In 2023, Switzerland experienced a surge in registered companies, marking a 3.2% increase from 2022 and a 2.2% rise from the previous record in 2021. The country continues to gain popularity as a prime destination for foreign direct investment — thanks to its skilled workforce, flexible labor laws, reliable infrastructure, and relatively low tax rates.
If you are also interested in forming a business in this country, follow the steps outlined in this article and draft the necessary paperwork. Let’s dive in.
Steps for Registering a Company in Switzerland
Registering a company in Switzerland is a structured process facilitated by clear regulations and guidelines. Here's how you can go about it:
1. Choose a Legal Form
Decide on the type of company structure best suited to your business needs. Common forms include:
- Sole Proprietorship (Einzelfirma)
- Limited Liability Company (GmbH)
- Corporation (AG)
Most company types require registration in the commercial register. However, this process can be complex without proper knowledge, so it is advised to seek professional assistance to navigate it smoothly.
2. Name Your Business
Select a unique business name. The name must not be already in use or registered in Switzerland. Check name availability through the Swiss Federal Commercial Registry Office (Zefix).
3. Draft Articles of Association
Prepare the necessary documents, including the articles of association and public deed of incorporation, particularly for GmbH and AG. These documents outline the company's purpose, share capital, and management structure.
4. Capital Deposit
Open a corporate bank account and deposit the required initial capital:
- For GmbH, a minimum of CHF 20,000.
- For AG, a minimum of CHF 100,000, with at least 50% paid up before registration.
5. Notarization
The formation deeds and articles must be notarized. This is typically done at a notary public in the canton where the company will be registered.
6. Commercial Registry Application
Submit the notarized documents and the application form to the Commercial Registry of the canton where the company will be located. The application must include:
- Proof of capital deposit
- Articles of Association
- Identification and residency verification for directors and owners
7. Registration Fee
Pay the required fee, which varies depending on the canton and the company structure.
8. Value Added Tax (VAT) Registration
Register for VAT with the Federal Tax Administration if your company's turnover is expected to exceed CHF 100,000 per year.
9. Social Security Enrollment
Register yourself and any employees with the Swiss social security system. This is crucial for handling pension contributions, accident insurance, and other social benefits.
10. Compliance and Permits
Depending on your business type, additional permits or registrations may be necessary. For example, a restaurant would need food and safety certifications.
11. Start Operations
Once the registration is complete and all necessary permits are obtained, you can officially start operating your business in Switzerland.
Doing Business As A Sole Proprietorship Or As A Partnership
Entrepreneurs who want to carry out their commercial activity without explicitly forming a company can do so as a sole proprietorship or as part of a limited or general partnership. Both these legal structure options require little formality for registration. A business with an annual turnover exceeding 100,000 CHF must be registered with the Swiss Commercial Registry. Registrations are made with the cantonal office for the canton where the business operates from.
Non-Swiss residents can also set up businesses in the country. However, they need the right residence permit. While Swiss citizenship isn't mandatory, at least one registered member must live in Switzerland.
Sole Proprietorship
The sole proprietorship structure allows individuals to run a business while being personally liable for its debts. This setup suits professions like architects or doctors and requires the business name to include the owner's surname.
When choosing a name for a sole proprietorship, a trading name must be added. Registration does not require any special documentation. The process is simply the filing of standard registration forms. The federal government levies a base registration fee, and cantons add their own fees on top of that; thus, the total registration costs may vary from one canton to another.
Non-Swiss residents must be EU citizens and become local residents to operate as sole proprietors. Alternatively, they can appoint a Swiss resident with sole signature authority to bypass the requirement for their own residency or permit.
Swiss Partnerships
Partnerships come in various forms: simple, collective, and limited. A simple partnership is a flexible arrangement for different purposes. Collective partnerships involve multiple individuals jointly running a company, sharing full liability. Limited partnerships are trading companies where some partners have limited liability.
