Where to incorporate in Western Europe: the tax rate is the least of it
Liechtenstein, Luxembourg, Switzerland, the Netherlands and Denmark compared on tax, substance, banking and speed, with a verdict for each kind of founder.
Benelux correspondentSeptember 20267 min readEach of these five countries has a pitch that leads with a number or a phrase: Liechtenstein says 12.5%, Luxembourg "holding regime", Switzerland "pick your canton", the Netherlands "participation exemption", and Denmark nothing in particular, which is why founders overlook it.
Russian-speaking founders search mostly for the first two; they usually need one of the last three.
A corporate tax rate is a promise the jurisdiction makes to you; substance is a promise you make to the jurisdiction. These five differ far more on the second, which decides whether a bank opens the account and whether a buyer's lawyers wave you through at exit.
The five at a glance
| Liechtenstein | Luxembourg | Switzerland | Netherlands | Denmark | |
|---|---|---|---|---|---|
| Entity | AG or Anstalt | SA or SARL | AG or GmbH | BV | ApS |
| Headline corporate tax | 12.5% flat, plus a minimum tax | 16%; roughly 24% all-in | About 11.7% to 20.5%, by canton (2026) | 19%, then 25.8% | 22% flat |
| Single-market status | EEA, not EU; Swiss franc | EU, euro | Neither; bilateral agreements | EU, euro | EU, own currency |
| Resident director rule | Art. 180a-qualified board member (EEA-resident, licensed) for entities without a commercial business | None by statute; central administration decides tax residence | One Swiss-domiciled representative (Art. 718 CO) | None by statute; substance tests bite | None |
| Time to incorporate | Weeks, via trustee | Weeks, notary | Weeks, notary and register | Days to weeks, notary | Fast, digital |
| Banking (our view) | Used to foreign owners; heavy KYC | Built for funds | Best here, priced to match | Hard without local staff | Cautious but predictable |
Rates are headlines, before the 15% global minimum all five apply to large groups; "time to incorporate" measures the registrar, and the bank is always slower.
Liechtenstein: the rate is real, the small print is Liechtenstein-shaped
The 12.5% flat rate is genuine, and the package around it is better than the headline: participation income is exempt, a notional interest deduction on equity pulls the effective rate lower for well-capitalised companies, and a private asset structure that only holds investments pays the minimum tax and nothing else. Liechtenstein is in the EEA, so an AG has freedom of establishment across the single market while keeping its books in Swiss francs. Our Liechtenstein tax profile has the mechanics.
Now the small print. An AG or Anstalt without a commercial business must have a board member meeting the Article 180a qualification — an EEA-resident, Liechtenstein-authorised person or a licensed trustee, lawyer or auditor; in practice a Liechtenstein trustee, who charges accordingly. The Anstalt, the form agents love to sell, is a local invention that foreign tax authorities must classify before they can tax it, and not always the way you hoped. My view: superb for a regulated or asset-heavy business with a real local presence; a slow-motion mistake for anyone wanting a cheap operating company with a low number on it.
Luxembourg: a holding regime, not an address for an operating business
SOPARFI is not a legal form but a nickname for an ordinary, fully taxable Luxembourg company, usually an SA or SARL, that uses the parent-subsidiary exemption: dividends and gains from a qualifying subsidiary, broadly a stake of at least 10% held for twelve months, arrive tax-free. Fall short on either test and only a half exemption on dividends (not gains) from fully taxed EU or treaty-country subsidiaries remains.
Everything else is fully taxable: the 16% corporate rate in force since the 2025 tax year, plus an employment-fund surcharge and municipal business tax, roughly 24% all-in in the capital, plus an annual net wealth tax with a minimum that even a pure holding pays. The Luxembourg tax page sets out the layers.
Luxembourg is where you put the holding above your businesses, ideally when a fund or co-investor insists — not where you put the business. Registering an operating SARL here for the "holding regime" is buying a Ferrari to fetch the groceries.
Switzerland: the canton is the decision, the resident director is the price
Switzerland does not have a corporate tax rate; it has twenty-six. Combined federal, cantonal and communal rates run from under 12% to about 20.5% depending on where the company sits, with a flat 8.5% federal statutory rate underneath.
