Using a company as pre-tax buffer

yes, but, as opposed to a salary, you would not pay any social contributions. and then, since you can use your company as a buffer, if you have fat years, followed by “sabbatical years”, you can spread out your income over many years and pay lower tax thanks to not falling into the higher tax bracket of the progressive tax.

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Maybe we should open a new thread about it. I think it’s more complex than just that.
My actual company has to pay x+15% directly to my new company, which has to pay social contribution for me (on a lower salary, to save taxes?) and has to pay to someone to manage this shell company.

At the end is it worth it?

Done. For the ones who just saw this thread, I have no first hand experience, I just heard that it can be done. If you do already have a company and you have a lot of business this year, but you plan to take it easy the next year, you may decide to spread the dividend over many years.

As a side note, I think as long as the money is in the company, you can even buy ETFs with it. But I can imagine it gets complicated, tax-wise.

That is sort of what I’m doing with the company I started last year. I worked a lot last year and a little less this year, I’m being employed with a small salary that I might reduce in the coming months, and the rest of the money stays in the company.
Just remember that while salaries are expenses, hence deducted from your profits, dividends are not. So no matter what you do you will pay taxes twice: once when the profits are accounted for in the company, and once when you receive the money personally.

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Yes, but if you own more than 10% of the company, you are not taxed on 100% of the dividends. With the new cantonal tax rates for companies, it can make sense for some people.

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A word of warning though: I have some doubts that somebody who creates a company only for the purpose of buffering taxes will succeed. This is not what companies are for. There is a possibility that the tax office sees it otherwise and requalifies anything in the company as privately owned assets. At least, I remember seeing in newspapers (I think NZZ?) that there are precedents of considering such company assets (from trusts) private assets, taxable normally.

In general, the spirit of taxes as I understand them in Switzerland is that, even if something seems to be allowed by the book, it does not mean it will be accepted if it contradicts the intent of the law. The tax office has a margin of appreciation.

Disclaimer: I am not a tax advisor and this is not tax advice. I am only saying that I would probably think twice before doing anything like this, and probably ask at least a tax professional for their opinion. Also because what can and cannot be done varies between cantons.

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True, so for example if your company pays out all income with salaries and records no net income, after a few years the tax office may say, that your company is a joke, because companies exist to make money.

Exactly, so is it still worth it?

I would say it is, such optimisations are as useful as you (or your fiduciary) is creative.
Basically anything that can be even remotely associated with the company operations can be seen as an expense or a liability, and can be deducted from the taxable profits, to the extent of what is allowed by the law of course.
For example, if you have a company that requires traveling, you could buy a car, or even better lease one through the company, and deduct that from the profit it makes.
But as the previous posters said, a company exists to make profits, or at least money, so if the only goal is tax “optimisation” I’d say forget it.

Don’t know why I got roasted by @nabalzbhf in the other thread for optimizing my taxes with a car that I don’t own and here everything seems fine?

Everyone seems fine because they do have a care, they do use for traveling on the job, while you do not have it. You get roasted because you did something not legal.

I think it’s only worth it if you earn more than 200k per year. As a rule of thumb.

I was considering that, but it doesn’t make sense. As a private person, you don’t pay taxes on capital gains. If you hold ETFs in a company, you will have to pay taxes on the capital gains. Already talked to several tax advisors about that. No one really had a clue, tbh.
If anyone is doing it in his/her own company in this forum, it would be nice to have some exchange.

THIS! You will be taxes twice (profit tax for the company - varying between cantons, then personal tax rate when you pay out dividends). Paying out money as dividends is better tax-wise (no AHV, no BVG), but it’s more complicated. Also, ESTV gets 35% when you pay out dividends, which you can only claim back with your tax declaration the year after. Depending on the canton, you need to wait 3 or 4 years before you get back some of the 35% paid upfront.

You also need to consider: to be able to pay more than 10% as dividends, you first have to pay yourself a salary which is approriate. You should check Lohnsalarium for this one. Some years ago, it was enough to get 120k gross per year as a managing director (Nidwalder model). Nowadays, Lohnsalarium will be checked instead. For me, this meant that I have to pay almost 150k as salary to qualify for super-dividend (>10% payed out as dividends).

True (see above). Some cantons (I’m looking at YOU, Basel-Stadt) messed up the whole system though, taxing 80% of the received dividends (instead of 50% or 60% like most other cantons). So you really need to check beforehand.

Yes and no. There are rules for this one, and AHV will check the books thoroughly during a revision. But things like business dinners with customers, traveling to clients etc can be deducted.

One final thing to consider: you need to calculate costs for registering/running the business. AHV/BVG/BU etc need to be paid, you need someone to create your annual accounting etc.
So as romzzz already said: if the companies only purpose is tax optimisation, forget it!

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I’m not sure how this topic is any more “legal” than my post lol.

really? Or are you starting a serious discussion?

I might agree on the unfairness of that system, but I thought it was 100% clear that declaring something that is not true is different than using the law excessively to the letter.

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I’m doing the same thing? I’m deducting car commute expenses because I’m saving 1h/day compared to public transport. It’s a legal reason to do that. How are they going to tell if you really drove a car?

You can also deduct the bicycle + public transport commute cost without even having/using a bicycle.

In any case, I don’t think creating company for the sole purpose of avoiding taxes works. The company needs a real purpose, add value, have customers, etc.

Otherwise would be a really nice loophole since when creating a company you can use pillar 2 funds.

You can only use pillar 2 funds if you create a “Einzelfirma”. It’s not possible for GmbH or AGs.
Just fyi

You should check out Poland, there the majority of IT workers, a lot of sales people, have single person companies, just because they save a bit on taxes. And for years it has been treated as accepted behaviour. Suddenly, the government is lacking money and they said they will look closely into the matter, if people are not “tricking the system”. It is a very shaky topic, legal & moral aspect of taxes.

But did you declare a car as part of your wealth as well?

No, because I don’t own a car. My girlfriend does and she declared it as wealth.

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