Is Rolex a non profit organization?

Wryfox · Dec 29, 2020

vitriol
https://hanswilsdorf.ch/
Here is an official website of the said foundation

and here are 'Rolex' records from the Swiss Trade Register;
ROLEX SA
https://ge.ch/hrcintapp/externalCompanyReport.action?companyOfsUid=CHE-105.962.823
Rolex Holding SA
https://ge.ch/hrcintapp/externalCompanyReport.action?companyOfsUid=CHE-102.844.305
Rolex Promotions SA
https://ge.ch/hrcintapp/externalCompanyReport.action?companyOfsUid=CHE-101.604.810
Those won't tell you lots interesting things, names of the members of managerial board, the dates of the fusions, names of the auditor - stuff like that, but no Statutory Accounts (which is fine - companies which are not listed do not have to public their Accounts).

I do taxes for a living, open secret in our environment says that it's great idea to set up a foundation high on the top of your structure, as a 'mother company' let's say. Under certain circumstances, foundations are exempt from the corporate tax (pretty much in every OECD country).
The foundation in a homeland is a very decent alternative to an aggressive tax optimization in one of those exotic countries you probably never been to.
IKEA is another, even more known, example of the company held by a private foundation(s).

Yep, done as a tax dodge. I'll try to dig up the history of it I have somewhere, but I recall when this was done pre war it was legal to set it up this way, but no longer as the loophole is closed. They are grandfathered.

Thrasher36 · Dec 29, 2020

This is purely a Tax Shelter nothing more nothing less. I'm sure they are no more Charitable than any other big corporation, Perhaps even less since nobody can see their numbers. If they really want to do people a favor they would insure their products are available to everyone who can afford to buy. If they want to impress me then the should publish their numbers until then it's just another scam to separate fools from their money.

vitriol · Dec 29, 2020

Nobel Prize
Otherwise every organization in Switzerland, including Richmond, would be non profit.

Richmond is listed on two stock exchanges.

There is a deal which each company needs to consider;
- either go IPO, disclosure your revenue, costs, income and all your figures,
- or, stay privately owned company.

Syrte · Dec 29, 2020

Nobel Prize
Bottom line, they could keep all the money. Right?

No, if they are for profit corporations in a civilized country they presumably have to pay taxes. Which go to fund hospitals,
Education and roads— not just penguins.
As stated above, setting themselves up as a foundation may be a way to avoid taxation.

TimeODanaos · Dec 29, 2020

What they're doing is not wrong - but the spiel in the OP is a rather depressing piece of spin. Lots of corporates donate alongside paying their regular bills - and that's good. Some commercial enterprises are held by non-profits, also no problem. For example, back in the day I recall the medical research giant Wellcome Trust was initially funded by Henry Wellcome's eponymous pharma company. But lack of transparency undermines the whole ethos; Rolex/Wilsdorf will of course know that, and have calculated the balance of reputational costs and benefits, whatever those might be.
I just think the best way to donate is to cut out the intermediary! (And buy the watch you want anyway.)

gatorcpa · Dec 29, 2020

As I understand from the links posted above, Rolex, SA and its affiliated marketing and holding companies are considered corporations in Switzerland.

In most countries (I cannot speak about Switzerland in particular) corporate profits are taxed once at the corporate level at normal rates (including state/cantonal tax) and again when the after-tax profits are distributed to the shareholders as dividends.

To the extent that the corporate stock is owned by a charitable trust, those dividends should be exempt from tax, but not the corporate profits that generated those dividends.

Of course, there may not be dividends paid every year. Since Rolex and its affiliates are private corporations, there is no requirement to disclose payment of dividends.

So the whole exercise here is speculative. My guess is that Rolex itself pays income tax on its profits, but the Rolex Foundation does not pay tax on the dividends it receives.

From a US perspective, there is a very good reason to set up a corporate structure this way and it has very little to do with income tax and everything to do with estate taxes. When an owner of a closely-held business wants to pass shares in the company down to the next generation, US estate taxes could take as much as 50% of value of the stock transferred. By leaving shares to a charitable trust, that value of shares are removed from the estate and are allowed to grow income tax free to benefit charity.

A win-win-win situation. The founding family continues to control the business through board of director control of the main companies and of the charitable trust, the corpus of the trust is deducted from the estate and is not subject to income tax on dividends received in the future.

I do not know if the law works the same way in Switzerland, but I suspect it is similar.
gatorcpa

Nobel Prize · Dec 30, 2020

Syrte
No, if they are for profit corporations in a civilized country they presumably have to pay taxes. Which go to fund hospitals,
Education and roads— not just penguins.
As stated above, setting themselves up as a foundation may be a way to avoid taxation.

True, but not to the extent normally depicted.

First they do pay sales tax
Second IF they are messing with the bottom line by dispersing the money into the family as expenses then the individual beneficiaries of those funds would pay personal taxes
Third, as explained above, depending on the stack of their companies, taxes may be paid by all except the foundation.

There are ways to skin a cat, but the cat gets skinned.

There are other companies that are not Non profit and manage to not pay taxes anyway.... not that’s a freaking mess!!

And I’m not defending Rolex.... I simply don’t know the details so I’m not going to accuse them either.

Dries · Dec 30, 2020

as @gatorcpa has said, it's a matter of prudent estate planning. Shares are held by a charitable foundation (not a trust), not by the individual family members. Swiss law (and this applies to most european countries) allows you to define the purpose of that charitable foundation literaly any way you like. You could, for example, say that the charitable purpose of your foundation is to make payments to direct descendants of the founder if they ever find themselves in financial need. Now, the important thing is that you don't have to make those payments, and that as long as you refrain from doing so, they are not personally taxable on it.
you could then set up some other charitable work, of which one can find some limited evidence online.

