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10.3.2. Mixed Company

The mixed company tax status is very similar to the domicile company status. The difference is that a mixed company is allowed to carry out limited commercial activities in Switzerland. In general at least 80% of the income from commercial activities must be foreign sourced (i.e. a maximum of 20% of the income may be Swiss sourced). In most cantons also at least 80% of the costs must be related to activities performed outside of Switzerland (foreign related). If those requirements are met, the same taxation rules as for the domicile company can be applied for in a ruling with the cantonal tax authorities (see above). The portion of the foreign sourced income which is subject to cantonal and communal level varies between 5% and 25% (normally higher than for a domicile company) and depends on the activities carried out and the infrastructure in Switzerland.

On federal level a mixed company is ordinarily taxed at an effective tax rate of 7.83% (except for qualifying participation income which is subject to the participation relief). In total a domicile company is subject to an effective tax rate of 7.83% to 12% on foreign sourced income.