The capital contribution reserve (CCR) is a balance sheet reserve in Swiss companies comprising amounts contributed by shareholders beyond the nominal share capital — share premiums, additional paid-in capital and qualifying capital contributions under Swiss tax law (Art. 5 LT). Its key tax advantage is that distributions drawn from CCR reserves are exempt from Swiss withholding tax (35%) and not taxable as income for Swiss resident individual shareholders, unlike distributions from retained earnings. This makes CCR a strategic instrument in financial structuring and fundraising for Swiss companies.

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Example: a Swiss holding company receives a CHF 10.0 million capital contribution from its parent, booked to CCR reserves. Three years later, it distributes CHF 10.0 million as a CCR refund — exempt from 35% withholding tax and not taxable for individual shareholders resident in Switzerland, saving approximately CHF 3.5 million in tax versus a standard dividend distribution from retained earnings.

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Hectelion advises on the use of CCR reserves in Swiss financial structuring and transaction planning to optimise the tax efficiency of capital distributions.