When you are considering starting a business, you don’t necessarily need to produce a product or offer services to make money. Instead, you can form a holding company and buy stock in other businesses and manage those shares. There are many advantages to forming a holding company, especially in places like Switzerland.
What Is a Holding Company?
A holding company is a business that buys the stock of other companies, and other assets like silver, gold, real estate and anything else of value. The term ‘holding company’ indicates that in order to make money, it holds onto its investments. If the company buys enough stock in corporations, the holding company can have the controlling interest in those companies and influence their decisions.
Holding Companies in Switzerland
There are many countries that offer significant benefits for forming holding companies, but one of the most popular places is Switzerland. There are several tax advantages to forming a Swiss holding company for the investors. However, in order to claim the status of a holding company in Switzerland and enjoy its tax advantages, the company cannot conduct any other form of business activities.
In addition to limiting business activity, to enjoy the status of a holding company, the business’ investments or revenues gained from holding stock in other companies have to represent two-thirds of the company’s assets or income. The business must hold enough shares in a company to account for 10 percent, or the value of those shares has to be at least CHF 1,000,000. Also, the minimum time that shares in a business can be held is one year.
If these conditions are met, having the status of a holding company allows the business to be exempt from taxes or have a lower tax rate, depending on the canton in which the business is located. In addition, a business with participatory shares is virtually exempt from paying federal taxes as well, because it will not owe federal income or capital gains taxes.
How to Form a Swiss Holding Company
If you wish to take advantage of the favourable tax situation in Switzerland and form a holding company, there are many businesses that will help you legally form a company. They provide you with the necessary information to form a business, which includes:
- Having a minimum starting capital of CHF 100,000, of which at least CHF 50,000 must be paid.
- The company must have at least one person or shareholder to found the business or be a legal entity.
- At least one of the board members is required to be domiciled in Switzerland.
There are other requirements to business formation in Switzerland that a formation company can explain to you and the others forming the holding company.
Many non-residents form businesses to take advantage of favourable tax rates because they can keep more of the money the company earns. With the help of a business formation company, you can form the company, have it legally registered, and start enjoying the advantages of owning a business in Switzerland.