What is the Financial and Banking Systems of Switzerland?

Switzerland is among the most respected financial centers of Europe. Traditional status as a neutral state, the location in the heart of Europe, established democratic institutions in Switzerland have provided a special position on the political map of the world. Switzerland - outside the military, political and racial conflicts. The turmoil of the twentieth century did not affect its political and economic sovereignty. Political stability and economic prosperity led to the attractiveness of Switzerland in the eyes of wealthy people in other countries. More than 10% of its residents - foreigners. From all over the world flock here bank deposits. Switzerland is a transit point for international financial flows. The Swiss franc is one of the major reserve currencies in the world.

The Swiss banking system is one of the first places in the world in terms of confidentiality of bank deposits. However, Switzerland's reputation in this field in recent years acquired a number of dual color. Its tough international authorities are criticized for "sleeping" deposits, are in Swiss banks since World War II. Swiss banks continue to hold financial secrets of this era. According to many, the principle of the inviolability and secrecy of bank deposits came into conflict with international ethical standards. Nevertheless, the scandal of 'sleeping' contributions ns had a significant impact on the status of this country as an international center of financial operations. Swiss firms are widely used in various schemes of tax and financial planning.

Taxation in Switzerland is generally consistent with international standards. Of course, it can not be assigned to the "offshore jurisdictions" in the strict sense of the word. However, in some respects it may be regarded as

discount, especially when compared to countries such as Germany or France. Federal tax in Switzerland is only 9.8%, and local, in some cases allowed ns to pay. Switzerland within the jurisdiction of "intermediate" type of "moderate" tax system. This is due to the fact that it provides a number of exemptions for certain types of firms. In addition, in Switzerland (but not all) companies registered offshore type.

Let's start at the beginning. Switzerland - Confederation. It consists of 26 cantons - small sovereign entities, each with its tax laws. This fact explains the features of the tax system as a whole confederation. The tax liability is divided into three parts - the federal, cantonal and local. This complicates the introduction of the tax system in Switzerland, however, makes possible a number of prospective international tax schemes.

The federal tax is charged but a progressive scale, ranging from 3.63 to 9.8%. The cantonal taxes are much higher. They make up 20-30%. Add to that the municipal taxes. For example, the Geneva canton of Geneva county levies a tax of 45.5% of the cantonal tax. As a result, the effective income tax rate for the Swiss company often reaches 40%. An essential element of the Swiss tax system is the property tax (net worth tax) -0.8%. He charged at the federal, and in some cases at the local level. Tax "at source" in Switzerland is 35%. This means that there will be deducted 35% of the dividends distributed to the company, with which Switzerland has no tax treaty.

However, not all that bad. Switzerland has signed 37 tax treaties on avoidance of double taxation (there is an agreement with the Russian Federation, which is "inherited" it from the former USSR). Although the network of tax treaties the Netherlands and Switzerland concedes, it is considered one of the most favorable in the world. It should be noted that in Switzerland, tax incentives are available for manufacturing companies, there are "industry" and the additional tax incentives for businesses gradations of individual types. This particularly applies to the holding companies and investment types, commercial and "service" companies (serving the main company). It is because of the favorable conditions existing in Switzerland for holding companies. it is regarded as the jurisdiction of "intermediate" type. Through it, the transit of capital and income from them. This is largely due to a developed system of tax treaties Switzerland) (arias, as well as its status as a stable and respectable state of the world.

The peculiarity of Switzerland as a country participating in many offshore schemes lies in the fact that in most cantons are recorded so-called "domiciled" of the company, the profits of which will be subject only to federal tax at a reduced rate of 3,63-9,8%. Such a company should be subject to the principles of classical offshore (not to be resident, do not do business in Switzerland, have no office, staff and property in Switzerland). As can be seen on the status of such firm is close to typical offshore companies. Distinguishes it only the presence of a small tax (however, it is comparable, for example, a tax on the Cyprus offshore firms, we (4.25%)). At the same time, the Swiss firm has a more respectable image than any other offshore companies.

However, the possibility of Swiss jurisdiction in the offshore business do not stop there. In some cases, domiciled company has the right to maintain an office and staff. Control center and control it is formal (though not necessarily real) will be in this country. This possibility exists in the Swiss canton of Fribourg. Resident status gives an opportunity to use an extensive network of tax treaties, which has Switzerland. Among the privileged cantons in Switzerland, and Zug is also Neuchâtel.

Issues of taxation of companies domiciled in different cantons are solved in different ways. In some cantons, such a company may carry out some operations in Switzerland, while maintaining the most preferential status. However, the proportion of such operations is limited. Thus, in some cantons are granted tax incentives under the condition that at least 80% of the operations of trade and procurement firm should be held outside the country. Otherwise, the increase in the tax rate to 20%.Pretty interesting, and the banking system in Iceland.