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Right on time: Why Switzerland is poised to become a prime jurisdiction for families to establish their private trust companies

Switzerland has long been known for its international wealth management sector. It’s reputation as a global private wealth hub stems from a combination of factors including its political stability, financial services infrastructure and expertise in international markets.  However, its new regulatory regime for asset managers and professional trustees now means that it is fast becoming an attractive location to set up and maintain a private trust company.

A ‘private trust company’ (commonly known as a PTC) is a powerful tool for families to organise their wealth and achieve succession and governance in a cohesive manner.  A PTC is usually favoured by ultra-high net worth families looking to take more of a driving seat in determining the succession of complex assets such as a family business.

Only one piece of the puzzle is missing; Switzerland does not yet have its own trust law. The creation of a Swiss trust as a formal concept under Swiss law has been the subject of lengthy discussions at the Federal Council level for many years. Although a draft bill for a new Swiss trust law was released in 2022 and public consultation on the bill closed in 2023, a decision has been made not to continue with the introduction of a Swiss trust due to a lack of political consensus. Instead, Switzerland maintains its position as a leading trust administration jurisdiction through its 2007 ratification of The Hague Convention of 1985 on the Law Applicable to Trusts and on their Recognition. This has directly contributed to the development of the Swiss trust industry, premised on foreign law trusts administered from Switzerland.

Form of Private Trust Company in Switzerland

As a result of a new regulatory regime which came into effect from 2020, a Swiss company acting as trustee now requires a central licence to carry out trustee services where threshold criteria are met.  A PTC in Switzerland which acts as trustee for one or more connected trusts on a private basis can however be exempt from obtaining a Swiss license from a regulatory perspective.

Connected trusts are those which are established by the same settlor, exclusively for the benefit of persons with family ties1. There are a number of categories of persons who may fall within the family ties exemption in the context of a PTC:

  • relatives by blood or by marriage in the direct line;
  • relatives by blood or by marriage up to the fourth degree in the collateral line;
  • spouses and registered partners; and
  • persons living in a permanent life partnership with a trustee.

As such, any Swiss PTC will need to be indirectly controlled by a person with ‘family ties’ to the beneficiaries or directly controlled by a trust set up by a person with family ties, in order for the licensing exemption to apply.

It is also key that the PTC which is acting as trustee is not providing trustee services to the general public.  Trusts managed by licensed trustees must meet the criteria required under the Federal Act on Financial Institutions of 15 June 2018 (the FinIA) (for example, regulated trustees must have a minimum share capital of CHF 100,000 paid up in cash with adequate collateral, and the management body must consist of at least two qualified persons, the details of which are regulated by the Federal Council). Trusts managed on a private basis do not have these threshold requirements; similarities can be drawn to the functions of a single family office although on a more focussed scale.

A Swiss PTC is able to be incorporated in one of the twenty-six Swiss cantons. Settlors are able to take advantage of Switzerland’s cantonal division and, for example, its differing tax rates when looking to optimise their wealth structures. This is because Swiss corporates are taxed at rates that vary from canton to canton with the majority of cantons levying tax at less than 15%.

Switzerland in particular also offers a variant to the PTC: a ‘dedicated trust company’ (commonly known as a DTC).  A DTC is owned and operated by a licenced professional Swiss trust company, in its corporate capacity, and therefore does not need to avail itself of an exemption from trustee licensing as a PTC does. They are, however, focussed on one family – acting as trustee either of multiple trusts established by the same settlor or benefiting members of the family with family ties back to the settlor. A family can influence control over its DTC indirectly (by, for example, dictating the selection criteria for the DTC board members or by holding positions on various advisory committees to the underlying trusts). Although a DTC may not have the flexibility in terms of family involvement that a PTC has, it has the advantage of ‘piggybacking’ off the professional trust company’s licence in terms of regulation whilst serving single family purposes.

Why a Private Trust Company?

The principal benefits of PTCs, as compared to other professionally managed wealth holding structures, is summarized in the SWOT analysis (Strengths – Weaknesses – Threats – Opportunities) below:


Maintains Family Control – PTCs are ideal structures for families who want to take advantage of a wealth planning structure without sacrificing control.  The founder and the founder’s family can comprise the majority, if not all, of the board of directors of the PTC and make decisions as they would in their capacity as shareholder of the underlying businesses of the structure.  Control from an ownership perspective is therefore managed by the family.  

Ensures Continuity – As a company cannot die, succession of ownership is inbuilt into a PTC. The individuals serving on the board will change over time, requiring succession procedures to be implemented as part of set-up to ensure continuity for the family. Using a professional licensed trustee may not guarantee continuity of relationship over the long term due to the risks of the business being sold (scalable fiduciary businesses remain ripe for acquisition by private equity) and the potential for trust relationship managers to leave.  


