Benefits of using a Swiss company to hold investments owned by Turkish residents or companies

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Turkish shareholders with foreign portfolio investments should consider owning these investments through a Swiss company, especially if these investments are held in Switzerland.

What are the main advantages?

a) Profits taxed in Switzerland will be at a rate of 14% and 25% instead of the corresponding corporate tax rate in Turkey of 11.9% or a personal income rate of 40% (marginal tax rate).

b) Reducing the information that Turkey needs to provide under the CRS Regulations.

c) Turkey has a double taxation treaty with Switzerland, the tax provisions of which iran mobile database entered into force on 1 January 2013.

Turkish CFC rules and Swiss corporate tax

As described above, Swiss companies present an interesting opportunity because their corporate tax rate varies between 11.9% and 14% (depending on the Swiss canton in which they are located). This is helpful because under Turkish CFC rules, the undistributed income of foreign subsidiaries should not be payable in Turkey when the foreign company's corporate tax rate exceeds 10%.

Investment currency fluctuations

Fluctuations in the Turkish lira against major currencies can trigger taxable foreign exchange gains when held by Turkish individuals and corporate taxpayers. The currency fluctuations of investments are taxed in Turkey, even if they are not realized. A Swiss company is not taxed on the currency fluctuations of investments, as long as the gain is not realized.

Equities are recorded in Swiss financial statements at their acquisition value, unless they are sold and a profit is realized.