With fantastic transportation infrastructure, clean environment and a hub for innovation, the Zug canton is an attractive residential region as well as a preferred business location. It offers a broad, but focused mix of sectors becoming an attractive tax situation and a business-friendly environment for any new entrepreneur ready to invest in.
Another reason for which many investors choose Canton Zug is because of the low taxes applied here - the lowest taxes in Switzerland. For example, a deductible tax on income and wealth was in 2011 at 8.5%, a withholding tax on dividends of 35 and a VAT tax of 8%, not payable for export of goods and services.
Though in Switzerland there are many types of companies to choose from, in Zug, the most popular are the “Aktiengesellschaft (AG)” and the “Gesellschaft mit beschränkter Haftung (GmbH)”.
The Aktiengesellschaft, AG is a legal entity in its own right with its own name. The corporation’s capital is divided into shares. Actual management of the AG is the exclusive responsibility of the Board of Directors and the executive officers who are appointed by the Board. An AG requires a share capital of at least CHF 100,000 CHF The share capital can be divided into registered shares. The nominal value of those shares must be at least CHF 0.01. When establishing the corporation, each share must be paid up to at least 20 % of its nominal value, but the total paid-up share capital must amount to at least CHF 50,000.
A limited by shares company, the GesellschaftmitbeschränkterHaftung (GMBH), has its capital divided into shares, with a minimum value of 100 CHF. The formation of a GmbH requires only one person (private individual or legal entity.) The GmbH must be represented by a person residing in Switzerland. This person can be a managing director. The equity share capital, which is at least CHF 20,000.00, has to be fully paid in. There is no cap on equity share capital.
The main steps to follow for the registration of a new entity are as follow:
1. Provide an unique name for the company;
2. Provide identification documents and signature legalized by a notary;
3. Open the bank account and deposit the capital;
4. Submit the documents to the Registry of Commerce;
For both entities the required documents to be provided for the registration procedure are:
- drafting of Statutes and bylaws;
- certified copies of the certificate of incorporation, statutes and bylaws;
- capital bank account proof
- application for the VAT, if required;
These two kinds of legal entity offer the following advantages:
- Liability and risk limited to capital;
- Simplified transferability of participation rights/shares;
- Regulated representation rights;
After the share capital has been deposited in the newly created capital account and the documents have been prepared, executed and submitted to the Commercial Register, the registration of the company shall take 5 to 10 days.
In Switzerland, the registration for tax purposes is not required for every formed company. Only the ones obliged to register for tax must file an application with the Federal Tax Administration after incorporating the company at the Swiss Commercial Register. The same rule applies for VAT registration.
Depending on the type of business an investor chooses to open, certain permits and licenses might be required. Also, if the newly registered Swiss company has employees they must be registered for social security.
Besides “AG” or a “GmbH”, in Zug is also possible to have a branch of a foreign corporation inscribed in the Commercial Register, or to set up a private company which is not a legal entity in its own right.
A common practice in the business environment is to open branches in Zug, more advantageous than opening local companies because there is no need to deposit a minimum share capital at registration and the responsibility for its actions is taken by the foreign parent company.