Flexibility to include Governance - The family’s broader governance needs and objectives can also be accommodated within the PTC. For example, if there is a desire for future generations who choose to work in the family business to be gradually integrated into the PTC structure, this can be accommodated by forming a family committee which may be invited to meetings of the board of the PTC. Individual members of the family committee, once they reach a certain age or have a certain number of years of experience within the family business, may be invited to fill a vacant board seat.

Control Information – In a time where global transparency is increasing year on year, there has been a strong trend towards basing structures in onshore centres or jurisdictions which are closer to the hub of the family or the family’s wealth. As it is not uncommon for high net-worth families to have assets managed in Switzerland, having a Swiss company at the helm of a structure can simplify the associated due diligence and tax reporting from a Swiss perspective.

Decision Making - A professional corporate trustee is ultimately subject to the decisions of its owners and managers, which may mean that business transactions or key decisions of the family will be subject to external policies and procedures. PTC’s offer a flexibility in decision making without the concern of delay or immobilisation which is more common in professionally managed wealth holding structures.  For example, a family that is interested in the expansion of its business into new markets or regions will face less hurdles in implementation through a PTC structure versus a professionally managed structure.  


Reliant on Key Professionals – A PTC will require the input of experienced professionals outside the family circle in order to assist with the administration of the PTC as well as educate family members. It is not unusual for these professionals to build up a close relationship with the family, and over time the family may become reliant on their experience and knowledge. The absence or departure of key professionals will therefore impact the operations of the PTC.  

Cost Control – A PTC has ongoing operating expenses from its inception, including founding capital, incorporation costs, taxes and legal fees, audit and accounting fees.  There will also be on-going service fees associated with third parties assisting in the administration and management of the PTC.  Economic and business factors may drive increases in third party costs, which will be outside the control of the family and the PTC.


Changes in Regulatory Framework – PTC’s are generally exempt from trustee licensing in many of the major private wealth hubs, however changes to the regulatory framework can have significant impact on the efficiencies and longevity of the structure (for instance, if additional anti-money laundering measures are imposed, this can lead to increased compliance requirements which may affect the PTC’s cost model).

Requires Family Consensus and Responsibility – Due to the longevity of a PTC, consensus and buy-in from future generations of the family is needed.  It also requires the family to assume responsibility for complying with corresponding legal obligations of the PTC, which ideally will be regularly monitored to ensure compliance with applicable laws.  If the family does not agree to be responsible for these obligations, or does not include future generations in decision making, this can threaten the existence of the PTC.

Regulatory obligations in Switzerland

Trustee licencing exemption

The introduction of the licencing regime for asset managers and trustees via the FinIA has strengthened the credibility of Switzerland’s reputation from a wealth management perspective.  The new provisions of the FinIA read alongside the Financial Institutions Ordinance of 6 November 2019 (the FinIO) now mean that a trustee exercising its activities in a professional capacity2 in Switzerland is classified as a ‘financial institution’ which is subject to a licencing requirement and placed under the supervision of the Swiss Financial Market Supervisory Authority (FINMA). This regulation and supervision validates the trustee with respect to its services.  

However, the FinIA/FinIO take a pragmatic approach to PTCs: there is an exemption from the licencing regime under certain conditions for trustees managing assets of persons with whom they have family ties. Family ties are tightly defined in the relevant regulations and consider both multi-generational relationships as well as lateral lines as set out in Article 4(1) of the FinIO. The recent expansion of the definition of ‘professional capacity’ applicable to trustees does not impact this.

Although the provisions of FinIA/FinIO confirm that an exemption from licensing is available if certain conditions are met, FINMA has publicly stated that any entity wishing to utilise an exemption should communicate with FINMA regarding their exemption status, particularly whilst the licencing framework is still in its infancy.

The exemption from licensing in Switzerland is therefore largely in line with the regimes in other well-known PTC jurisdictions. As is common in those jurisdictions, families who set up a PTC in Switzerland will also often need to engage the services of a third-party professional administrator who is himself/itself licensed and supervised to deal with the day-to-day activities.  

Anti-money laundering

All Swiss companies are required to consider their obligations under Swiss anti-money laundering legislation, the Federal Act on Combatting Money Laundering and Terrorist Financing 1997 (the AMLA). The conditions of the AMLA are not applicable to companies which, amongst other criteria, have gross earnings in its corporate capacity of under CHF 50,000 per calendar year with less than 20 business partners.

In many cases a PTC will not fall within this category due to the nature of its family related trusteeship. PTC’s which do fall within the AMLA will be subject to a number of duties which include the following:

  • The duty to identify and document the beneficial owner of the trust;
  • The duty to clarify the economic background and the purpose of a transaction or of a business relationship if the transaction or the business relationship appears unusual, or if it carries a higher risk (which is always deemed to be the case for business relationships with politically exposed persons and their family members);
  • The duty to keep records of transactions carried out and of clarifications required under the AMLA; and
  • The duty to file a report with the Money Laundering Reporting Office Switzerland in the event of a suspicion of money laundering.

