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TAX

Non-residents bank accounts in Switzerland are completely tax-free. This means, there are no income taxes, no capital gain taxes, no real estate taxes, no inheritance taxes, no stamp duties, plus a bonus of your privacy. With your single bank account (say multicurrency account) you can connect direct to the stock markets and trade globally. You can receive or send payments in any world currency. You deposits do earn attractive interest rates.

  • Starting from July 2005, all offshore banks comply to EU Savings tax directive on exchange of information.

Non-Resident taxes in Switzerland

Swiss residents are subjected to income and net wealth taxes. Non-residents as long as you do not derive any income inside Switzerland, you are free from Swiss taxes. Some of the examples which bind you for Swiss taxes are

  • Real Estate Income
  • Income from business establishments in Switzerland
  • Interest on mortgages
  • Pensions relating to former employment in Switzerland

See: EU Savings income directive on EU resident persons (from july 2005)

What is a Swiss withholding tax ?

Withholding Tax (Verrechnungssteuer, impôt anticipé ) rated at 35%, levied on dividends, bank loans, bank interest rates and certain insurance payments. The procedure of this tax, is often paid by the payee domiciled/headquartered in Switzerland, rather than the recipient. For foreigners having bank accounts (other than Swiss Franc CHF currency) - this is exempt. The bank (payee) deducts withholding tax from your interest/dividends earned from your account and pays the rest to you. For example, if you accrue CHF 100.- from your Swiss franc deposits, CHF 35 will be levied on you, and you will be paid only CHF 65.- out of the interest income.

IRS Withholding Tax for US Citizens

If you are US citizen, IRS regulates you with a new withholding tax system, making a must for you to pay taxes on dividends, interest rates gained from domestic US securities brought from a foreign held offshore bank accounts. For countries with strict banking confidentiality (Switzerland) banks are required to levy a 31% backup withholding tax on US investors who fail to disclose their taxable holdings. That is why we ask our US customers to refrain from investing in US securities directly from your Swiss bank account.

See: 

The IRS and Swiss Confederation Tax treaty part 1


The IRS and Swiss Confederation Tax treaty part 2


The IRS and Swiss Confederation Tax treaty part 3


The IRS and Swiss Confederation Tax treaty part 4

 

Tax Avoidance - Tax Evasion - Tax Fraud

In Switzerland, in case of mere tax evasion, just avoiding taxes on their part of personal income/assets cannot be considered as crime, and banks are not obligated to release the customer identity to tax authorities or any third parties as the Swiss consider this as their own internal matters. However, the situation is different in case of 'tax fraud' considered as criminal offence in Switzerland. Ex. false accounting, false invoices. In order to get legal assistance in Switzerland, for lifting of bank secrecy, the foreign authorities must have a favorable evidence to address a foreign tax payer liable for criminal offense.

Tax avoidance: occurs when a taxpayer uses legal means to reduce or avoid the payment of taxes.

Tax evasion: is when a taxpayer fails to declare income or assets which therefore cannot be taxed; this is a violation of the law. In this manner a tax is avoided when a tax assessment cannot be performed even though it should, or when a tax assessment is performed incompletely. Swiss banks, as third parties, have no obligation to supply information directly to the tax authorities.

Tax fraud: is the most serious case, as the taxpayer uses ways and means to mislead the tax authorities, such as presenting falsified evidence, forged or incorrect records such as account books, profit and loss statements, balance sheets, income statements or any other documentary evidence. Fiscal fraud is similar to fraud or forgery. Tax fraud is subject to criminal prosecution and punishable by imprisonment and /or a fine. In the case of tax fraud, the bank is obliged to inform the investigating authorities and, where necessary, may be called to testify.

More information: Geneva Financial Center

We make offshore bank account setup easy: Just a copy of your passport "apostille" or ID required.

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