Choosing a wealth holding structure is one of the most consequential decisions in a family's wealth planning. In Switzerland, several vehicles are available, each with its own advantages, constraints and tax implications. None is universally superior: the right choice depends on the family's specific situation, objectives and time horizon.
The Swiss holding company
A holding company is a corporation (generally a Swiss SA or Sàrl) whose purpose is to hold interests in other companies or financial assets. It is particularly common where a family owns one or more operating businesses or a portfolio of investments.
Key advantages:
- Tax reduction on dividends: under Swiss law, holdings of more than 10% benefit from a substantial participation reduction (Beteiligungsabzug, art. 69 ff. LIFD) that can significantly reduce the taxation of dividends and capital gains.
- Asset separation: personal assets are kept separate from professional assets or those held within the holding structure.
- Succession planning: shares in the holding can be transferred according to precise rules, with potentially optimised valuation.
Limitations:
- Maintenance costs (accounting, audit, general meeting)
- Not suitable for holding non-productive assets outside a business context
- Tax implications on entry and exit of assets
The Swiss family foundation
A family foundation (Stiftung in German) is an autonomous legal entity endowed with assets allocated to a defined purpose. In Switzerland, the family foundation under the Civil Code (art. 335 CC) has a limited scope: it may only allocate its resources to education, establishment and support costs for its beneficiaries, not for general investment or wealth management purposes.
Appropriate use: funding descendants' education, assistance in cases of economic hardship, support for professional establishment.
Ordinary foundation (art. 80 ff. CC): unlike the restrictive family foundation, an ordinary foundation may have a broader wealth purpose, but it requires supervision by the foundation supervisory authority, transparent management and no redistribution to founders.
Important limitations:
- The foundation belongs to no one: once established, the assets are permanently allocated to it
- Irrevocable commitment of capital
- Mandatory supervision by the cantonal authority
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The trust: recognised in Switzerland but not constitutable
Switzerland has ratified the Hague Convention on Trusts (in force since 2007), which means that trusts validly established under foreign law (English, Jersey, Cayman, etc.) are recognised in Switzerland. However, Switzerland does not have the trust as an institution of domestic law: it is not possible to establish a Swiss trust.
In practice, families with international interests frequently use trusts established under English, Jersey or other common-law jurisdictions, with assets held at Swiss banks. Swiss recognition of these structures facilitates their administration from Switzerland.
Advantages (of a recognised foreign trust):
- Clear separation between settlor, trustee and beneficiaries
- Asset protection against certain creditors
- Flexibility for multi-generational transmission
- Confidentiality (depending on jurisdiction)
Limitations:
- High establishment and maintenance costs
- Requires a professional trustee in the jurisdiction of establishment
- Complex tax implications (ESTV has precise rules on fiscal transparency of trusts)
Summary comparison
| Structure | Control | Cost | Succession | Swiss tax | Internationalisation |
|---|---|---|---|---|---|
| Holding SA/Sàrl | High | Medium | Flexible | Favourable (participations) | Limited |
| Family foundation | Low | Medium | Rigid | Neutral | Limited |
| Foreign trust | Variable | High | Very flexible | Complex | Strong |
A decision embedded in a global strategy
The choice of a holding structure is not made in isolation. It is part of a global wealth strategy that takes account of personal and corporate taxation, succession law, liquidity needs and multi-generational objectives. A structural error can generate significant and potentially irreversible tax and legal costs.
Ridger assists its clients in analysing and selecting appropriate wealth structures, in coordination with specialist tax advisers and lawyers. To discuss your situation in full confidence, we invite you to get in touch.