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Old 09.11.2009, 14:00
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Wealth tax on foreign business

I have read that wealth tax is not levied on foreign real estate or foreign permanent establishments. I understand the real estate bit, but what is Permanent Establishments ? Would that be a wholly owned business ? eg share is a private company>
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Old 09.11.2009, 17:00
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Re: Wealth tax on foreign business

no, it's a fixed base of affairs where a quantitatively and qualitatively important part of the business of the enterprise/company is realized. See art. 5 OECD Model for what a PE is (or is not... such as inventory, maintenance, etc.)
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Old 09.11.2009, 21:05
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Re: Wealth tax on foreign business

OK, I am moving to CH. My main assets will be cash and securities located outside of CH. With regards to wealth tax, does anybody have any tips on the best structure/place to hold these assets
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Old 09.11.2009, 21:11
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Re: Wealth tax on foreign business

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OK, I am moving to CH. My main assets will be cash and securities located outside of CH. With regards to wealth tax, does anybody have any tips on the best structure/place to hold these assets
You can hold your cash and assets anywhere you like. You must pay wealth tax in Switzerland. Also any dividends, interest, etc. are income taxed in Switzerland.
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Old 09.11.2009, 21:11
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Re: Wealth tax on foreign business

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OK, I am moving to CH. My main assets will be cash and securities located outside of CH. With regards to wealth tax, does anybody have any tips on the best structure/place to hold these assets
A vault? Maybe a bank would work also.
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Old 09.11.2009, 23:16
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Re: Wealth tax on foreign business

So I will pay wealth tax on the cash, but if i buy foreign real estate I would not ?. Why do they make such a rule ?
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Old 11.11.2009, 11:12
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Re: Wealth tax on foreign business

Because movable assets are taxed at the place where you are resident (unlimited tax liability) and fixed assets are taxed where the assets are located (limited liability). That's a general taxation rule set in nearly all the tax systems of the OECD countries.

One thing you could imagine (but is this wise and is that really worth it compared to costs, management, etc?) is to set up a company that will hold your cash, shares, bonds, and other investments. This company could be offshore or onshore (Luxembourg has some interesting tools...). You then declare only the par value of your shares in that company. Basically the Swiss tax authority could request the accounts of the company and perform a valuation of the shares and tax you (wealth tax) on the value of the shares. Nevertheless, depending in which canton you are a resident, this might take some years until they come to that point. And if you really have a lot of money and wealth tax would represent a big amount, then this might be interesting. Anyway, you would have to compare with figures if that is really interesting.
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Old 11.11.2009, 12:57
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Re: Wealth tax on foreign business

Thanks Syt. I have also read that the value of Foreign assets ( ex property ) is only used to place you into a higher tax bracket for your domestic ( Swiss ) wealth tax, and that the actual value of the foreign assets is not wealth taxed. what is your opinion ? eg Swiss cash assets = 500 000, foreign cash = 700 000 with Zurich wealth tax @ 0.5%.
whats the approx answer ?
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Old 11.11.2009, 13:04
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Re: Wealth tax on foreign business

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Thanks Syt. I have also read that the value of Foreign assets ( ex property ) is only used to place you into a higher tax bracket for your domestic ( Swiss ) wealth tax, and that the actual value of the foreign assets is not wealth taxed. what is your opinion ? eg Swiss cash assets = 500 000, foreign cash = 700 000 with Zurich wealth tax @ 0.5%.
whats the approx answer ?
With that much liquid, get a proper accountant/investment advisor.
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Old 11.11.2009, 13:47
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Re: Wealth tax on foreign business

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With that much liquid, get a proper accountant/investment advisor.
Guess I will. But its a simply enough question isn't it ?
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Old 11.11.2009, 14:06
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Re: Wealth tax on foreign business

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Thanks Syt. I have also read that the value of Foreign assets ( ex property ) is only used to place you into a higher tax bracket for your domestic ( Swiss ) wealth tax, and that the actual value of the foreign assets is not wealth taxed. what is your opinion ? eg Swiss cash assets = 500 000, foreign cash = 700 000 with Zurich wealth tax @ 0.5%.
whats the approx answer ?
1.2M CHF wealth assets in Canton Zurich for a non-religious, single person is:

Wealth Tax rate: 0.1085%

Wealth; 1,200,000
Wealth Tax: 1,302 CHF

Note that any current debt reduces the taxable wealth.

See the online calculator:
http://www.steueramt.zh.ch/html/steu...e_personen.htm

NOTE: the above is my view as a layman. Use a Qualified Expert such as a tax advisor for proper advice.
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Old 11.11.2009, 15:03
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Re: Wealth tax on foreign business

Ok, so now with figures:

Case 1:
assumptions: Swiss assets CHF 500'000; foreign (movable/non fixed) assets CHF 700'000; resident of Switzerland in ZH.

Taxation: you are fully subject to taxes on your worldwide income and wealth. Taxable on CHF 1'200'000 at the rate of 0.10% (as computed by kiwi).

Case 2:
Assumptions: Swiss assets CHF 500'000; foreign fixed assets (such as property) CHF 700'000; resident of CH in ZH.

Taxation: you are fully subject to taxes on your worldwide income and wealth, but fixed assets located abroad are exempted from Swiss taxation, but not for the tax rate. Therefore, taxable in CH are CHF 500'000 at the rate of 0.10% (applicable rate for CHF 1'200'000).

Case 3:
Assumptions: Swiss fixed assets CHF 500'000 (property); foreign assets CHF 700'000; resident abroad.

Taxation: you are subject to limited taxation in CH for the property only. Taxable on CHF 500'000 at the rate of 0.10% (applicable rate for CHF 1'200'000). Nevertheless, in some cantons, you don't have to disclose your worldwide wealth to determine the applicable rate (such as Vaud) and in most of the cantons the rate is determined by estimation. The law says that your are taxable in CH at the rate that is applicable to - at least - your Swiss income/wealth.


nb: final remark for Case 1 & 2, there are some limited jurisdictions that levy a wealth tax on national non fixed assets held (such as shares in a corporation) which could lead to a potential double taxation except if a double tax treaty is applicable.
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