Your Team for Swiss Law – now also in Geneva
The founding of a startup is typically a turbulent process. An existing idea has to be transformed into a business model, the team has to be assembled and investors have to be found for the financing. The focus in this phase is on driving the project forward and the practical implementation of the business model - less on contracts and tax optimization. However, strong contracts and forward-looking tax planning are a must for every startup in the medium and long term - especially if it is successful! The VISCHER Startup Desks's three-part series Focus on Taxes is dedicated to the tax aspects that have to be considered for a successful startup from the point of view of investors and founders, employees and the company:
On September 17, 2018, the Swiss parliament approved the corporate tax reform (Federal Act on Tax Reform and AHV financing (TRAF). On one hand TRAF will abolish preferential cantonal tax regimes, such as holding or mixed companies, but will on the other hand implement measures to preserve Switzerland's attractiveness as a business location. In addition to such measures the cantons plan to drastically lower their ordinary tax rates on profit and capital (applicable for all companies). Overall, these developments will lead to a more favorable tax regime for most companies in Switzerland. Especially innovative companies will be promoted.
Businesses nowadays structure their value chain globally. In doing so entire operations, but sometimes only individual functions (sales activities, services provided etc.), can be transferred within a group; often across borders. Such relocations of functions within a group usually occur free of compensation and have so far rarely been taxed. Nevertheless, a cross-border business restructuring can already under the current legislation lead to tax consequences; particularly, if the transferring company is not compensated in line with market conditions.