What is a holding company?
The holding company is a legal entity. As such, it offers the possibility of grouping holdings in several companies at the same location. Its main purpose is to hold shares in other companies, although it can also carry out commercial activities. It optimizes the management of investments and allocate HR, marketing, accounting and other costs within the Group.
How to set up a holding company in Switzerland
Setting up a holding company in Switzerland requires meticulous planning and a clear understanding of the steps involved. Here are the different ways of setting up a holding company in Switzerland in 2024 :
Normal creation:
The first option for setting up a holding company is the so-called " normal ". Against this backdrop, you will draw up a new entity You then use your available financial resources to invest in various subsidiaries. It's common for entrepreneurs looking to set up a holding company to prefer this approach, as it's more cost-effective. easiest to set up.
Bottom mounting:
A second alternative is to set up a holding company using the " bottom mounting ". In this configuration, a pre-existing company transfers its business to a new entity, which then becomes its direct subsidiary, taking on the role of holding company.
This process involves what is known as a " partial asset contribution ". It is important to note that this operation is considerably more complex and involves higher costs, making it imperative to call in an auditor.
Top mounting:
The third solution for setting up a holding company is based on a "one-stop shop" approach. top mounting ". In this scenario, the company's shareholders contribute their shares when the holding company is created, thereby helping to build up its share capital.
In this context, it is also essential to evaluate the value of the shares contributed to the company by an auditor. This method involves a different approach, in which the holding company's share capital is formed from the partners' contributions.
Advantages of a holding company
Holding companies are popular for their ability to optimize group investment resources, succession planning and tax advantages. In Geneva, holding companies continue to benefit from favorable legislation and tax policies.
Tax benefits
Income tax
Profits transferred to the holding company may be eligible for the participation deduction under Art. 69 LIFD.
Eligibility requirements: To benefit from the participation discount, you must satisfy one of the following conditions:
- The company owns at least 10 % of the share capital or registered capital of another company.
- It contributes in at least 10 % to the profits and reserves of another company.
- It holds equity interests with a market value of one million CHF at least.
If the reduction for participation is possible, the company will be tax exempted on the share of profits from subsidiary companies. "Profit" includes dividends, distributions of participation certificates, income from shares and extraordinary distributions of profit (liquidation surpluses, merger profits).
If it carries out other business activities, the company will be taxed at the rate of 13.99% on the net profit. But this will reduce the tax reduction provided by art. 69 LIFD.
Capital tax
Capital tax on shareholdings is reduced to 0.001% in Geneva.
For more information on corporate taxation following the RFFA.
Inheritance and succession
Holding companies also facilitate the transfer and succession of family assets. By bringing assets together under a single umbrella, it is easier to plan and organize their succession succession to the next generation. What's more, the shares held by a holding company can be passed on more easily than the individual assets of the various subsidiaries.
Efficient management of subsidiaries
The holding company can supervise, in centralized way, all its subsidiaries, facilitating the implementation of policies and procedures throughout the organization. This approach ensures greater efficiency and better coordination between the company's various entities.
Consolidation of financial resources (cash pooling)
Facilitating international operations
Finally, a holding company based in Switzerland can facilitate international activities. Switzerland is renowned for its favorable business environment and political stability. A company can access international markets more easily, benefit from a solid legal framework and take advantage of the confederation's extensive network of tax treaties.
The disadvantages of a holding company
Despite all the advantages that such an organization offers, it is essential to take into account the possible disadvantages when considering setting up a holding company in Switzerland.
Administrative complexity
Setting up and managing a holding company can be administratively complex. First and foremost, legal requirements must be taken into account. A holding company must consolidate its accounts and have them audited.
Added to this are the tax regulations and administrative formalities specific to each canton. All these procedures can be time-consuming and require the assistance of a lawyer or a tax expert.
High costs
The creation and operation of a holding company is generally associated with high costs. Legal fees, professional fees and maintenance expenses can quickly add up. As costs are pooled, they can be shared between structures.
Conclusion on holding companies
As we have seen, a holding company offers many advantages, but it is worth noting the high initial costs and strict regulatory requirements. Setting up a holding company in Geneva can be a strategic and tax-efficient decision, but it is strongly advised to consult specialists in the field before taking the plunge.
Our experts at Fidulex are at your disposal to discuss your project.
Frequently Asked Questions
What is a holding company?
A holding company is a company whose main activity is to hold interests in other companies, called subsidiaries, in order to control and manage them.
Unlike an operating company, a holding company has no productive activity of its own. It simply manages the shares it holds in other companies.
Can I set up a holding company with a B permit in Switzerland?
Any foreigner, resident or not, can set up a holding company (or any other type of company) in Switzerland, including holders of a residency permit B.
Various conditions apply, depending on whether the person wishes to work as an employee in the company. In addition, the company must have a representative resident in Switzerland.
What legal form should a holding company take?
The Limited Company (SA) is the legal form most commonly used to set up a holding company. The Limited liability company (Sàrl) can also be adapted for a holding company.
What are the tax advantages of a holding company in Geneva in 2024?
A holding company in Geneva benefits from attractive tax rates on the income generated by its holdings, as well as reduced taxation on the capital relating to its holdings.
How do you protect your assets with a holding company in Switzerland?
A holding company offers legal protection by separating the assets held within different subsidiaries, thus limiting overall financial liability.
How do I set up a holding company in Switzerland?
There are three ways to set up a holding company:
Normal creation: You'll set up a new, independent legal entity and invest your financial resources in various subsidiaries.
Bottom mounting: An existing company transfers its business to a new entity, which then becomes its direct subsidiary and acts as a holding company.
Top mounting: In this option, the company's partners contribute their shares when the holding company is created, thereby helping to build up its share capital. It is l to have the value of the shares contributed to the company assessed by an auditor.
How does control of shareholdings in a holding company work?
Control of shareholdings in a holding company generally takes the form of majority or total ownership of the shares in the subsidiaries concerned.
