Many family fortunes are held through companies that neither produce nor sell anything. In Swiss anti-money laundering law they are called domiciliary companies (Sitzgesellschaften). The term is not pejorative: holding and investment vehicles have legitimate purposes, from succession planning to pooling participations. It does, however, have consequences for due diligence.
Distinction from an operating company
A domiciliary company conducts no trading, manufacturing or other commercially run business. Typical indicators are the absence of its own premises and its own staff, or premises and staff that perform only administrative tasks. A pure investment holding can be a domiciliary company; a holding that actually manages a group of companies is less likely to be one. The classification is a case-by-case assessment and must be documented.
What changes in due diligence
For operating companies the question is the controlling person. For domiciliary companies the question is to whom the assets ultimately belong, recorded on Form A. In addition, a domiciliary company is in itself a risk indicator. Combined with other factors — a foreign seat, complex chains, politically exposed persons — it leads to enhanced due diligence.
Not the same as the former tax status
In everyday language, domiciliary company is often equated with the former cantonal tax status for companies without business activity in Switzerland (Domizilgesellschaft). Those special tax regimes were abolished by the Swiss tax reform TRAF with effect from 1 January 2020. The anti-money laundering category continues to exist independently. Mixing tax and AML concepts leads to wrong conclusions.
Domiciliary companies in family offices
In family structures, domiciliary companies are often part of a chain: a foundation or trust at the top, one or more intermediate companies, then custody accounts and participations below. A correct overall view requires managing the chain as a whole rather than each company in isolation. Otherwise wealth is double-counted, and the question of who is entitled to what remains open.
Relation to the TJPG
Domiciliary companies in the form of an AG or GmbH are in principle subject to reporting under the TJPG. The register asks about control, not entitlement to assets. For one and the same company two answers can therefore coexist: the controlling person in the register and the beneficial owner of a custody account on Form A. Both must be consistent and explainable.