Switzerland is an attractive location for managing Intellectual Property (IP) assets because of several tax and non-tax facilities provided by the Swiss Confederation.
An overview of the tax and non-tax facilities making Switzerland an attractive IP location
Tax facilities
Low tax rates in general;
Personal income tax rates are very low;
Switzerland has an extensive tax treaty network;
There are no controlled foreign corporation (CFC) rules;
R&D costs are 100% tax deductible;
The allocation to an “IP Box” is not necessary;
Non-refundable foreign taxes, such as withholding taxes, paid by the Swiss IP company may normally be deducted from Swiss taxes;
On a cantonal and federal level, tax holidays for substantial investments may be available;
A region where a full tax holiday may be granted (0% tax rate) is located at 45 minutes from Zurich airport;
Swiss IP companies may benefit from the statutory cantonal tax regime called mixed company regime. The mixed company is a vehicle for companies with mainly international activities. When combined with other ideas, the mixed company may be subject to a low effective tax rate;
Swiss IP companies may also benefit from the “License box”, an alternative to the mixed company regime. With the “License box”, IP companies located in Nidwalden benefit from a cantonal tax rate which is calculated on only 20% of the net license income (net license income is reduced by 80%). The effective corporate income tax rate (including federal tax) is 8.8%, and may be reduced further.
Non-tax facilities
Some cantons offer direct payments for substantial investments;
The Commission for Technology and Innovation (CTI ) offers R&D grants;
Conclusion
Offering perfect conditions for IP companies, Switzerland has attracted many high-tech companies working in the fields of biotechnology, electricity, life sciences, information and communication technology, medical technology, pharmacy, and micro- and nanotechnology. These companies not only benefit from the competitive tax system but also from the sophisticated business culture and the well-educated and international labour force.
