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Old 21.11.2020, 21:01
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Uk dividends from own company and Swiss tax

I have been here for a few years and still have my Uk ltd which I used to contract through which has a bit of retained profits.

I have been told by my Uk accountant that any dividends I take out are not taxed in the Uk as I am non Uk tax resident so I can take all the retained profits as a dividend with no Uk tax (as long as I stay out of Uk for five years which is fine)

I wonder if anyone knows what Swiss tax I would have to pay living in canton Schwyz on those foreign dividends given it is foreign income. Someone told me that dividend tax in Swiss is also zero
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Old 21.11.2020, 23:54
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Re: Uk dividends from own company and Swiss tax

I don't know who your "someone" is but dividends are treated as income. You declare them on your tax return as such.
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Old 22.11.2020, 00:30
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Re: Uk dividends from own company and Swiss tax

I was pretty sure that dividends from foreign companies are not taxable in Switzerland

Are you saying that the rate of tax on dividends from foreign country Uk is the same as income tax. That does not sound right
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Old 22.11.2020, 09:47
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Re: Uk dividends from own company and Swiss tax

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I was pretty sure that dividends from foreign companies are not taxable in Switzerland

Are you saying that the rate of tax on dividends from foreign country Uk is the same as income tax. That does not sound right
Where did you get this idea, and why doesn't it sound right?

Dividends are treated as income in Switzerland. Whether the company is Swiss or foreign makes no difference.
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Old 22.11.2020, 09:59
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Re: Uk dividends from own company and Swiss tax

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Dividends are treated as income in Switzerland. Whether the company is Swiss or foreign makes no difference.
Exactly, you pay tax on your world wide income.
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Old 22.11.2020, 12:01
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Re: Uk dividends from own company and Swiss tax

Section 6.2 from this document explain that profits from foreign businesses are exempt

https://www2.deloitte.com/content/da...guide-2015.pdf

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Old 22.11.2020, 12:20
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Re: Uk dividends from own company and Swiss tax

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Section 6.2 from this document explain that profits from foreign businesses are exempt

https://www2.deloitte.com/content/da...guide-2015.pdf

The author has password protected the document making it impossible to copy and paste the paragraph
Nothing to do with dividends, paid to shareholders of a company.
If it was taken as income subject to NI & UK tax then it would be tax exempt in CH
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Old 22.11.2020, 12:33
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Re: Uk dividends from own company and Swiss tax

Thanks fatman films

My point is I have some retained profits in the UK Ltd and I really want to optimise the tax whilst I am non uk tax resident

If I was to declare a UK dividend in the UK (and therefore pay no UK tax on the dividend) would I really have to pay swiss tax?

I have approx 250K GBP in the company from ten years working and I want to get it out of the company and into personal name - If it helps I will keep the money in the UK and not remit it here
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Old 22.11.2020, 13:45
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Re: Uk dividends from own company and Swiss tax

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Where did you get this idea, and why doesn't it sound right?

Dividends are treated as income in Switzerland. Whether the company is Swiss or foreign makes no difference.

That's right. And if the taxpayer in Switzerland pays tax on the foreign dividend in the foreign country then a reclaim of the foreign tax is typically made under a tax treaty when filing the taxpayer's tax return in Switzerland.


Also, a payout of paid-in capital would not normally be a taxable event in Switzerland.
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Old 22.11.2020, 17:06
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Re: Uk dividends from own company and Swiss tax

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Thanks fatman films

My point is I have some retained profits in the UK Ltd and I really want to optimise the tax whilst I am non uk tax resident

If I was to declare a UK dividend in the UK (and therefore pay no UK tax on the dividend) would I really have to pay swiss tax?

I have approx 250K GBP in the company from ten years working and I want to get it out of the company and into personal name - If it helps I will keep the money in the UK and not remit it here
Dividends have preferential treatment in the UK, but carry zero tax credit now, so fully taxable in CH.
If you wind up the company the distribution is a capital gain, that is not chargeable to UK CGT if you stay away for 5 UK tax years & no Swiss Tax payable.

