For Swiss income tax purpose, the CIP is a transparent non-taxable entity. Capital, income and gains derived from the LP are taxed directly with the investors. As a result, there is no tax on the distribution of capital gains by the CIP to Swiss individual investors. Dividend and interest income is taxable but typically of little importance, if any, in a private equity context. Non-resident investors in a CIP are not subject to income, profit, capital or net wealth tax in Switzerland.
The issuance of LP interests is exempt from Swiss securities issuance tax and securities transfer tax. The repayment of invested capital is tax exempt anyway.
The taxation of the profit of the GP Company is in principle subject to the ordinary profit tax (ca. 18 % in the low-tax cantons). Already under the current regime the tax burden may be reduced significantly de-pending on the structure. And there is strong pressure from various angles of the political spectrum to alleviate the tax burden further not only for the GP Company, but also for its managers and owner indi-viduals.
Ultimately, the tax treatment of Swiss LP structures will be regulated in more detail in guidelines of the Federal Tax Administration and the cantonal tax authorities.