Business entities in Switzerland
Switzerland is an attractive location for the registration of a company for foreigners, thanks to business-friendly registration procedures and an efficient banking, finance and fiduciary industry. The registration of a limited liability company (locally known as a GMbH and a SARL) is usually the optimal corporate structure for most business needs. Foreigners planning to use their Switzerland entity to hold and manage their subsidiary will be additionally interested to secure mixed/auxiliary company status. Lastly, Switzerland is the gold standard for registration of charitable foundations.
Doing business in Switzerland with a local entity
The Switzerland limited liability company (GMbH/SARL)
- A Switzerland limited liability company can be registered by a single owner and a minimum paid-up capital of CHF20,000 (approximately US$20,000). The company is also required to appoint at least one resident director, who can be of any nationality but must be ordinarily resident in Switzerland. Additional directors can be living overseas;
- The company will be required to submit financial statements every year to the Swiss tax authority. Corporate tax rates vary according to the province of registration of the business. Audit of the statements is not required if at least two of the following criteria are met: i) less than 250 employees ii) assets below CHF20 million and iii) turnover below CHF40 million;
- Best uses for a Switzerland limited liability company: a Swiss LLC is the optimal vehicle for most business uses, including trading with Swiss customers and abroad and having local manufacturing/services operations.
The Switzerland joint stock company (AG/SARL)
- The Swiss joint stock company can be registered by a single owner, with a minimum issued capital of CHF100,000, 20% of which must be paid-up before company registration. The company’s financial statements are always subject to an audit requirement;
- The company oversight is to be exercised by a Board of Administrators, who can then appoint directors and managers to oversee the daily operations of the business. Most smaller JSCs however appoint the same person to these functions, which is allowed by Law provided such individual lives in Switzerland;
- Best uses for a Switzerland joint stock company: a Swiss joint stock company is the optimal vehicle for larger investments in Switzerland and for business owners seeking additional management and governance oversight. It is also the only type of entity allowed to list on the Switzerland stock exchange.
Doing business in Switzerland with a foreign entity
The Switzerland branch office
- The branch of a foreign company is not considered separate from its overseas head office, which is consequently legally liable for all losses incurred by its Swiss branch. There is no paid up capital requirement to register a branch in Switzerland;
- The foreign company is required to appoint a local representative, who must be living in Switzerland. Globally, the branch registration process will follow similar steps to those of a subsidiary;
- Best uses for a Switzerland branch office: registering a branch is advisable only in industries subject to high capital and regulatory requirements (like the banking sector) or if our Clients expect that their customers will more comfortable dealing directly with their company, rather than a local subsidiary.
The Switzerland representative office
- Switzerland laws do not differentiate representative offices and branch offices. Consequently, the distinction is made by the foreign company, which will disallow its local office to conduct commercial operations;
- Best uses for a Switzerland representative office: registering a representative office is advisable for a first entry in the Swiss market, if no productive and commercial operations are expected.
Holding assets with a local entity
The Switzerland holding company (previously auxiliary and mixed companies)
- Important notice: in February 2017, Swiss voters have rejected a federal reform which intended to harmonize the different holding companies regimes currently existing in Switzerland (holding company regimes, mixed companies and auxiliary companies). The Swiss Government will likely pass a new law over the coming months to satisfy the European Union’s and the OECD’s requirements. The content of such law is however unknown;
- In the meantime, Switzerland companies can benefit from full or total exemption from cantonal corporate income tax provided i) equity investments of the holding company represent over 66% of its total assets or ii) the income generated by such investment represents over 66% of the company’s annual income. Dividends received from subsidiaries can also be exempt from federal income tax if the investment of the holding company represents either i) over CHF1 million (US$1 million) or ii) over 10% of the total capital of the distributing subsidiary;
- Companies not eligible as holding companies can still apply for i) domiciliary status if they do not run any commercial and productive operations in Switzerland or ii) auxiliary/mixed status if less than 20% of their sales are sources from Switzerland;
- Best uses for a Switzerland holding company: A Switzerland holding company is an excellent entity to raise corporate finance in Switzerland and to hold all assets types, including subsidiary and intellectual property. The choice of the canton can however be challenging due to a complex tax code, contact us for further information.
