Participation Deduction Calculator
Calculate the participation deduction for corporations with qualifying participations.
The participation deduction (Art. 69-70 DBG, Art. 28 StHG) is the most important instrument for avoiding economic double taxation of legal entities. It reduces corporate income tax in proportion to the share of participation income relative to total profit. It is indispensable for holding companies and corporate groups.
When does the participation deduction apply?
The participation deduction is available to corporations and cooperatives that:
Hold at least 10% of the share capital or nominal capital of another company, or
Hold a participation with a fair market value of at least CHF 1 million.
The deduction applies to dividends, capital gains from the disposal of participations, and liquidation surpluses. It operates as a tax reduction, not a profit deduction.
Calculating the participation deduction
The reduction is calculated using the formula:
Tax reduction = Corporate income tax x (Net participation income / Net profit)
The net participation income is derived from gross participation income minus attributable financing costs and a flat charge for administrative expenses (5% of gross income).
Example: With a net profit of CHF 1 million, of which CHF 600,000 is net participation income, the corporate income tax is reduced by 60%.
Frequently Asked Questions
- Does the participation deduction apply at the federal level?+
- What is the difference from the holding privilege?+
- How are capital gains from participations treated?+