Better understand corporate taxation

Important: in this article, we will only discuss the taxation of legal entities (and not that of individual companies).

There are three main types of taxes for corporate entities:

• Withholding tax: Dividend distributions are  iraq email list taxed at approximately 35%. However, the rate of this tax is adjusted according to various Swiss tax treaties.
• Corporate tax (or profit tax): In Switzerland, profit tax is a deductible expense. Be aware that there are different tax scales depending on the canton and municipality, so the tax can vary by as much as two times.
• VAT: With some exceptions, companies with an annual turnover of more than CHF 100,000 must pay VAT . The tax rate varies between 7.7% for services, cars, and alcohol (this rate will increase to 8.1% from 2024) and 2.5% for medicines, food, and books (2.6% from 2024). For accommodation, it is 3.7% (3.8% from 2024).

GOOD TO KNOW
Each country has its own tax regulations. It’s important to be well-informed to identify the tax optimization levers that apply, or don’t, to international businesses!

How to do tax optimization for a business?

Deduction of current expenses

Many current expenses are deductible from a company’s income. This is the case, for example, for raw material and energy expenses (gas, electricity, etc.), insurance costs, advertising costs, and crimson bears finish sixth at state baseball even rental income. These various expenses, deducted from revenue, will help reduce the amount of taxes.

GOOD TO KNOW
By using depreciation appropriately and in accordance with the law, you will be able to optimize your taxes and therefore save money.

Carrying forward deficits

Another method is to carry forward company losses to future profits . There is no time limit. By strategically managing losses, it is possible to cancel corporate taxes for several years in a row.

Donations and distribution of dividends

Since the latest tax reforms, it has become more advantageous to transfer company profits in the form of salary rather than dividends. Indeed, salary reduces the company’s tax burden, unlike dividends. Also note that  usa b2b list transferring dividends results in a double tax burden  : corporate taxation and personal taxation.

The creation of a holding company

Many companies use holding companies to reduce their tax liability. It’s important to know that:

• The interest on a loan taken out with a holding company is deductible from the result;
• The holding company’s dividends are 95% tax-exempt;
• And the losses of one subsidiary can be offset with the profits of another subsidiary of the holding company.

The financial structure of the holding company, with a “parent-subsidiary” regime, therefore allows for significant savings on corporate tax. It is important to note that this type of creation must be motivated by commercial, not tax, reasons.

In addition, the creation of a holding company may be subject to certain complex tax rules, which must be strictly observed, as abuse of rights is punishable by law.