Asset holding & investment structures

Recent corporate tax reforms in Switzerland and the significant reduction of cantonal and municipal profit tax rates have reinforced the attractiveness of certain investment and holding structures.

Structures that were previously relevant only in specific situations or cantons particularly real estate companies, investment vehicles and group holding companies may now offer efficient and flexible solutions for private clients, entrepreneurs and internationally active families.

Depending on the individual investment strategy and personal circumstances, the appropriate use of such structures can contribute to the optimisation of personal taxation, risk management and long term asset planning.

Investment and holding structures in Switzerland

Investment companies and holding vehicles

Swiss investment and holding companies may be used to:

centralise and manage financial investments;
structure private or family owned assets;
organise participations in operating companies;
prepare succession or future transfer scenarios.

When properly designed, these structures can offer advantages in terms of:

tax efficiency;
asset segregation;
governance and control;
long term planning.

Each structure must however be assessed on a case by case basis, considering the investor’s tax residence, asset composition and international exposure.

Real estate structures

Real estate holding structures remain a key planning tool, particularly in a Swiss context.

Depending on the canton and the investment strategy, real estate companies may help:

optimise income and capital gains taxation;
structure financing and debt;
facilitate succession or partial transfers;
manage risk and asset separation.

Their efficiency depends strongly on cantonal practice, financing structure and the intended holding period.

Trusts and partnerships as planning instruments

Trusts in a Swiss context

Despite the criticisms they sometimes face, trusts can be effective tax and estate planning tools in an international context. However, because trusts are not recognised as legal entities under Swiss law, only their effects are acknowledged.

Swiss tax authorities do not base their analysis on the label of a trust (for example “irrevocable discretionary trust”), but on its actual legal and economic effects, as determined by:

the trust deed;
the powers retained by the settlor or trustee;
the rights of beneficiaries.

As a result, it is not uncommon for individuals to relocate to Switzerland believing their trust will be taxed according to its name, only to discover that Swiss authorities requalify it (for example as a transparent structure), potentially undermining the entire planning strategy.

Even seemingly minor clauses such as the power to modify beneficiaries may lead to unexpected tax consequences.

Partnerships and alternative structures

Partnerships and similar investment vehicles may also play a role in asset structuring, particularly for:

private equity investments;
family owned investment activities;
cross border holding arrangements.

As with trusts, the tax treatment of partnerships in Switzerland and abroad depends on their substance, governance and economic reality, and must be analysed consistently from both a Swiss and foreign perspective.

Importance of Swiss and international compatibility

The use of investment structures, trusts or partnerships requires a thorough legal and tax compatibility review, considering:

Swiss tax practice;
applicable double taxation treaties;
civil law considerations;
foreign tax rules in relevant jurisdictions.

What is efficient or accepted in one country may lead to adverse or unintended outcomes once Swiss rules apply.

How RSM Switzerland supports you

Our Private Client Services specialists assist private clients, entrepreneurs and families with:

assessing the suitability of investment and holding structures;• reviewing existing structures and trusts;
identifying tax and legal risks;
implementing or adjusting structures in line with Swiss and international legislation;• ensuring ongoing compliance and administrative management.

By combining local Swiss expertise with the RSM international network, we provide coordinated and pragmatic advice for complex cross border asset and investment structures.