New company, branch or holding: management and permanent establishments

The new Swiss company and its place of effective management

Most Italian entrepreneurs who bring business to Ticino do so through a new Swiss company, either an SA or a Sagl. The company law is described in Chapter F.II, which also discusses the requirement that at least one person authorized to represent the company be domiciled in Switzerland. The tax question that decides whether the structure works is the place of effective management. Under Article 73 paragraph 3 TUIR as amended by Legislative Decree No. 209/2023, a company is resident in Italy if for the greater part of the tax period it has in Italy its registered office, its place of effective management or its principal ordinary management. The place of effective management is defined as the "continuous and coordinated assumption of strategic decisions concerning the company as a whole", and ordinary management as the "continuous and coordinated performance of day-to-day management acts concerning the company as a whole".¹

The two definitions turn the analysis to people. A Swiss company whose strategic decisions are taken by an owner living in Varese, or whose daily business is conducted by employees working from Italy, is resident in Italy under either criterion, whatever its register entry. The configuration in which the owner has moved to Lugano is the more favourable one. If he lives in Ticino, takes the strategic decisions there and employs staff in Lugano who conduct the daily business, the Swiss company is managed in Switzerland. The difficulty lies in the transition. During the first months after the move the owner often continues to spend much time in Italy, the Italian staff continue to deal with the Swiss company's customers and the new Lugano office has not yet hired its own staff. Board minutes, emails and travel records from that period will be examined in any later audit.

The holding structure and the presumption of Article 73 paragraph 5-bis

A common structure places a Swiss holding company above the Italian operating company. The entrepreneur moves to Ticino, contributes or sells his shares in the Italian company to a new Swiss holding and then receives dividends through it. Article 73 paragraph 5-bis TUIR creates a rebuttable presumption that a foreign entity holding controlling participations in Italian companies is resident in Italy if it is controlled, directly or indirectly, by Italian residents, or if it is administered by a board or equivalent body composed in the majority of persons resident in Italy.² The presumption is assessed at the end of the foreign entity's financial year and, for individuals, the votes of family members are added. If the entrepreneur has genuinely become a Swiss resident and the board of the holding consists mainly of Swiss residents, neither condition is met and the presumption does not apply. If he remains an Italian resident, or if his adult children who continue to live in Milan hold the majority, the presumption bites. The holding must then prove that its strategic decisions are taken in Switzerland.

The holding structure also raises the question of withholding tax. Dividends paid by the Italian company to a Swiss holding may be exempt from Italian withholding tax under Article 9 of the Agreement between Switzerland and the European Union on the automatic exchange of financial account information if the holding has held at least 25 per cent for at least two years and the anti-abuse conditions are met. Chapter F.II describes the Revenue Agency's resolution of 2023 on this point, and Chapter H.III describes the procedures. The relief is not available if the Swiss holding is a mere conduit or if the Italian authorities treat it as resident in Italy, which makes the place of management of the holding as important as that of an operating company.

Notes

1. TUIR, Art. 73 para. 3, as amended by Legislative Decree No. 209 of 27 December 2023, text at Brocardi.it, https://brocardi.it/testo-unico-imposte-redditi/titolo-ii/capo-i/art73.html. The English renderings follow the summary of the source [R as to the exact Italian wording]. ↩
2. TUIR, Art. 73 para. 5-bis (Brocardi.it, above), including the assessment at the end of the financial year and the inclusion of the votes of family members. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.