Avoiding withholding tax in Switzerland: Optimization opportunities with Malta as a holding location

What is withholding tax in Switzerland?

Switzerland levies a withholding tax of 35% on dividends, interest and certain license income. This tax is deducted directly at source before the income is paid out to the recipient.

The high withholding tax can often be optimized through double taxation agreements (DTAs) or a suitable holding structure.

How can you avoid withholding tax in Switzerland?

A holding structure in Malta is a proven strategy to avoid or significantly reduce withholding tax on dividends from a Swiss company.

Why Malta as a holding location?

Malta offers a particularly attractive tax regime for holding companies and is a member of the EU, which offers additional legal protection.

The Maltese tax model

• Companies in Malta are subject to corporation tax of 35%.
• However, shareholders can apply for a tax refund of 6/7 of the tax paid.
• This reduces the effective tax burden to just 5%.
• Furthermore, Malta does not levy withholding tax on dividends that are distributed abroad.

How does the avoidance of withholding tax in Switzerland work with a Malta holding company?

1. Schweizer AG pays dividends to the Malta holding company
2. • Thanks to the double taxation agreement (DTA Switzerland – Malta), the withholding tax can be reduced from 35% to 5% or even 0%.
2. The Malta holding company only pays an effective 5% tax
3. • The holding company applies for a tax refund in Malta and thus reduces its tax burden.
3. Tax-optimized distribution of profits
4. • The remaining profits can be distributed to the shareholders in a tax-optimized manner or reinvested.

Advantages of a Malta holding company for Swiss entrepreneurs

• Reduction or avoidance of Swiss withholding tax on dividends
• Effective tax burden of only 5% in Malta
• Legal certainty through the DTA Switzerland-Malta
• No withholding tax on dividend distributions from Malta to other countries
• Flexible capital management and reinvestment of profits

Conclusion: Avoidance of withholding tax for Swiss companies with a Malta holding company

A Malta holding company is an effective strategy to avoid the high Swiss withholding tax. Thanks to the double taxation agreement and the advantageous 5% taxation in Malta, Swiss entrepreneurs can significantly reduce their tax burden.

In order to ensure a legally compliant and tax-optimized structure, it is advisable to seek advice from experts who are familiar with international holding structures.