Two rules bite. Under Article 718 of the Code of Obligations, every Swiss company must be able to be represented by a person domiciled in Switzerland — since 2015, a board member or executive officer. And a founder from outside the EU or EFTA who wants to work in his own Swiss company needs a residence and work permit, granted by the canton within quotas on the strength of the business case; our Switzerland programmes page covers them. Switzerland is in neither the EU nor the EEA and reaches the single market through bilateral agreements — fine for goods and services, awkward for regulated finance.
Swiss banks onboard foreign-owned companies better than anyone here, if you fit the profile and pay for it. Switzerland is for the founder who is moving there or has a genuine Swiss-resident partner on the board; bought-in resident directors are a compliance product, not substance, and the cantonal tax offices know the difference.
The Netherlands: the exemption is free, the substance is not
The Dutch BV is the workhorse of European group structuring. Corporate tax is 19% on the first bracket of profit and 25.8% above, a 9% innovation-box rate exists for genuine research, and the participation exemption switches off tax on dividends and gains from a stake of just 5%.
Then the anti-abuse machinery: a conditional withholding tax at the top corporate rate on interest, royalties and, since 2024, dividends paid to related companies in low-tax jurisdictions (a rate below 9%, or the EU blacklist); substance tests that stopped being a safe harbour in 2020, so meeting them no longer protects you if the inspector can show abuse; and banks grown allergic to BVs whose directors and owners all live abroad. The Netherlands tax profile has the rate card.
The Netherlands works brilliantly for a group that puts people, decisions and payroll in the country; for a letterbox holding it has become one of the most hostile addresses in Europe.
Denmark: the boring one that works
Denmark has no pitch, and that is its pitch. Corporate tax is a flat 22% with a participation exemption for subsidiary shares; the ApS is registered digitally on the Virk portal with MitID or an approved foreign electronic ID, a filing rather than a ceremony; and there is no residency or nationality requirement for directors or executives. None. The Denmark tax page has the details.
The catches are Danish. The company needs a NemKonto, the account through which the state pays and collects, so a Danish bank must accept you — and Danish banks are careful with non-resident owners the way the tax authorities are careful with everyone. Denmark won the conduit-holding cases at the EU Court of Justice in February 2019, and the beneficial-ownership doctrine is now used against thin holdings across the Union.
Denmark is the right answer for a founder who wants a clean EU operating company, a fast honest registrar and no interest in tax engineering — and the wrong answer for anyone who arrived hoping for the engineering.
If you hold a Russian passport
EU sanctions cap the deposits banks may accept from Russian nationals who hold neither EU, EEA or Swiss citizenship nor a residence permit in one of those countries, and ban trust and similar services for them; Switzerland and Liechtenstein apply matching restrictions. A company owned by a Russian national without European residency will be onboarded slowly or not at all, whatever the registrar says; the founders who succeed hold, or are about to hold, an EU, EEA or Swiss residence permit or a second nationality. Fix residency first.
The verdict, by founder
Operating tech or services business, and you are moving to Europe: Denmark for speed and predictability, the Netherlands for talent and treaties; both punish letterboxes and reward people on the ground.
Holding above several businesses, with outside investors: Luxembourg if the investors are institutional and you can meet the exemption's tests; the Netherlands if there are real staff to place there.
Regulated financial or crypto business wanting single-market access: Liechtenstein, if you accept a licensed local board member and a real office — the only place on this list where EEA passporting and a 12.5% rate coexist.
Moving yourself to the Alps with wealth to manage: Switzerland, canton chosen before the company, permit filed before the notary.
The lowest rate with nothing behind it: none of them. All five now run a 15% minimum for large groups, a beneficial-owner register (Switzerland's opens on 1 October 2026) and a tax authority that reads the OECD's notes. The low rate is the least important column in the table; pick the country you could describe as home to a bank compliance officer without blushing.
The full, dated reference for this: Services.
Frequently asked
What is the corporate tax rate in Liechtenstein?
