The Canton of Vaud (Vaud, Waadt) is one of the largest cantons in Western Switzerland. An official language in the canton is French. The canton of Vaud is the second largest wine producer in Switzerland. A light industry and agriculture are developing in this jurisdiction. A tourism is popular in many cities along Lake Geneva.
A company registration in the canton of Vaud is available for a citizen of any country. Switzerland is an attractive jurisdiction to establish a Swiss company in terms of taxes. The Federal Law on Tax Reform and Financing AHV (TRAF) on May 19, 2019 confirmed, that a country intends to maintain its international competitiveness in order to increase interest in registering international business in Switzerland.
A VAT tax rate is 7,7%, and it is one of the lowest in comparison with other European countries.
Swiss companies are subject to a corporate direct income tax and a capital tax. A federal corporate tax rate in Switzerland is 8,5%. Rates can vary significantly at the cantonal level. Each canton has the right to independently set personal income tax rates, as well as corporate profits in Switzerland. Thus, a canton sets its own municipal and cantonal rates, as well as methods for calculating them. Therefore, it is important to choose the optimal canton for registering a company in Switzerland.
A taxation in the canton of Vaud
Before the tax reform, a corporate tax rate in the canton of Vaud ranged from 20,75% to 23,6%, depending on the location of a company. Since 2019, there has been a decrease in the rate to 13,79%, including a federal tax for all companies in the canton. A capital tax rate is 0,1%.
WHO CAN BE TAXED BY A CORPORATE TAX IN THE CANTON OF VAUD?
Legal entities, whose main office is located in the canton, or who have economic ties with this canton, including:
- Joint Stock Companies;
- Limited Liability Companies;
- Cooperative Companies;
- Associations;
- Funds and other legal entities.
Establishing a company in the canton of Vaud attracts with the possibility of obtaining tax benefits. A reduced taxation is possible for a period of not more than 10 years from the date of opening a company in the Swiss canton of Vaud. Such exemption is temporary, and it is granted to newly registered companies, that operate sustainably in this canton. A process of obtaining tax benefits is controlled by the Council of State and is reviewed on the basis of an application to the Canton Tax Administration (ACI) and the Innovation and Economics Service (SPEI).
To receive a temporary tax exemption, when registering a company in the Swiss canton of Vaud, an application with the following data is required:
- a business plan for the next 3 years;
- a financial forecast for the first 5 years of activity (for example, a planned turnover, a size of wages, planned investments);
- a description of the expected results of the activity (including the creation of new jobs, the influx of investments, a cooperation with local development centers).
This statement should also be accompanied by the following DOCUMENTS:
- Company documents (a Charter);
- A forecast of income for the next 5 years (if possible);
- A form of commitment to compliance with collective labor agreements;
- A filled out application form.
We want to draw your attention to the fact, that since a registration of a company in the canton of Vaud is especially popular, a number of companies, that do not conduct local activities, has increased significantly. This led to frequent inspections by the Swiss tax authorities.The income tax in the canton of Vaud is calculated at a rate of 11,91%. Thus, registering a company in the canton of Vaud is a fairly new solution for opening a business in Switzerland, which provides its advantages to foreign investors.
As a result, a tax reform in the canton of Vaud creates a platform for more foreign investment and an improvement in the economic climate in a country.
Our experts are ready to provide you with a qualified support in registering a company in the canton of Vaud, as well as competent advice on opening an account with a Swiss bank.
