Publication date 28 February 2014
Via this alert we would like to inform you about the recently published ‘guidelines’ from the Swiss federal tax administration on the taxation of Principal Companies, which could have a material effect on principal company structures.
Central to the Swiss principal company structure, is the international allocation of profit between the Principal Company and the foreign distribution companies, whereby a certain part of the distribution profit is regarded as not taxable in Switzerland. The new guidelines introduce new, more stringent conditions that have to be met in order to apply the Principal Companies regime. The guidelines include the following new requirements:
For existing principal companies, the new conditions will apply as of 2015/2016, new principal companies and pending structures will have to comply with the new rules with immediate effect.
In order to avoid jeopardizing principal company structures of the following steps must be taken:
Depending on the outcome of the analysis, further action may be required, which may involve significant changes to the supply chain and IT systems.