Is it worth opening a company in Switzerland? Real advantages and the risk of sham foreign residence

It is worthwhile when the Swiss company has genuine activity and is genuinely managed from Switzerland. If, on the other hand, decisions continue to be taken in Italy, for the Italian tax authorities the company remains Italian and the advantages disappear.

The real advantages

• A stable and predictable tax and administrative system.

• Direct access to the Swiss market and to international banks and investors.

• A suitable base for groups operating in several countries, holding companies and real estate investments.

The level of taxation in Lugano is explained in the article “How much tax do you pay in Lugano?”.

The main risk: esterovestizione (sham foreign residence)

Under Italian law (Art. 73(3) TUIR, as in force since 2024), a company is resident in Italy if, for most of the year, it has at least one of these three elements in Italy:

• Registered office: the office stated in the articles of association.

• Place of effective management: “the continuous and coordinated taking of strategic decisions concerning the company or entity as a whole”.

• Day-to-day management on a principal basis: “the continuous and coordinated performance of day-to-day management acts concerning the company or entity as a whole”.

An SA with its registered office in Lugano but managed day to day from Milan may therefore be considered Italian. In that case it pays Italian taxes on all its income, with penalties.

A note on holding companies

Art. 73(5-bis) TUIR adds a further presumption. A foreign company that controls Italian companies is deemed resident in Italy, unless proven otherwise, if it is controlled by Italian residents or if its board of directors is mainly composed of Italian residents.

What if I want to move my Italian company to Switzerland?

Transferring the registered office of an Italian company abroad is possible, but the Italian tax authorities tax unrealised capital gains at the time of exit (exit tax, Art. 166 TUIR). The operation should be assessed with a valuation before deciding.

When it is worthwhile: a three-question check

1. Who will take the strategic decisions, and where do they live?

2. Will the company have a real office, people and activity in Switzerland?

3. Will it control Italian companies or be controlled by residents of Italy?

If the answers point to Switzerland, the structure can work. If they point to Italy, it is best to rethink it before incorporating.

How we work

Collina d'Oro Consulting SA sets up the company's bodies, delegations of authority and governance rules, so that management in Switzerland is effective and documented. Tax aspects are handled in coordination with licensed tax advisers.

Sources: Art. 73(3) and (5-bis) TUIR (Presidential Decree 917/1986) — text of the article, as amended by D.Lgs. 209/2023 · Art. 166 TUIR