International reporting

Switzerland is a reporting jurisdiction for tax reporting regimes such as Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standards (in this regard Switzerland has entered into more than 70 bilateral agreements for the exchange of information with the EU, UAE, UK, Hong Kong and Singapore, among others).

Although there is currently no centralised register of beneficial owners of companies in Switzerland, the Federal Department of Finances in Switzerland has been tasked to draft legislation designed to increase transparency and identify the beneficial owners of Swiss legal entities with an obligation to keep this updated based on a risk assessment. The introduction of beneficial ownership register in Switzerland at some point in the future should be anticipated, however the register would only be available to competent Swiss authorities and not to the general public. This would however be a major change to the current legislation, where such information is not available to the authorities except those in charge of enforcing anti-money laundering legislation.

Other beneficial ownership registration regimes may also apply to the underlying non-Swiss subsidiaries of a Swiss PTC structure, depending on the jurisdiction of incorporation.

Corporate requirements for a Private Trust Company in Switzerland

Corporate form

A Swiss PTC is a legal entity independent from its owners, with the corporate form of a company limited by shares (Aktiengesellschaft or AG / société anonyme or SA) or a limited liability company (Gesellschaft mit beschränkter Haftung or GmbH / société à responsabilité limitée or SARL). The choice of corporate form as well as the canton of incorporation, will usually be guided by the settlor’s personal preferences as well as tax considerations. In most cases, unless the settlor is guided by financial considerations in setting up the company (as the AG will require a minimum share capital of CHF 100,000 versus the GmbH which requires a minimum share capital of CHF 20,000) a Swiss PTC will take the form of an AG.  Unlike the GmbH, where the name of the shareholders are published, the identity of the shareholder(s) of an AG remains confidential.

Other corporate formalities

Swiss PTCs follow the corporate formalities of any Swiss company requiring, for example, a minimum share capital, Swiss bank account and corporate governance formalities, as well as traditional audit where required and accounting and tax return filing requirements.  


The nature of a PTC is that it is usually under the control of the family to whom it serves as wealth guardian – often directly by individual members, or indirectly by specialist vehicles such as non-charitable purpose trusts. Structures which are owned by purpose trusts are theoretically ‘orphaned’ and often complement a family’s asset protection, succession planning and confidentiality objectives.

Purpose trusts are frequently used to own Swiss PTC’s, however as Switzerland currently lacks any form of trust law these need to be set up and managed by professional trustees outside of Switzerland. Foundations, however, are a creature of Swiss law, and this includes family foundations (a foundation established for the benefit of beneficiaries who are members of the founder’s family). The Swiss Civil Code includes an exhaustive list of purposes for which a family foundation may be set up, covering education, welfare and health, A Swiss family foundation would therefore not be suitable as an ownership solution for a Swiss PTC, given that its sole purpose would need to be the holding of shares in the PTC.  

Care must be taken however when structuring the purpose trust, to ensure that the Swiss PTC’s ability to obtain a licencing exemption is not jeopardized. This usually requires certain roles within the purpose trust (such as the role of an enforcer) to be undertaken by the settlor or persons with family ties to the settlor.

Provided the settlor is not tax resident in Switzerland, they are able to be involved at every level of the Swiss PTC structure as it best suits the family agenda. For example, a business founder would be able to act in an enforcer function for the purpose trust and a protector for the underlying trusts; as well as sit on the board of directors of the PTC, subject to conflict of interest considerations as well as their individual home country tax considerations.

Composition of the board

The composition of the board of directors of a PTC is fundamental to the relationship between the PTC and the wider family. Directors have a dual responsibility – corporate duties and responsibilities towards the company itself and also fiduciary duties and responsibilities in acting as trustee of the underlying trusts.

A key element of Swiss corporate legislation is that the board of a Swiss PTC must be represented by at least one person with residence in Switzerland.  It is often the case that the wealth-owning family are not based in Switzerland, and so this is where an independent, professional licenced Swiss trustee can complement the structure. The advantage of engaging a licenced Swiss trustee in this capacity (on commercial terms) is twofold – the licenced trustee could be engaged to deal with the day-to-day operations of the Swiss company and administer the underlying trusts and also would satisfy the Swiss residence requirement by agreeing to provide a local director to the PTC. With a seat on the board, the professional service provider would be given sufficient exposure to the activities of the underlying businesses in order to carry out its duties and obligations as a board member and administrator of the trusts.

Swiss taxation 

Taxation of the PTC in Switzerland

Switzerland’s tax regime as it applies to PTCs is highly favourable.  Although there is an annual obligation on a PTC to file a Swiss tax return, Swiss taxation is not imposed in principle on assets held by a Swiss PTC provided the settlor and the beneficiaries of the underlying trusts, and the shareholders of the PTC, are all not tax resident in Switzerland.

