Tax law: International corporate taxation: the generalities you need to know!

Do you want to expand the activities of your Swiss company abroad? We remind you what you need to know about it!

Before taking the legal steps, it is essential to find out about the implications of expanding abroad. Carry out market research, set company goals, find out about the local culture. It is important to choose the country that best suits your interests. Deal with the financial and human resource issues of international expansion. 

Then find out about the laws, economic regulations and social protection measures for employees in the host country. 

Of course, it is essential to ensure that your company’s tax efficiency is optimised. Expansion should not be detrimental to you; you should inform yourself about the taxation of a subsidiary or branch abroad. 

Check whether Switzerland has double taxation agreements with the host country. You want to avoid having to pay too many taxes in two countries! 

Now you have to distinguish between a branch office and a subsidiary. These are the two forms of “daughter” companies.

The branch office:

Is a replica of the parent company based in Switzerland, but does not require any capital. It will have the same legal form as the parent company, if it exists in the legislation of the host country. The profit will be taxed in the host country, not in Switzerland. However, all movements are made in the name of the parent company, which may lead to their taxation.

The subsidiary company:

The subsidiary is a company, whose capital is partly or wholly owned by the parent company. The subsidiary will have its own tax return and will therefore be taxed in the host country. Dividends will accrue to the parent company, which will have to pay withholding tax if the host country does not have a double taxation agreement with Switzerland. 

The balance sheet of the subsidiary will be included in the balance sheet of the parent company.

 

We advise you to find out about the specifics of your company’s host country. The host country strongly influences the measures you will have to take regarding the taxation of your branch abroad.

Tip: the closer the tax law of the host country is to Swiss law, the easier it will be for you to facilitate the administrative procedures!

Contact Lawrence, our specialist lawyers can carry out his research for you and help you in the tax optimisation of your company!

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