (dividend - partially taxed - or directors' fee).

Depending what your company does and canton of relocations, there might be possibilities to minimize taxation at an acceptable level while being 100% compliant with tax laws.

Thanks for that...


It would be possible to have management entirely offshore, and limit our incomes to dividends. For Valais at least, the implication of going down an "income/tax return" route is favorable to the Lump Sum option.


Thanks again, very much appreciated.

For advice on such a complex issue as this you should consult the professionals!

As an accountant, I will make one observation - there is no such thing as a generic off shore company. It depends entirely on the tax treaties and norms between Switzerland and the country where the company has been established and of course your own status in Switzerland. What may have worked well for you while located in one country, may be wholly unsuitable in another!

You should also be aware that there are special rules for the valuation of shares in a private company for capital tax purposes and depending on the structure of the company and it's assets this could be very high!!!! I have in the past come across companies being value as high as CHF 1.6M on the basis of incomes under 100K

Good luck with that,

Jim

Good luck indeed.... I'm sure we'll work it out, but with the help of a suitable pro...


Thnks..

Since you say you will not be working CH, consider the Pauschal lump sum tax. Tax is based on your cost of living in CH. Worldwide income outside of CH is not taxed. Big help for persons who are double or triple taxed by other countries. Tax returns are submitted to verify compliance. CH based expert individual help is required. Extensive information can be found on internet via Google, e.g. an Ernst and Young publication, all via direct access without hiring E&Y or others before you commit to CH tax.