Move registered office to canton with lower tax rates? But then do it properly!

Government and business gave a sigh of relief in Switzerland on 19 May. The Swiss voters had adopted the federal law on tax reform and the financing of state pensions with 66.4% in favour and 33.6% against. This vote in favour has really fuelled the competitive pressures regarding locational advantage in the cantons. The cantons are using lower tax rates to court new companies from abroad and neighbouring cantons with higher tax rates. This is a problem for the canton of Zurich, for example, because Switzerland’s economic driver is groaning under the enormous strains of serving a major city; the canton therefore feels it is unable to reduce the tax rate.

For companies, a change of domicile to a nearby canton with lower tax rates is appealing. Can a public limited company benefit in the long term from moving its registered office, at least by statute, to a canton with lower tax rates? Let’s look at the last Federal Supreme Court rulings on this subject:

Nowadays, the authorities carry out strict checks to make sure that the actual business activity is carried out at the place of the company’s registered office.

Statutory relocation of registered office

For the Federal Supreme Court of Switzerland, simply carrying out general and board meetings is not enough for the tax legal recognition of the relocation of the registered office. This applies even when the invitations to the general meeting were sent from the place of the new domicile. The Federal Supreme Court (now) checks among other things whether the company’s management is located at the place of the registered office, whether rented rooms are used for the actual business activity and where the employees and shareholders live.

Are you thinking about a statutory relocation of the company’s registered office? It is best to first clarify issues such as: where does your market perform, where are your partners and suppliers based? Where do you have the best chances of attracting the scarce specialists your company needs? We would be happy to help you think all this through.