Digital distribution of a certain shrink-wrapped software
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
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
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.