The most common types of companies established by foreign entrepreneurs in Switzerland are GmbH and AG. Both types of companies have their advantages and disadvantages, therefore the following information might be very useful for those interested in opening a company in Switzerland, to help them make a decision.
Both an AG and a GmbH have limited liability and the option to transfer shares to different beneficiaries, however in the case of the GmbH the entire process is more difficult. In the case of the AG, the governing bodies consist of shareholders that make decisions through general meetings, a board of directors and company auditors. In the case of a GmbH, the partners make the decision through general meetings and the company’s management runs the company.
Both companies are set up rather quickly, the entire process takes between one to two weeks, under the condition that all the legal requirements are fulfilled. The domicile of the company may be transferred from one Swiss canton to another in both cases, but the taxation is based on the residency of the company’s management.
Corporate legal requirements
If you want to set up a GmbH, the required minimum share capital is 20,000 CHF, without the obligation to deposit a paid – up sum. There are no bearer shares permitted, but the company must have at least one shareholder and one company director. Also, it is required to have at least one local director and a registered office in Switzerland.
For an AG, the required minimum share capital is 100,000 CHF, from which 50% must be paid – up upon registering the company. If the share capital is paid – up fully, bearer shares are permitted. An AG must have at least one shareholder, one director, one local director and a registered office in Switzerland.
When it comes to taxation, both types of companies must pay a corporate tax rate between 8% and 15%. The worldwide income is a subject of taxation and certain tax privileges are applicable to holding companies and mixed companies.
These privileges include participation exemptions. 35% of the withholding tax dividends are refundable, depending on the double taxation treaties in order. The withholding tax on interests varies between 0 and 15%, also depending on the double taxation treaties in order. There is no withholding tax on royalties. The VAT rate in Switzerland is 8%, for most goods and services.
The director or directors of an AG or a GmbH must be registered in the Public Registry of Directors. Both types of companies must file annual tax return reports, but they are not required to submit annual reports of the company’s accounts. The owner or owners or the company are not disclosed publicly, only to the bank for money laundering checks when opening a bank account.
The shareholders of an AG may remain undisclosed; however this is not the case for the shareholders of a GmbH.
As far as annual audits goes, they are required for AG and GmbH companies that meet any two of the following criteria: they have a turnover of 40 million CHF or more, they hold assets worth 20 million CHF or more, or they have at least 250 employees.
Considering all the legal requirements, a GmbH is more suitable for entrepreneurs or small businesses willing to expand their activity in Switzerland, while an AG has a more suitable structure for corporations.
In both cases, the companies may benefit from important tax incentives, on federal and cantonal level, which is why you should weight in all the advantages offered by the Swiss authorities before you decide to set up a company in Switzerland.