Switzerland is a highly recognized and favored location for setting up stock corporations, especially holding companies.  It is no wonder since the country has granted a lot of tax benefits to foreign companies.
But what is a holding company?  A holding company is a form of stock corporation.  For federal tax purposes, holding companies are companies that are either holding at least 20% of the capital share of another company, which is its principal; or a company that possess shares, valued at a minimum of 2 million Swiss Francs, of another company  This is different with the definition of a holding company for cantonal tax purposes.  In fact, even the meaning of a holding company differs among Swiss cantons.  Generally, cantons define a holding company as a company that obtains its income from subsidiary remittances and it is a company that holds majority of its subsidiary shares.  

In Switzerland, capital gains tax and corporate income taxes of holding companies are reduced both in the federal and cantonal levels.  Additionally, the cantons also reduced a certain percentage from the net worth tax of holding companies.  Holding companies greatly benefit from the tax system of Switzerland that even dividends from holding companies’ subsidiaries are not even taxed; and pure holding companies are taxed at 0.5% to 1.5% by cantons.  The country has also double agreements with major countries which practically reduce the withholding tax to almost zero.  Offshore companies would certainly benefit from opening a holding company in Switzerland given all the tax privileges; and not to mention, the fact that the country has a stable political status, secure currency and it is the heart of Europe.

Swiss holding companies have been put under scrutiny when OECD proposed to eliminate unfair tax competition.  Switzerland resort was to create an agreement with the OECD whereby the country agrees to submit information on possibly fraud holding companies operating within its jurisdiction.