As is the case in other jurisdictions, Switzerland has a concept of central management and control. As a matter of Swiss taxation, a PTC (or indeed, any company) will be resident in Switzerland if its corporate domicile (ie. its place of incorporation) is in Switzerland. A company which is not incorporated in Switzerland would also be considered tax resident in Switzerland if its place of effective management is in Switzerland, which may be the place from which day-to-day activities are carried out and/or the place from which managerial decisions are taken.

Nonetheless, the fact that a non-Swiss incorporated PTC may be deemed to be effectively managed in Switzerland for Swiss tax purposes has no impact on the taxation of the underlying trust assets. This is on the basis that the PTC is acting in a fiduciary capacity and owns the assets by virtue of its role as trustee. Effective management of the PTC in Switzerland should not therefore result in the trust’s underlying assets becoming subject to taxation in Switzerland.  

If a PTC has income reserves at year-end (because, for example, it has received fees for its services as trustee) it will be subject to Swiss profit tax. A Swiss PTC does not, however, need to charge fees for its services.

Dividends received by the PTC from the underlying trust businesses in its capacity as trustee are not taxable in Switzerland in the majority of circumstances.

VAT is also an important consideration, and Swiss PTCs often chose service providers (such as legal advisors, audit and accounting) based in Switzerland.  If the services provided are for the benefit of the trust’s beneficiaries and the tax domicile of those beneficiaries is not in Switzerland, this can lead to a VAT exemption on the provision of services in certain circumstances.

A further consideration is the individual board members – under Swiss law, the board of directors of PTCs may be treated as employees. Swiss tax (including social security, source tax and pension contributions) is therefore a consideration if any board member is remunerated for his/her services.

Taxation of the Settlor and Beneficiaries in Switzerland

As mentioned above, as long as the settlor and beneficiaries of any underlying trust are not  Swiss tax residents, the trust assets of the PTC should not become subject to Swiss taxes.

In the case of the settlor and beneficiaries relocating to Switzerland, the following issues will arise:

  • Settlor Relocation to Switzerland: If the settlor is in a position to control the trustees (to instruct and to replace them) or if the settlor were to remain as the primary beneficiary of the trust being administered by the PTC, the trust can usually be disregarded for Swiss tax purposes and the trust assets as well as any income/gains arising from them would in such cases be attributed to the settlor for income and wealth tax purposes (ie. transparent tax treatment). This ultimately may have no impact for the settlor if he/she is taxed under the lump-sum regime3. If, however, the trust is irrevocable, the settlor will in most cases be deemed to have made a gift of the trust assets and therefore they will not be taxable in his/her hands. It goes without saying that an individual thinking about relocating to Switzerland should obtain advice prior to taking up residence, in order to ensure that any non-Swiss or Swiss structure remains effective from both a tax and legal perspective.
  • Beneficiary relocation to Switzerland: In principle, the beneficiary will not be taxed on the trust assets. He/she may, however, be taxed on the income and assets derived from the trust in proportion to his/her share if the trust qualifies as an irrevocable fixed interest trust, or on the distributions if it qualifies as an irrevocable discretionary trust. Again, if the beneficiary is taxed under the lump-sum regime, this may have no impact as taxes are levied exclusively on the lump-sum granted by the tax authority (provided that the Swiss source income and assets do not exceed the lump-sum).


PTCs are not a new concept in Switzerland. What has changed is the regulatory approach to a Swiss company acting as trustee, which now requires a central licence if threshold criteria are met. The licencing regime for Swiss trustees has therefore contributed to the growing popularity of a Swiss PTC, and provides an ideal environment for its incorporation and administration in Switzerland as part of a family’s wider wealth planning strategy.


1 Article 4(1) of the Financial Institutions Ordinance of 6 November 2019.
2 Art. 19 para. 1 FinIO specifies that trustees carry out their activity in a professional capacity and within the meaning of money laundering law if (i) they generate gross proceeds of more than CHF 50,000 per calendar year, (ii) they enter into business relationships with more than 20 contracting parties per calendar year or maintain at least 20 such relationships per calendar year, or (iii)  they have a power of disposal of third party assets in an amount exceeding CHF 5 million. Per guidance from the Federal Department of Finance, the third criteria previously was not applicable to trustees as trust assets were not deemed to be third party assets. However, since 3 February 2024 FINMA has updated its guidance and confirmed that this third criteria does indeed now apply to trustees on the basis that trust assets are economically separate from the trustee’s personal assets.
3 The lump-sum regime is a special tax system available to non-Swiss citizens who do not carry out a gainful activity in Switzerland – it is a taxation based on expenses.  


Originally published in the International Family Offices Journal - Global Law Online

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