If to was paid in the UK subject to PAYE with the UK 12.5k annual allowance it might be virtually free over several years depending on the amount involved.
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Old 22.11.2020, 17:25
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Re: Uk dividends from own company and Swiss tax

Thanks FF - I cannot wind up the company because it has some properties inside it sadly

The balance sheets shows:

1) A negative director loan (meaning the company owes me money)
2) Net retained profits a.k.a shareholder funds

If I sold the company from CompanyA (owned by me) to CompanyB owned by me would that work as it would in theory be a disposal and therefore CGT rather than dividends.
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Old 22.11.2020, 17:33
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Re: Uk dividends from own company and Swiss tax

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Thanks FF - I cannot wind up the company because it has some properties inside it sadly

The balance sheets shows:

1) A negative director loan (meaning the company owes me money)
2) Net retained profits a.k.a shareholder funds

If I sold the company from CompanyA (owned by me) to CompanyB owned by me would that work as it would in theory be a disposal and therefore CGT rather than dividends.
I don't know. but I suspect that would fall foul of anti avoidance laws, since this is not an arms length transaction at market value.
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Old 22.11.2020, 17:49
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Re: Uk dividends from own company and Swiss tax

It would be market value and arms length.

Do you know an accountant who can advise on this and is able to do tax planning with knowledge of Swiss / UK tax rules?
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Old 22.11.2020, 17:53
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Re: Uk dividends from own company and Swiss tax

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It would be market value and arms length.

Do you know an accountant who can advise on this and is able to do tax planning with knowledge of Swiss / UK tax rules?
If you control both companies it's not at arms length. Sell the properties, pay the stamp duty & liquidate. It's never cheap or easy getting profits out of a company, limited liability has a price.
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Old 22.11.2020, 18:22
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Re: Uk dividends from own company and Swiss tax

Arms length means that you do not sell it at an undervalue - It has nothing to do with connected parties.

Do you know any accountants that would realistically provide real advice rather then just vague information about tax planning and structuring deals for tax optimisation?
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Old 22.11.2020, 20:11
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Re: Uk dividends from own company and Swiss tax

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Arms length means that you do not sell it at an undervalue - It has nothing to do with connected parties.
You are incorrect.
What Is an Arm's Length Transaction?
An arm's length transaction refers to a business deal in which buyers and sellers act independently without one party influencing the other.

A below market value is something else. CGT is payable on disposal at market value even if given away for free.
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Old 22.11.2020, 20:21
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Re: Uk dividends from own company and Swiss tax

In my job at armīs length is a measurement to have an internal transaction done at the same price/rate as if it were an external transaction (most of the time charging and/or paying interest on company loans). If not done properly, the tax authorities may complain.
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Old 22.11.2020, 20:40
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Re: Uk dividends from own company and Swiss tax

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I was pretty sure that dividends from foreign companies are not taxable in Switzerland

Are you saying that the rate of tax on dividends from foreign country Uk is the same as income tax. That does not sound right
It is right. I own shares in US, Canadian, UK and Swiss companies. The dividends are all taxable. To cover withholding tax, I take advantage of the pauschal (all inclusive) deduction, since it's higher than the amount that gets withheld.

I'm shutting down my Swiss company. Apart from the initial 20K, all I can do is take the accumulated funds as dividends (no tax relief) or salary (social contributions).

It's just the way it goes. At least I can act as liquidator. Only have to pay a notary to notarise the decision to close the company and my accountant for his work. I understand in the UK it's a bit more complicated involving a licensed liquidator - according to the stories I read at forums.contractoruk.com. (Although I closed two companies improperly through ignorance, and there was never any comeback).
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Old 22.11.2020, 20:59
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Re: Uk dividends from own company and Swiss tax

From a similar post elsewhere.

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The plan is to sell UkLtdA to UKLtdB (both being owned by me) to cystralise the CG and avoid paying tax.

If I sell UkLtdA then this is a CG and I can take out the entire value of the company. UkLtdB will then be funded by a directors loan from me to purchase UkLtdA.
Nope. I can't figure out how that can not be dodgy. I'm not even sure how you expect it to help.
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Old 22.11.2020, 22:11
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Re: Uk dividends from own company and Swiss tax

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From a similar post elsewhere.

Nope. I can't figure out how that can not be dodgy. I'm not even sure how you expect it to help.
Thank you. My point was selling companyA shares from my name to to companyB would crystallise the capital gain which in Switzerland would be tax free. That was the reason for it. It’s not dodgy but rather tax planning

I really need an accountant who can offer proper tax advice on Uk Swiss agreements. If you have any suggestions I would be grateful
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