A Swiss holding company pays very little tax on dividends from its subsidiaries, thanks to the participation reduction. For an Italian entrepreneur, however, it is worthwhile only if it is genuinely managed from Switzerland and holds up under Italian rules on residence and controlled foreign companies.
How it is taxed today
Until 2019 the cantons offered a special holding status. The federal tax reform (TRAF) abolished it from 1 January 2020. Today a holding company is an ordinary SA or Sagl that benefits from the participation reduction.
For federal direct tax (Art. 69 DBG/LIFD), the reduction applies if the company holds at least one of these participations:
at least 10% of the capital of another company;
at least 10% of the profits and reserves of another company;
participations with a market value of at least CHF 1 million.
Profit tax is reduced in proportion to participation income over total income: a pure holding company therefore pays very little on the dividends it receives. Ticino applies a similar reduction.
The real advantages
Bringing participations in several countries under a single company.
Reinvesting dividends without immediate taxation at shareholder level.
Preparing sales, the entry of investors and generational transfers.
When dividends leave the holding company
Switzerland levies a 35% withholding tax on distributed dividends. Recipients abroad may obtain a partial or full refund under the double taxation agreement or the agreements with the EU, depending on who the shareholder is.
Italian aspects to check first
Holding company managed from Italy (Art. 73(3) TUIR): the holding is considered resident in Italy.
Holding company controlling Italian companies (Art. 73(5-bis) TUIR): presumption of residence in Italy, unless proven otherwise.
Holding company controlled by Italian residents (Art. 167 TUIR, CFC): its income may be taxed in the hands of the Italian shareholder.
We also discuss this in the article “Is it worth opening a company in Switzerland?”.
What about a real estate holding company?
Holding companies that own real estate in Switzerland are common. Note, however, the Lex Koller: for those living abroad, buying shares in a real estate company may require the same authorisation as a direct purchase (see the article “Buying a home in Lugano as a foreigner”).
How we work
Collina d'Oro Consulting SA assists entrepreneurs, family offices and industrial groups with the legal aspects of holding companies: incorporation, articles of association and governance, in coordination with licensed tax advisers.
Sources: Art. 69 LIFD · AFC – Foglio cantonale Ticino · AFC – Imposta preventiva · Art. 73 and 167 TUIR