Put simply, two or more entrepreneurs can come together to conduct business activities jointly under a partnership. Partnerships can comprise persons or companies providing similar or related services or products. A partnership agreement must be drawn up and notarized with a certified notary. There is no minimum capital requirement required and company articles are not necessary. However, partners are personally liable for the business debts and obligations if the business goes bankrupt.
Gesellschaft mit beschränkter Haftung (GmbH)
To set up a GmbH in Switzerland, a minimum of 20,000 CHF share capital is needed. The company shareholders are listed in a public register. The documentation necessary at registration includes the articles of association—the company statutes. This document states the company’s purpose, object of activity, governing bodies, and details about the founders and shareholders.
In addition, a constitutive act and proof of funding are also required. A Swiss bank normally issues this document after the share capital is deposited. Once the registration process is complete, the capital is transferred into the company’s bank accounts, or the bank account becomes a business account for the company. A GmbH’s profits are taxed on dividends and as personal income.
Aktiengesellschaft (AG)
An AG is a company with its capital divided into shares. Its liabilities are limited to company assets. Shareholders aren't obliged to contribute more than their share's subscription amount. They're not personally responsible for the company's debts.
A Swiss AG has a minimum required share capital of 100,000 CHF. 50,000 CHF, or at least 20% of the full figure, must be paid when the company is registered. This business structure is the most commonly chosen in Switzerland as it is suitable for various activities, including larger companies, corporations, and multinationals.
Articles of association are needed, including information about the company’s purpose, governing bodies, founding directors, and shareholders. Much like a GmbH, proof of funding is necessary when registering an AG company. However, unlike the "GmbH," AG shareholders can stay anonymous and aren't listed in the commercial register.
The AG focuses less on individuals, and shareholders don't automatically manage the company. Another significant advantage of the AG over the GmbH is that it is easier to change ownership.
The Process of Company Formation in Switzerland
When registering a company, at least one of its directors must be a Swiss resident. However, if none of the company’s founders is a Swiss resident, hiring company directors to meet this requirement is possible. The company must also be registered with a notary. This does not necessarily have to be in the canton where the company is located.
Corporate Taxation
All Swiss companies employing ten or more people must audit their accounts annually. All businesses that generate more than 100,000 CHF in a year are required to register for VAT purposes.
In Switzerland, taxes are levied on three levels i.e., federal, cantonal, and municipal. Federal tax rates are fixed. On the other hand, Cantonal taxes vary from one canton to another, given that Swiss cantons compete against each other to attract as many investors as possible. In addition, certain cantons offer tax incentives and advantages for foreign companies or entrepreneurs who set up their businesses there.
The federal corporate tax rate stands at a low of 8.5%. However, the overall rate can rise to 21.2% when factoring in cantonal and municipal taxes.
Cantons play a significant role in taxation, collecting two-thirds of total taxes. They also influence foreign investment decisions and social security contributions, business permits, residency, and construction regulations.
Tax Benefits and Double Taxation Provisions in Switzerland
Switzerland is known for its tax-friendly environment, especially for corporations. One key benefit is the participation exemption, which reduces taxes for companies owning 20% or more of another company's shares. Additionally, Swiss cantonal laws offer a domicile privilege for companies managed within Switzerland but conducting business overseas. These companies are only subject to a 10% tax on their worldwide profits, making Switzerland an attractive location for international business operations.
Swiss Trademarks
It is recommended that businesses dealing with intellectual property register a Swiss trademark. Once determined to be unique, a trademark can be registered with protections valid for ten years. Once the trademark has expired, it can be repeatedly renewed for another ten years. Trademarks used outside of Switzerland can be registered globally with The World Intellectual Property Organization (WIPO), which is based in Geneva.
The registration fee is CHF 550 for up to three classes of goods/services. Before applying, ensure your trade name isn't used for the same product/service, or your trademark could be revoked.
Getting Professional Assistance
Even though company formation is rather straightforward in Switzerland, it is advisable to rely on the services of a firm that is experienced with company incorporation in Switzerland. At Sigtax, we offer our clients expert assistance in handling all the legal requirements, paperwork, and any other assistance they might need with company formation in Switzerland.
Add new comment