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Old 06.07.2007, 16:48
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Starting a Swiss firm with foreign income, what a re tax and legal implications?

Dear All

I have recently moved to Switzerland so I am not yet that firm with the Swiss system. A friend is considering following us to Switzerland as has asked me to get some information for him - I hope someone can help.

He is the co-owner of a German IT consulting business and will in future work from Switzerland with the following implications.

The majority of the consulting work he does will be for firms outside of Switzerland. Some will even be for his own company in Germany, whom he would invoice for this. He will probably move to Vaud and would work from home.

He would like to be able to have a further shareholder in his Swiss business, so that an "Einzelfirma" is not an option. He doesn't mind whether he takes a salary from the firm or gets the money out of the firm in the form of a dividend.

What would be the best way to structure this, what are the tax implications and what are the costs associated with the various options.

Thank you all for any advice you can offer.

dcribb
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Old 06.07.2007, 16:54
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Re: Starting a Swiss firm with foreign income, what a re tax and legal implications?

You can search the existing threads first. Then you can join the existing discussions that are currently raging. Then you can frame some specific questions for us that make us think you have done some of your own research...Oh it might be better if your "friend" asked the question too. Its a bit more satisfying for the respondent.

dave

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Dear All

I have recently moved to Switzerland so I am not yet that firm with the Swiss system. A friend is considering following us to Switzerland as has asked me to get some information for him - I hope someone can help.

He is the co-owner of a German IT consulting business and will in future work from Switzerland with the following implications.

The majority of the consulting work he does will be for firms outside of Switzerland. Some will even be for his own company in Germany, whom he would invoice for this. He will probably move to Vaud and would work from home.

He would like to be able to have a further shareholder in his Swiss business, so that an "Einzelfirma" is not an option. He doesn't mind whether he takes a salary from the firm or gets the money out of the firm in the form of a dividend.

What would be the best way to structure this, what are the tax implications and what are the costs associated with the various options.

Thank you all for any advice you can offer.

dcribb
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  #3  
Old 06.07.2007, 16:59
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Re: Starting a Swiss firm with foreign income, what a re tax and legal implications?

That's a whole lot of questions for one post .

Follow DaveA's advice and you will get 90% of what you or your freind needs. Come back for the other 10%.

One thing though - this will be a complex tax situation and the authorities, both in Germany and Switzerland, are going to be hearing alarm bells ringing.
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Old 06.07.2007, 17:02
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Re: Starting a Swiss firm with foreign income, what a re tax and legal implications?

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Dear All

I have recently moved to Switzerland so I am not yet that firm with the Swiss system. A friend is considering following us to Switzerland as has asked me to get some information for him - I hope someone can help.

He is the co-owner of a German IT consulting business and will in future work from Switzerland with the following implications.

The majority of the consulting work he does will be for firms outside of Switzerland. Some will even be for his own company in Germany, whom he would invoice for this. He will probably move to Vaud and would work from home.

He would like to be able to have a further shareholder in his Swiss business, so that an "Einzelfirma" is not an option. He doesn't mind whether he takes a salary from the firm or gets the money out of the firm in the form of a dividend.

What would be the best way to structure this, what are the tax implications and what are the costs associated with the various options.

Thank you all for any advice you can offer.

dcribb
This organisation in Montreux may be able to help.
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Old 06.07.2007, 17:11
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Re: Starting a Swiss firm with foreign income, what a re tax and legal implications?

Okay guys, you got me. I tried to short cut because I didn't know the answers and didn't wan't to wade through endless posts. My friend is great at German and French but pretty useless at English, so I can't really let him do himself.

I will have another shot at this and will get back with more detailed questions.

Greetings

dcribb
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Old 06.07.2007, 17:55
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Re: Starting a Swiss firm with foreign income, what a re tax and legal implications?

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That's a whole lot of questions for one post .

Follow DaveA's advice and you will get 90% of what you or your freind needs. Come back for the other 10%.

One thing though - this will be a complex tax situation and the authorities, both in Germany and Switzerland, are going to be hearing alarm bells ringing.
I should not really post on this thread but what the hell...
Actually this is not a tax issue at all. Yes it is a half tax fiddle but all totally legitimate and the German authorities can whistle for their money. As long as he is living in Switzerland working for a genuine Swiss company the money is simply paid from the German company to the Swiss company and as long as the expense to the German company can be justified then all is fine...
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Old 06.07.2007, 18:08
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Re: Starting a Swiss firm with foreign income, what a re tax and legal implications?

Hi Richard, thank you for this. I concur, but that wasn't actually the concern I was raising. The issue of taxation between Germany and Switzerland I know, the transfer pricing rules I am aware of. What I can not say anything about - and what I was trying to get answers to - is how different types of income are taxed in Switzerland.

i.e. on a net tax level is it better to have a company pay corporation tax and then pay out earnings to the shareholder or is it better for the shareholder who works in the company to draw a salary from the company and taxing that as income from employment.

Also, in many countries there are different tax implications if income is generated outside of the country rather than within it. I was wondering if the same went for Switzerland.

But the others are right, there are probably other ways of finding out that stuff. I just thought I'd post here as I thought that it was probably a common enough topic.

Greetings

dcribb
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Old 06.07.2007, 18:21
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Re: Starting a Swiss firm with foreign income, what a re tax and legal implications?

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i.e. on a net tax level is it better to have a company pay corporation tax and then pay out earnings to the shareholder or is it better for the shareholder who works in the company to draw a salary from the company and taxing that as income from employment.

Also, in many countries there are different tax implications if income is generated outside of the country rather than within it. I was wondering if the same went for Switzerland.
In Switzerland money is king. It does not matter (usually) where you got it from as long as you have it. So the fact the income is generated out of Switzerland is a so what to the Swiss authorities. The only real implication is in the area of VAT. Here the Swiss authorities would probably recommend you get an EU VAT number in order to minimise your payments within EU member states.

The answer to your tax question is actually it depends. Switzerland akin to many countries employs a double taxation with respect to small company profits. However, it is quite easily possible to transfer a substantial amount of expense to your company and to make reserves and otherwise avoid tax at least in the formative years of business.

In summary though it is certainly better to look at having taxes paid on income. Corporation tax runs at sometimes high rates and then the "dividends" that are paid are taxable as normal income...
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Old 06.07.2007, 18:32
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Re: Starting a Swiss firm with foreign income, what a re tax and legal implications?

Thanks Richard! It seems that wherever one reads about tax in Switzerland people are forever hinting that everything is negotiable. Do you have any idea if this is fact or fiction for "normal" incomes? It strikes me that the tax authorities may well be open to negotiation, but I somehow can't see this happening for people who bring home anything less than a couple of million francs.
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Old 12.07.2007, 13:07
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Re: Starting a Swiss firm with foreign income, what a re tax and legal implications?

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Thanks Richard! It seems that wherever one reads about tax in Switzerland people are forever hinting that everything is negotiable. Do you have any idea if this is fact or fiction for "normal" incomes? It strikes me that the tax authorities may well be open to negotiation, but I somehow can't see this happening for people who bring home anything less than a couple of million francs.
Sorry only just got round to this. There are two types of tax here. Commercial and personal. The personal tax is negotiable if you are wealthy enough and go to live somewhere where they are open to the concept. For example a Bill Gates would be welcomed anywhere in Switzerland with a red carpet. A David Beckham while wealthy would interest only those who are happy to be involved in a tax negotiation and mere mortals earning say 250K per year would be asked to pay normal tax.

Commercial tax is a different story and here it is always possible to negotiate or defer or ...

I guess though for you and I the answer to your question is fiction.
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