Company formation in Switzerland – a short guide for 2020

Before you can start business operations in Switzerland, there are a number of crucial steps that you need to follow carefully and diligently. The registration process requires thorough planning—you have to select a unique business name, choose a business structure suitable for your intended business and prepare all the necessary documentation.
 
Anyone intending to conduct commercial activity in Switzerland should either set up a company, join a partnership or work as an independent individual. All these popular options have specific legislature that applies to them and you have to do your due diligence to observe all of them and draft the necessary paperwork.
 
The most commonly chosen Swiss business structures are Gesellschaft mit beschränkter Haftung (GmbH) or Societé à Responibilité Limité (SARL) – basically a private limited liability company; and Aktiengesellschaft (AG) or Societé Anonyme (SA).
 
Choosing a Swiss company name
The Swiss authorities reserve the right to approve of business names for the purposes of registration. This approval must be received for you to be able to use the name for commercial purposes. This is done as a precaution, to ensure the uniqueness of all business names. With the Switzerland Federal Registry having a list of all registered business names, it is quite easy to check for yourself if the name is available prior to registration.
 
Doing business as 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.
 
Sole proprietorship
When choosing a name for a sole proprietorship, it is necessary to add a trading name. Registration does not require any special documentation. The process is simply just the filing of standard registration forms. A base registration fee is levied by the federal government and cantons add their own fees on top of that, thus the total registration costs may vary from one canton to another.
 
Swiss partnerships
Two or more entrepreneurs can come together to conduct business activities jointly under a partnership. Partnerships are usually made up of 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 in the event the business goes bankrupt.
 
Gesellschaft mit beschränkter Haftung (GmbH)
A minimum requirement of 20,000 CHF share capital is needed to set up a GmbH in Switzerland. The company shareholders are listed in a public register. The documentation necessary at registration includes the articles of association - the company statues. This document states the company’s purpose, object of activity, the governing bodies and details about the founders and the shareholders.
In addition, a constitutive act and proof of funding is also required. This document is normally issued by a Swiss bank 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)
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 up when the company is registered. This business structure is the most commonly chosen in Switzerland as it is suitable for a variety of activities, including for larger companies, corporations and multinationals. The shareholders for an AG company are not listed in a public registry. An articles of association is needed and it includes information about the company’s purpose, governing bodies, founding directors and shareholders.  Much like a GmbH, it is necessary to provide proof of funding when registering an AG company. One of the main advantage an AG has over the GmbH is that it is easier to change ownership.
 
The process of company formation in Switzerland
When registering a company it is mandatory that at least one of the company’s directors be a Swiss resident. However, it is possible to hire company directors in order to meet this requirement, if none of the company’s founders is a Swiss resident. 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 10 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. Cantonal taxes on the other hand vary from one canton to another, given that Swiss cantons are competing against each other to attract as much investors as possible. In addition, certain cantons offer tax incentives and advantages for foreign companies or for entrepreneurs who set up their businesses there.
 
Swiss trademarks
For businesses who are deal with intellectual property, it is recommended to register a Swiss trademark. Once determined to be unique, a trademark can registered with protections valid for 10 years. Once the trademark has expired, it can be repeatedly renewed for another 10 years. Trademarks used outside of Switzerland can be registered globally with The World Intellectual Property Organization (WIPO), which is based in Geneva.
 
Get professional assistance
Even though company formation is rather straight forward in Switzerland, it is advisable to rely on the services of a firm which 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.

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