Corporate tax – the tax consequences of starting a company

Corporations, such as joint-stock companies or limited liability companies, must pay tax on profits (corporate income tax) and capital. There is a clear distinction between the company and the shareholders/partners.

Corporate income tax is levied on the net profit posted by a corporation. The unjustified expenditures (unjustified depreciation and writedowns or provisions, constructive dividends, etc.) are also taxable.

The federal government (8.5%) and most cantons (2–24%) apply a proportional tax rate. All other cantons have a mixed system that accounts for "earnings intensity."

The cantons (but not the federal government) charge capital tax on the company's capital. In most cantons, this is the share capital or nominal capital as well as the declared reserves. The tax is charged proportionally except for in the canton of Valais.

Depending on the canton, the capital tax is between 3% and 9%.

If shareholders or partners receive a dividend, they must pay tax on these as private individuals as capital gains. If a shareholder/partner owns more than ten percent of the company shares, then only about 50% of the dividend must be taxed.

A separate tax return is needed for corporations.

If a dividend is paid out, this results in double taxation (income tax on profits, corporate income tax on dividends). The same problem occurs with share capital by way of tax on capital and wealth tax (equity value).