The swiss being the swiss, transparency is limited to the bare minimum and for all I know, they might be doing a lot more charitable work than we know off, or they might not.

It isn't directly a matter of corporate tax, because any charitable work they are doing at the level of their foundation, they could also deduct from company tax.

Unless, ofcourse, they have somehow managed to talk the swiss tax authorities in to being allowed to make generous contributions to the foundation (which is 'charitable') and thus deduct those donations before paying company tax ::stirthepot::

.

In any case, you are literaly in tax nirvana if you manage to only pay about 10% corporate income tax, no tax on dividends, no sales tax and no inheritance tax. Tell me again Switzerland isn't still a tax heaven.

vitriol · Dec 30, 2020

gatorcpa
I do not know if the law works the same way in Switzerland, but I suspect it is similar.

Neither me knows such specific Geneva canton provisions, but in general it is very common thing to benefit some tax savings due to a tax exemption treatment on inheritance of the trust / foundation.

Societe Anonyme is a stock-based company so yes it is corporate. Their income should be taxed as business.
Dividends transferred from those corporates to the foundation are tax exempt due to the nature of the foundation (this is what I assumed as obvious when I have mentioned 'mother company' though perhaps I should be more specific).
Moreover, if corporate has made donations to charitable organisations - such donation is tax free, donation is deductable up to 20% of the taxpayer’s net income. So technically it is easy setup where only 80% of the corporate's income can be taxed as business.

Yes, without knowing the real structure (which Rolex probably will never dislosure😀) - the whole exercise is speculative, it is academic chat about the options and opportunities.
Kudos to Rolex for their charity activities, nothing wrong in the foundation incorporated in your tax structure after all it is legal. My point was to give you a broaded picture - that doing charity perhaps in not a sole reason for existance of the Fondation Hans Wilsdorf.

vitriol · Dec 30, 2020

Dries
no sales tax

Let's do not jump the gun😉 The above was about corporate tax, the direct tax in general.
US sales tax is indirect tax, and VAT is European (Swiss included) indirect tax. If company is generating gains - there is not much space to push back VAT burden.

Dries · Dec 30, 2020

sorry, I was referring to a comment made by @Nobel Prize

First they do pay sales tax

swiss vat is indeed a non issue for a company which either sells to distributors or exports.

(my point being that them being swiss, there is no sales tax involved; but I agree it is more a matter of company tax and inheritance structuring)

STANDY · Dec 30, 2020

Apparently they are a lot smarter than Google who pay 1% tax in Ireland for goods bought in Australia.

Remember something about a hospital in Switzerland that was built and now funded 6 million a year by Rolex. Read something from Rolex many moons ago.

S.H. · Dec 30, 2020

Engee
Wilsdorf also spoke out against the Nazis during ww2 and helped allied POWs by sending them Rolex watches after their own watches had been confiscated by the Nazis. One such was a chronograph used in the “great escape” to measure the time taken for guard patrols.
https://www.warhistoryonline.com/world-war-ii/rolex-watched.html

I always wonder why this bit is repeated over and over, and nobody minds that early Panerai were Rolex-finished Cortebert movements in Rolex cases, and that they were issued to both Italian and German military. Or am I getting my facts wrong?

They are really great at writing their own history. If they are as good at managing their corporate assets, they won't pay much taxes.

Mad Cow · Dec 30, 2020

Rants feel fine, no? I can no find energy to care on Rolex & save it for real problem.

François Pépin · Dec 30, 2020

S Shay
Do they publish their accounts? Not sure how a charitable trust work. But in UK it would be regulated and accounts would have to be published for that size of organisation.

As far as I know, been a foundation, Rolex does not have to pulish its account. That is likely one of the reasons it is a foundation...

By the way, the title of this thread made my day!

Archer · Dec 30, 2020

Dries
sorry, I was referring to a comment made by @Nobel Prize

swiss vat is indeed a non issue for a company which either sells to distributors or exports.

(my point being that them being swiss, there is no sales tax involved; but I agree it is more a matter of company tax and inheritance structuring)

Anyone who collects sales taxes knows they are just a middle man, and all you do is collect it on behalf of the government, and then turn it all over to them. It's not like it matters as it's not coming off your bottom line, so in this discussion it's irrelevant.

There was a time in the past when the provincial government here would "pay" me for collecting their tax, with a token remittance to me (which was of course itself taxable income) but those days are long gone.

Archer · Dec 30, 2020

S.H.
I always wonder why this bit is repeated over and over, and nobody minds that early Panerai were Rolex-finished Cortebert movements in Rolex cases, and that they were issued to both Italian and German military. Or am I getting my facts wrong?

They are really great at writing their own history. If they are as good at managing their corporate assets, they won't pay much taxes.

The Swiss were not neutral about making money during the war, that's for sure!

Larry S · Dec 30, 2020

Ahh yes. Reminds me of the Hershey company.

gbesq · Dec 30, 2020

Larry S
Ahh yes. Reminds me of the Hershey company.

At least I can buy my favorite Hershey bar without getting on a waiting list. 😀

Omegafanman · Dec 30, 2020

This info surprised me but I treat it with caution (as other posters have alluded to).

Bupa is another example of an international not-for profit organisation, providing health insurance, care homes, health at work services, hospitals, dental clinics and health assessments. By weight It would be cheaper to launch some small tumours into space compared to what the surgical and post op treatments for removal come to.... So god help all of us if they did want a profit.....