Participation relief

In Switzerland, participation relief is a corporate tax mechanism for companies holding qualifying participations in other companies. It reduces the profit tax burden on dividends and, under specified conditions, capital gains from substantial shareholdings, because the underlying profits have usually already been taxed at the subsidiary level. The relief is not a full exemption in every case; its effect depends on the participation, holding period, income type, expenses and cantonal or federal calculation rules. It is central to holding structures and group taxation planning.