Global

Details

  • Service: Tax, Global Indirect Tax, Global Transfer Pricing Services, Global Compliance Management Services, International Tax
  • Type: Business and industry issue, Regulatory update, Survey report
  • Date: 5/1/2012

Country perspectives on taxing the cloud – Switzerland 

KPMG in Switzerland takes a look at how local tax authorities are approaching the challenge of cloud computing, by examining the potential taxes applied.

Digital distribution of a certain shrink-wrapped software

tax infographic

Permanent establishment

If the Swiss service company does not negotiate important contract terms and conditions with the customers in Switzerland, then there is a low risk of a permanent establishment (PE).


A ruling can be obtained to confirm there is no PE for a vendor in Switzerland.


Related party transactions

Remuneration of the Swiss service company on a cost plus basis is generally accepted to be at arm's length; a ruling can be obtained to confirm this point.


Withholding tax

If the payments are considered to be at arm's length, they are generally not subject to Swiss withholding tax.


Indirect tax

The export of services is not subject to Swiss Value Added Tax (VAT) (due to exemption).


The import of goods and services is generally subject to VAT.


Transfer of business issues

The conversion into a Swiss service company is not subject to tax and there is generally no taxation on a mere transfer of functions out of Switzerland. A ruling can be obtained on this topic.


However, there is capital gains taxation on any possible transfer of assets out of Switzerland.


Other issues or planning opportunities

Low ordinary corporate income tax rates in Switzerland (11.7 percent - 24 percent depending on location) apply. Further reduction of the effective tax rate might be possible via a ruling request.


Public cloud

tax infographic

Permanent establishment

If the Swiss service company does not negotiate important contract terms and conditions of the contracts with the customers in Switzerland, then there is a low risk of a permanent establishment (PE).


A ruling can be obtained to confirm that there is no PE of a vendor in Switzerland.


Related party transactions

Remuneration of the Swiss service company on a cost plus basis is generally accepted to be at arm's length.


A ruling can be obtained confirming that the remuneration of the service company is at arm's length.


Withholding tax

If the payments are considered to be at arm's length, they are generally not subject to Swiss withholding tax.


Indirect tax

The export of services is not subject to Swiss VAT (due to exemption).


The import of goods and services is generally subject to VAT.


Transfer of business issues

The conversion into a Swiss service company is not subject to tax and there is generally no taxation on a mere transfer of functions out of Switzerland. A ruling can be obtained on this topic.


However, there is capital gains taxation on any possible transfer of assets out of Switzerland.


Other issues or planning opportunities

Low ordinary corporate income tax rates in Switzerland (11.7 percent - 24 percent depending on location) apply. Further reduction of the effective tax rate might be possible via a ruling request.


Private cloud

tax infographic

Permanent Establishment

There is no PE risk as no services are provided in Switzerland on behalf of the vendor.


Related party transactions

Remuneration of IT services on a cost plus basis is generally accepted to be at arm's length; a ruling can be obtained to confirm this point.


Withholding tax

If the payments are considered to be at arm's length, they are generally not subject to Swiss withholding tax.


Indirect tax

The import of services is generally subject to VAT.


Transfer of business issues

There is generally no taxation on a mere transfer of functions out of Switzerland. A ruling can be obtained on this topic.


However, there is capital gains taxation on any possible transfer of assets out of Switzerland.


Other issues or planning opportunities

Low ordinary corporate income tax rates in Switzerland (11.7 percent - 24 percent depending on location) apply. Further reduction of the effective tax rate might be possible via a ruling request.

 

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Contact

Thomas Linder

KPMG in Switzerland

+41 44 249 23 07