Tax optimisation for companies: How can you save taxes as the owner of an AG or GmbH?

Legislators assume that taxpaying companies and individuals exhaust all legal means for deductions and optimisations in their tax return, and this practice is perfectly acceptable. Therefore, it is also worthwhile following the guidelines of the Federal Tax Administration (FTA) carefully so as to benefit from all possible tax optimisations. In this article, you will learn more about how you can optimise your taxes as an entrepreneur. An entrepreneur in Switzerland can optimise their taxes at two levels: at the level of the company and at the level of the private individual. Follow these tips to easily optimise your taxes:

Tax optimisation at company level

Formation of del credere (5-10% of the accounts receivable balance)

One way to optimise taxes at the company level is to create a del credere. Del credere is a provision that is used to cover bad debts. Companies can deduct 5-10% of their accounts receivable balance as an allowance for doubtful accounts to reduce their tax base.

Creation of guarantee provisions

Guarantee provisions are provisions for future guarantee obligations. The creation of guarantee provisions can help to reduce the company’s tax base as they are deducted from taxable income.

Deduction of “the third of goods” on inventories

“The third of goods” is a special provision that allows companies to deduct one third of the value of their inventories. This can help to reduce the company’s tax base.

Additional employee benefits

Companies can provide certain additional employee benefits that are tax deductible which reduces the company’s tax base.

Deduction for a study in a private home

A company may claim a deduction for a study in the private home of the owner or employees, provided it is used for business purposes. This deduction can also help reduce the company’s tax base.

Planning supplier and customer invoices

Tax optimisation at the company level can be achieved by adjusting the timing of customer and supplier invoices. The goal is to balance expenses and income over the years. If the year is very profitable, larger customer invoices can be postponed into the new tax year. If there is a foreseeable loss, invoicing is accelerated in the current tax year. Taxes can be further optimised by establishing agreements with suppliers on the timing of invoices.

Tax optimisation at owner level

In margin note 72 of the salary statement guidelines, the FTA lists the benefits that are not to be declared for taxes. These are non-taxable for the employee/owner and can be listed as a business-related expense for the company. This reduces the company’s profit which means income tax is reduced on the dividend.

The following benefits do not have to be declared on the salary statement:

• Free SBB half-fare card
• REKA-Check benefits up to CHF600 (e.g. free delivery of CHF600 in REKA-Checks)
• Customary Christmas, birthday, engagement, and similar gifts in kind up to CHF 500 per event. A gift in kind can be a voucher, but not a monetary gift.
• Contributions to association and club memberships (but not subscriptions to fitness clubs) up to CHF 1,000 per individual case.
• Admission tickets for cultural, sporting and other social events up to CHF 500 per event (only contributions exceeding CHF 500 per event must be declared).
• Free parking at the place of work

The following benefits are neither subject to AHV nor taxable, but must be declared on the salary statement:

Lump-sum expense allowance (approx. 3-5% of gross salary)

The following benefits are not subject to AHV, but are taxable for the employee

Family allowances (child, education, household, marriage, birth allowances) within the scope that is customary in the locality or industry. According to the Federal Supreme Court, unmarried persons may also receive this allowance.

The following private expenses are tax-deductible and are often forgotten:

• Deduction of health costs, in particular expenses for glasses and contact lenses.
• The direct federal tax for the current year can be entered as a debt in the assets.

Tax Optimisation and Retirement Planning for Entrepreneurs

This section presents various ways in which business owners can simultaneously save taxes and increase their retirement provisions.

Saving taxes through pension funds

One of the best ways to save taxes is to use occupational pension schemes, especially pension funds. Contributions to a pension fund, especially voluntary purchases, can be deducted from taxable income, provided there is a purchase potential.

The purchase potential depends on the retirement capital saved to date and the current salary level. By reducing the tax progression, the tax burden can be considerably lowered, while, at the same time, pension capital can be built up and invested for the long term.

However, it should be noted that the purchased capital is not available until retirement and is entrusted to the pension fund in the long term.

Save taxes with dividends

Entrepreneurs can distribute income from their company in the form of dividends. It can be advantageous to receive part of the salary as a dividend, as this is subject to preferential taxation.

Only 60% of dividends are taxed as income at the federal level, while there are differences at the cantonal level. A salary/dividend strategy should consider all short- and long-term effects.

Save taxes through voluntary pension provision

Pillar 3a is a classic instrument for building up retirement capital and saving taxes at the same time. Every year, a certain amount (CHF 7,056 in 2023) can be paid into Pillar 3a and deducted from income.

The capital can be withdrawn no earlier than 5 years before reaching the AHV retirement age, although there are exceptions, such as taking up self-employment or purchasing owner-occupied residential property.

Save taxes through a withdrawal strategy

The payout of pension capital from a pension fund and pillar 3a is tax-privileged, but varies depending on the place of residence. The tax burden can be optimised by staggering the payouts. As a company owner, you can more easily plan your withdrawals and retirement.

Save taxes by changing your domicile

A transfer of domicile of the company headquarters or a change of residence can provide tax advantages but is not practicable for every entrepreneur. Tax savings can be realised in cases where a change of domicile or residence is easy to implement.