The Switzerland foundation (private and charitable foundations)
- A Swiss foundation can be registered with a minimum capitalization of CHF20,000, which can take the form of cash or other asset types. The foundation is run by a Board, with a requirement to have at least one Board member in Switzerland;
- It is additionally possible to apply with the Switzerland tax office for charitable status, provided the foundation is a non-profit organization and finance humanitarian, health, ecological, educational, scientific or cultural activities and projects. Upon approval, the foundation is legally tax exempt in Switzerland;
- While the foundation can be managed by a single board member, it is customary to appoint a minimum of three members. In accordance with Swiss laws, at least one of them must be living in Switzerland;
- Best uses for a Switzerland foundation: registering a foundation is a good way to hold personal or corporate assets. Switzerland is also one of the best locations for the registration of a charity, thanks to well-defined laws and its good reputation worlwide.
Table of Comparison between Switzerland business entities
|Operations and logistics||LLC||JSC||Branch office||RO||Foundation||Holding company|
|Also known as:||GMbH and SARL||AG and SA||Succursale||Bureau de liaison||Fondation||Holding|
|Doing business in Swizterland permitted?||Yes||Yes||Yes||No||Yes||Yes|
|Allowed to sign contracts with local Clients?||Yes||Yes||Yes||No||Yes||Yes|
|Allowed to invoice local Clients?||Yes||Yes||Yes||No||Yes||Yes|
|Can rent local office premises?||Yes||Yes||Yes||No||Yes||Yes|
|Allowed to import raw materials?||Yes||Yes||Yes||No||Yes||Yes|
|Allowed to export goods?||Yes||Yes||Yes||No||Yes||Yes|
|Accounting and tax|
|Corporate tax rate?||Between 12.5% and 24%||Between 12.5% and 24%||Between 12.5% and 24%||0%||Between 0% and 24%||Between 8.5% and 24%|
|Corporate bank account?||UBS||Credit Suisse||Lombard Odier||BNP Paribas||ING||Raiffeisen|
|Statutory audit required?||No||Yes||No||No||No||No|
|Annual tax return to be submitted?||Yes||Yes||Yes||Yes||Yes||Yes|
|Access to DTAAs?||Yes||Yes||Yes||No||Yes||Yes|
|Issued share capital required?||CHF20,000||CHF100,000||None||None||CHF20,000||CHF20,000|
|Resident director/public officer required?||Yes, 1||Yes, 1||Yes, 1||Yes, 1||Yes, 1||Yes, 1|
|Resident bank signatory required?||No||No||No||No||No||No|
|Local shareholder/partner required?||No||No||No||No||No||No|
|Minimum number of directors/managers?||1||3||1||1||1 or 3||1|
|Minimum number of shareholders/partners?||1||1||Parent company||Parent company||1||1|
|Individual shareholders allowed?||Yes||Yes||No||No||Yes||Yes|
|Corporate director(s) allowed||No||No||No||No||No||No|
|Corporate shareholders allowed?||Yes||Yes||Parent company||Parent company||Yes||Yes|
|Public register of shareholders and directors?||Yes||Yes||Yes||Yes||Yes||Yes|
|Can the entity hire expatriate staff?||Yes||Yes||Yes||Yes||Yes||Yes|
|How long to get work permit approved||3 months||3 months||3 months||3 months||3 months||3 months|
|Fees and timelines|
|How long to set the entity up?||3 weeks||3 weeks||3 weeks||3 weeks||4 weeks||4 weeks|
|How long to open corporate bank account?||4 weeks||4 weeks||4 weeks||4 weeks||4 weeks||4 weeks|
|Estimate of engagement costs||€18,650||€21,640||€20,300|
Frequently asked questions
Do I need local shareholders for Switzerland business setup?No. Our Clients can setup a business in Switzerland that is fully foreign owned. A Swiss LLC can be setup with only 1 shareholder and 1 director. The director however, must be resident in Switzerland.
Will I have to travel to start a Switzerland business?No. Healy Consultants can provide Switzerland business setup services without our Client having to travel to Switzerland.