Liechtenstein taxes legal entities at a flat 12.5% on profit, with a minimum annual income tax that applies even in loss years. Dividends and capital gains from participations are exempt, and companies may claim a notional interest deduction on their equity, which lowers the effective rate for well-capitalised businesses. A private asset structure that only holds investments and does not trade pays the minimum tax alone. Large multinational groups within the scope of the OECD's global minimum tax are topped up to 15% under Liechtenstein's separate GloBE legislation, so the 12.5% is in practice a rate for companies below that threshold. Liechtenstein is a member of the European Economic Area, uses the Swiss franc and sits in a customs union with Switzerland.
Is a SOPARFI a type of Luxembourg company?
No. SOPARFI is shorthand for an ordinary, fully taxable Luxembourg company, normally an SA or an SARL, whose main activity is holding participations and which uses the parent-subsidiary exemption. Dividends and liquidation proceeds from a qualifying subsidiary are exempt where the parent holds a sufficient stake, broadly at least 10% or an equivalent acquisition-cost test, for an uninterrupted period of twelve months. If the percentage or the holding period is not met, a 50% exemption may still apply to dividends, though not to gains, from a fully taxable EU or treaty-country company. Income that does not qualify is taxed at the normal rate: 16% corporate income tax from the 2025 tax year onwards, plus the employment-fund surcharge and municipal business tax, giving an aggregate rate of roughly 24% in Luxembourg City. The company also pays an annual net wealth tax with a minimum amount.
Do I need a Swiss resident director to set up a company in Switzerland?
You need a Swiss-resident representative. Article 718 paragraph 4 of the Swiss Code of Obligations, in force since 2008 and tightened on 1 July 2015, requires every company limited by shares (AG) to be capable of being represented by a person domiciled in Switzerland, who must be a member of the board of directors or an executive officer; the same principle applies to the GmbH. Ownership itself is unrestricted. A founder from outside the EU or EFTA who wants to live in Switzerland and work in the company needs a residence and work permit, which the canton grants within federal quotas and on the strength of the business plan. Corporate tax is levied at federal, cantonal and communal level, and the combined rate ranges from about 11.7% to 20.5% (2026) depending on the location, so choose the canton before you choose the notary.
Can a foreigner register a company in Denmark without living there?
Yes. Danish company law imposes no residency or nationality requirement on the members of an ApS's executive board or board of directors; all of them may live outside Denmark and outside the EU. The company is founded and registered digitally through the Virk portal, which requires the Danish MitID or a foreign electronic ID approved under the EU eIDAS framework, and the paid-in share capital must be documented at registration. Corporation tax is a flat 22%. In practice the binding constraint is banking: the company needs a NemKonto, the designated account through which the Danish state pays and collects, so a Danish bank must onboard the owners, and banks apply enhanced checks to non-resident shareholders. A company registered in Denmark or managed from Denmark is normally Danish tax resident.
What are the substance requirements for a Dutch BV holding company?
The Netherlands looks at whether a holding company is actually managed in the country: where the directors live, where board decisions are taken, where the books and principal bank accounts are kept, and whether there are real payroll costs and office space. Until 2020 meeting the listed criteria gave a safe harbour; since 1 January 2020 it no longer does, and the tax inspector may still deny treaty or directive benefits if the structure is shown to be abusive. Separately, a conditional withholding tax at the top corporate rate of 25.8% applies to interest, royalties and, since 2024, dividends paid to related entities in low-tax jurisdictions, defined as a corporate rate below 9% or a place on the EU list of non-cooperative jurisdictions. The participation exemption itself still applies from a 5% shareholding.
Can a Russian citizen open a company in the EU or Switzerland in 2026?
Incorporation is usually possible; banking is the problem. EU sanctions under Regulation 833/2014 cap the deposits that EU banks may accept from Russian nationals or residents, and prohibit registering or administering trusts and similar arrangements for them. Both restrictions carry exemptions for people who hold citizenship of, or a temporary or permanent residence permit in, an EU member state, an EEA country or Switzerland. Switzerland and Liechtenstein have adopted matching measures. Company service providers and banks therefore apply enhanced due diligence to any structure with a Russian national in the ownership chain, and many decline outright where the owner has no European residency. In practice the order of operations is to secure a residence permit or a second nationality first, and to incorporate second.
Sources (7)
Reports on Dutch and Belgian residence and the rulings that expire faster than a five-year plan.
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