# Holding Company in Switzerland: Rates, Participation Relief, Pillar Two > Swiss holding company: cantonal rates 12–15%, participation relief, TRAF 2020 reform, global minimum tax Pillar Two (QDMTT/IIR), and substance requirements. Author: Мария Плотникова — юрист, Family Office (https://wiki.private.law/authors/plotnikova) Last modified: 2026-07-16T12:27:00.000Z Canonical: https://wiki.private.law/en/company-switzerland Topics: structures Jurisdictions: switzerland Semantic tags: substance --- Switzerland remains one of the most respected jurisdictions for holding structures: political stability, a broad network of tax treaties, a strong banking sector, and predictable law. After the 2020 reform and the arrival of the global minimum tax, its holding regime has changed significantly, and understanding the current landscape is important before choosing a canton. ## History: From Cantonal Privileges to TRAF Holding Switzerland grew out of federalism. Each canton sets its own rates and for decades competed for companies, while special regimes—holding, mixed, and domiciliary company—almost completely exempted foreign-sourced profits from cantonal tax. By the early 2000s, thousands of international group holdings were based in the country, holding shares in subsidiaries around the world on Swiss balance sheets. The model collapsed under external pressure. In February 2007, the European Commission declared cantonal regimes incompatible with the 1972 Free Trade Agreement: "foreign" and domestic profits were taxed differently—classic ring-fencing. The OECD added a line about harmful tax practices. The first reform attempt, Corporate Tax Reform III, failed in a referendum on February 12, 2017 (59.1% against): cantons feared losing revenue. Switzerland was placed on the EU "grey" list, and the revised STAF/TRAF package was approved by citizens on May 19, 2019, with more than 66% in favor; it entered into force on January 1, 2020. The dismantling of banking secrecy proceeded in parallel—see the article [History of Tax Havens](https://wiki.private.law/en/tax-havens-history). > 🧭 A Swiss holding today is an ordinary company on [general rates](https://www.efd.admin.ch/en/swiss-tax-system) that benefits from participation relief. The special cantonal status was closed in 2020; structures with the old holding status were transferred to the general regime through a transitional step-up. ## Tax Rates Corporate income tax consists of federal, cantonal, and municipal components. The federal rate is fixed (8.5% of profit after tax), while cantons compete with each other. In most cantons, the effective combined rate is in the range of approximately 12–15%, while the country-wide range is broader—from 12% to 21%. The lowest rates are traditionally in Zug, Schwyz, Nidwalden, and Lucerne, which makes them centers of attraction for holdings. ## Participation Relief The key mechanism for a holding is participation relief (Beteiligungsabzug). Dividends from a qualified participation are exempt from tax if the shareholding is at least 10% of capital or its value is not less than CHF 1 million. Capital gains from the sale of a participation also fall under the relief if the shareholding is at least 10%, held for a minimum of one year. In practice, this reduces the tax on income from long-term subsidiaries to almost zero. > ⚙️ Participation relief exempts dividends and gains from qualified participations (from 10% or CHF 1 million in value). This is what makes a Swiss company an effective holding instrument. ## Application: Who Holds a Holding in Switzerland A Swiss holding is chosen for three reasons: a broad network of nearly a hundred tax treaties, the jurisdiction's reputation with banks and counterparties, and predictable administration. Against this backdrop, it works as a neutral European center for holding shares—dividends are pulled up there and participations are sold through it. ### Zug, Commodity Trading, and IP Canton Zug has held the lowest combined rate for decades—around 11.9%—and has assembled a dense cluster: nearby, in Baar, sits Glencore, in Geneva—Trafigura, and around them—technology companies and crypto projects. The low rate only works in conjunction with [substance](https://wiki.private.law/en/economic-substance): real trading and management teams are kept there. After TRAF, a patent box was added, and owning intellectual property within the group became convenient directly from Switzerland. For family offices, a holding in Switzerland is a neutral umbrella over operating assets in different countries: dividends are pulled up under participation relief, and the sale of a qualified shareholding, when the threshold and holding period are met, passes without corporate income tax. The same tasks are solved by holdings in [Cyprus](https://wiki.private.law/en/company-cyprus), the [Netherlands](https://wiki.private.law/en/company-netherlands), [Ireland](https://wiki.private.law/en/company-ireland), and [Luxembourg](https://wiki.private.law/en/company-luxembourg); the choice between them is determined by the network of treaties and the attitude of banks. > 🧭 Switzerland is chosen where stability and access to treaties are paramount; pure rate savings are easier to find elsewhere. ## 2020 Reform (TRAF) Since 2020, Switzerland has abolished special privileged regimes for holding, domiciliary, and mixed companies, which the OECD and EU considered unfair tax competition. In their place, general instruments for all were introduced: mandatory cantonal patent box, optional enhanced R&D deduction, and transitional step-up rules. The regime became uniform for all companies and more resilient to international criticism. New instruments replaced old statuses with specific deductions. The cantonal patent box exempts up to 90% of profits from qualified intellectual property; super-deduction on R&D adds up to 50% to actual research expenses; certain high-tax cantons like Zurich introduced a deduction for notional interest on equity (NID). The total relief from all measures is limited to 70% of taxable profit. > ⚙️ The 70% threshold works as a floor: even a company with maximum patent box and R&D deduction pays tax on at least 30% of profit. It is impossible to completely zero out the rate in Switzerland—this was the condition for exiting the dispute with the EU and OECD. ## Pillar Two: Global Minimum Tax For large international groups with turnover exceeding EUR 750 million, the global minimum tax has entered into force. Switzerland introduced a national QDMTT from January 1, 2024, and from January 1, 2025—the Income Inclusion Rule (IIR). If the profit of a subsidiary structure is taxed at a rate below 15%, the difference is topped up to this level. The advantage of ultra-low cantonal rates for such groups is thereby neutralized, and cantons respond with non-tax support measures. The legal basis for Pillar Two in Switzerland is constitutional: the amendment was approved in a referendum on June 18, 2023, and from January 1, 2024, a temporary ordinance on minimum taxation has been in effect, referring directly to the OECD model rules. First, QDMTT was activated, from 2025—IIR; the Federal Council postponed UTPR indefinitely, hoping that foreign UTPR will backstop the Swiss treasury. From tax year 2025, groups within the Pillar Two perimeter file a unified GloBE Information Return with the [federal tax service](https://www.estv.admin.ch/); the first report for the calendar year is due by June 30, 2026. How other low-tax centers are introducing the same minimum can be seen in the example of [Hong Kong](https://wiki.private.law/en/hong-kong-pillar-two-15). ## Substance, Withholding Tax, and Reputation > 🔗 **Related** > [Holding Structures](https://wiki.private.law/en/holding-structures) · [Holding in Cyprus](https://wiki.private.law/en/company-cyprus) · [Holding in the Netherlands](https://wiki.private.law/en/company-netherlands) · [Luxembourg SOPARFI](https://wiki.private.law/en/company-luxembourg) · [Economic Substance](https://wiki.private.law/en/economic-substance) · [CRS](https://wiki.private.law/en/crs-overview) A Swiss company requires a real presence: management, office, and personnel on site—a formal shell will not withstand scrutiny and will not gain access to treaties. It is also worth remembering the withholding tax: Switzerland withholds 35% on dividends, one of the highest in the world, although it is refunded or reduced under tax treaties. In sum, reputation and the network of treaties outweigh these costs for structures with genuine economic activity. > 🍓 A Swiss holding is built on participation relief, a broad network of treaties, and reputation. After the 2020 reform and the arrival of Pillar Two, the canton's rate ceased to be the main argument; substance and structure sustainability came to the fore. *This material is for informational and analytical purposes only and does not replace individual legal or tax advice.* --- ## Factual claims - Switzerland remains one of the most respected jurisdictions for holding structures: political stability, a broad network of tax treaties, a strong banking sector, and predictable law. - Canton Zug has held the lowest combined rate for decades—around 11.9%—and has assembled a dense cluster: nearby, in Baar, sits Glencore, in Geneva—Trafigura, and around them—technology companies and crypto projects. - Since 2020, Switzerland has abolished special privileged regimes for holding, domiciliary, and mixed companies, which the OECD and EU considered unfair tax competition. - For large international groups with turnover exceeding EUR 750 million, the global minimum tax has entered into force.