The short version: Form 5471, Subpart F and NCTI when you own a Swiss company
If you own 10% or more of a Swiss GmbH or AG—directly, indirectly, or through attribution—or you sit on its board, the US tax system treats that foreign corporation as reportable to the IRS. Form 5471 is the annual information return that starts that reporting. If US shareholders collectively own more than 50%, the company is usually a controlled foreign corporation, which brings in Subpart F and Net CFC Tested Income (NCTI, the renamed and recalibrated version of GILTI). The key point: the IRS can tax your share of certain company profits even when the money never leaves the GmbH or AG. The good news is that Swiss corporate tax in most cantons often offsets most or all of that residual US tax because the US gives you a credit for foreign taxes paid.
When Form 5471 is required
Form 5471 has several categories. For most US citizen founders and board members of Swiss companies, the two that matter are the ownership category and the Category 5 officer/director category. You file as a US person if you own at least 10% of the foreign corporation—counting direct, indirect, and attribution ownership—or if you are an officer or director of a foreign corporation in which a US person owns 10% or more. A controlled foreign corporation then exists when US shareholders collectively own more than 50% of the stock by vote or value.
- You own 10% or more of the shares directly, indirectly, or by attribution.
- You serve as a director or officer and any US person owns 10% or more.
- US shareholders together own more than 50%, making the company a controlled foreign corporation.
What Form 5471 penalties actually look like
The filing is not optional, and the penalties are designed to get your attention. The initial penalty under IRC 6038(b)(1) is $10,000 per controlled foreign corporation per year. After the IRS sends notice, an additional $10,000 accrues for each 30-day period, capped at $50,000 in additional penalties—so the maximum is $60,000 per CFC per year. On top of that, IRC 6038(c) can reduce your foreign tax credit by 10% and then by an additional 5% for each 90-day period, and under IRC 6501(c)(8) the statute of limitations does not begin until the Form 5471 is filed. That last part matters: an unfiled Form 5471 can leave the entire return open indefinitely.
Subpart F: the older anti-deferral rule
Subpart F has been around since 1962. It taxes certain passive income of a controlled foreign corporation currently in the hands of the US shareholder, even if the income stays inside the company. The classic categories are interest, dividends, royalties, and certain related-party income. A typical Swiss operating company that earns active service or manufacturing income often has little or no Subpart F exposure, but it becomes relevant if the company builds up passive investment income or does transactions with related parties in the wrong direction. If your GmbH or AG holds investment funds or ETFs as portfolio assets, the PFIC rules can stack on top of Subpart F—our Form 8621 and PFIC Reporting guide explains that separate filing.
NCTI (formerly GILTI): the broader residual tax on CFC profits
GILTI arrived with the 2017 Tax Cuts and Jobs Act. For tax years beginning after December 31, 2025, the OBBBA renamed it Net CFC Tested Income, or NCTI. The mechanics changed in three important ways. The IRC 250 deduction falls from 50% to 40%, which raises the effective US rate from 10.5% to 12.6%. The deemed-paid foreign tax credit under IRC 960(d) rises from 80% to 90% of the foreign taxes attributable to that income. And the computation moves from a global blending approach to a country-by-country basis. In plain English: instead of mixing high-tax and low-tax countries together, the US now looks at the Swiss company's tested income and its Swiss taxes separately.
NCTI is a concept, not a separate Swiss tax
Switzerland does not tax NCTI or GILTI. This is a US tax concept layered on top of your Swiss corporate profits. The Swiss company pays Swiss corporate tax as usual; the US then asks whether a residual amount is due after the foreign tax credit.
If you also personally hold Swiss mutual funds or ETFs, that is a separate PFIC problem, not a Subpart F/NCTI issue. See Swiss Mutual Funds, ETFs and the PFIC Tax Trap for how that works on your personal return.
Why Swiss corporate tax usually neutralizes the residual NCTI
Swiss combined federal, cantonal and communal corporate income tax rates vary meaningfully by canton. The range runs from roughly 11.66% in Lucerne to about 20.54% in Bern, with a national average around 14.4%. The federal element is 8.5% on profit after tax, which works out to about 7.83% on pre-tax profit. Zug sits around 11.9%, Zurich around 19.7%, and Geneva around 14.7%. Because the effective NCTI rate after 2025 is about 12.6% and the deemed-paid credit covers 90% of the Swiss taxes, a company in a mid-to-high-tax canton often owes little or no residual US tax. A low-tax canton can leave a smaller residual, because the Swiss rate may not fully cover the US effective rate.
~12.6%
Effective NCTI rate after 2025 (up from 10.5% under old GILTI)
None of this means the filing goes away. Even if the tax due is zero, the Form 5471 and the NCTI calculation are still required. The goal is not to avoid filing but to file accurately and avoid duplicative tax.
How experienced US owners in Switzerland handle this
The calm approach is usually: get the Swiss financials translated into US tax principles, file the required information returns, and let the foreign tax credit do its work. Many owners work with a cross-border CPA who understands both the Swiss cantonal tax return and the US forms. If the GmbH or AG also pays a Swiss salary and social contributions, the personal return has its own issues—our Swiss Pension Plans and US Taxes guide walks through how Pillars 1, 2 and 3 interact with the US return. This depends on your specific structure and canton, so get personal advice before relying on any general pattern.
Start with the decision, not the forms
Before automating the filings, take stock: how much of the company do you own, does your board seat trigger Category 5, and is the company a CFC? Then you can sequence the work with a cross-border CPA instead of reacting to IRS notices.