Tax on profit distributions – withholding tax

Tax on profit distributions

In the Canton of Geneva, some improvements in corporate taxation were made in 2009. The taxation of profit distributions is not left out of the change that has been initiated. This technical term implies the payment of profits or dividends to the shareholders or partners of a company from the profits. The tax authorities have the power to control the distribution system. In case of non-compliance with the related rule, this authority may also impose sanctions.

At first glance, in order to alleviate economic double taxation, the said reform affects in particular participants with a participation rate of not less than 10% depending on the amount or wealth invested in the company. The price to be paid for participation in private assets is up to 60% more in dividends than in profit shares. On the other hand, 50% is required if the participations belong to the commercial assets.

Secondly, 35% federal tax is prescribed in the distribution circuit between the company and the shareholders. Note that the tax in question is drawn from all forms of shareholder compensation. A system of full refunds of withholding tax is also available to Swiss residents after they have declared their income. But it should be noted that foreign residents do not receive the same treatment, a final charge is reserved for them. On the other hand, they can apply for a partial or total tax reduction, depending on the case, especially if they live in a treaty country. No tax relief will be granted unless requested. Like any administrative process, this process is set by procedures well.

The net taxable profit for companies in the canton of Geneva

At the end of each accounting period, each company can prepare financial statements that determine the result of a sustained effort during a period. However, it cannot enjoy all of them because of its obligations to the State, including the tax on its profits.

All companies established in Switzerland must pay their tax on the profit of each company. However, taxes vary according to the profits of each company. The taxable profit is governed by the principles of commercial accounting.

However, tax returns are always followed by a copy of the amended financial statement. Namely: the balance sheet, the profit and loss account and the notes. Where applicable, the financial statements must be signed by the competent bodies of the company.

These conditions concern the district of Geneva. There may be similarities in substance, but the differences are considerable in the rest of Switzerland.

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