Swiss Holding Company Basics

"Swiss holding company" describes what a company does, not a legal form it registers as. There is no separate holding-company entity type in Swiss law. A holding is simply a GmbH or AG, incorporated the ordinary way, whose main assets are shareholdings in other companies rather than trading activity of its own. What makes it worth understanding on its own terms is less the entity itself than a specific piece of tax law that applies to it, and how that law changed in 2020.

The old privilege is gone#

Until the end of 2019, Swiss cantons offered a special reduced tax status to holding companies, and to two related categories, domiciliary and mixed companies. That regime was abolished on 1 January 2020 by the Federal Act on Tax Reform and AHV Financing (TRAF, also known as STAF). It was withdrawn specifically because it no longer met international standards on preferential tax regimes, and every canton had to update its own tax law to remove it.

What replaced it: the participation exemption#

The abolition of the cantonal holding privilege did not remove the underlying reason holding structures made sense in Switzerland. A separate, federal-level mechanism, the participation exemption (Beteiligungsabzug), continues to do that job, and it was not part of what TRAF took away.

Participation exemption at a glance

Qualifying participation

Ownership stake

At least 10% of capital

Or, market value of

At least CHF 1 million

Effect

Applies to

Dividends and capital gains

Legal basis

Art. 69 and 70 DBG

Where a Swiss company holds a qualifying participation in another company, dividends it receives and, under certain conditions, capital gains it realises on selling that stake are relieved from ordinary corporate income tax, at both the federal and cantonal level. The mechanism works by reducing the tax otherwise due in proportion to how much of the company's total income comes from qualifying participations, which in practice brings the effective rate on that income close to zero. Any of the company's other income, from services, royalties, or trading activity, is taxed at ordinary rates in the normal way.

This is why a holding structure still makes sense post-2020: it is not a special status the company applies for, it is a standing feature of federal tax law that any company, holding or otherwise, benefits from automatically once its participations qualify.

Setting one up#

Because a holding company is not a distinct legal form, incorporating one follows exactly the same process as any GmbH or AG: notarised incorporation documents, a capital deposit, and Commercial Register entry. The practical decisions are the same ones any founder makes, GmbH or AG, and the same capital and governance rules apply, including the requirement that at least one person with sole signatory authority is resident in Switzerland.

What differs is mostly at the planning stage, before incorporation: confirming that the underlying participations will actually meet the 10%-or-CHF-1-million qualifying threshold, and structuring the group so that dividend flows up through the Swiss entity in a way that the participation exemption actually applies to.

Information current as of 12 August 2026, based on the Federal Act on Tax Reform and AHV Financing (TRAF/STAF) and Articles 69 and 70 of the Federal Direct Tax Act (DBG).