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Establish a company branch in Switzerland

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Most foreign companies interested in establishing a presence on the European market choose Switzerland as a location for a company branch because it provides a good geographical location, right at the heart of Europe; it has great infrastructure and a favorable tax system. When deciding between opening a Swiss subsidiary or a company branch, there are several factors than need to be taken into consideration such as a company’s liability, taxation regime and certain company management issues under the Swiss legislation.

Company branch in Switzerland

A company branch in Switzerland is linked to the foreign parent company, but it is partially independent, it has a local structure and it is able ye conduct business operations in the country.

The most important factor to consider when deciding to opt for the company branch as a business structure depends mostly on the degree of autonomy the newly-formed company needs to have in relation with the foreign parent company.  Under the Swiss legislation, the foreign company is fully liable for the responsibilities and the debts of the company branch in Switzerland. On the other hand, if the foreign parent company falls into insolvency or is liquidated, the effects of these processes can also extend to the company branch in Switzerland.

Swiss company branches don’t have separate legal personalities; however they are still required to be registered in the Swiss Companies Register. Unlike a company subsidiary, a company branch in Switzerland is easier to incorporate and it does not require a minimum share capital, which is something worth considering if the financial aspect is important for the foreign parent company. In addition, double taxation avoidance treaties that Switzerland has signed with most industrialized countries from all over the world can favor the taxation of a company branch in Switzerland.

Opening a company branch in Switzerland

The company branch must be registered at the Swiss Companies Register. In order to register the company branch, the parent company must provide several relevant documents, which should include the identification details of the parent company, its certificate of incorporation, details about the share capital, number of shares and types of shares, the minute of the board meeting during which the decision to establish a company branch in Switzerland was made and the designated individuals that will manage the Swiss branch.

Some or all the documents need to be translated into one of the Swiss official languages – French, German or Italian. The documents must be legalized and the sent to the relevant Swiss authorities for approval.

Among the main advantages of opening a company branch in Switzerland it is important to note the fact that there is no share capital requirement, a low tax burden and payments made to the parent company are exempt from the 35% withholding tax.

Foreign companies can establish a company branch in Switzerland if certain requirements are met, such as:

  1. The foreign parent company must prove its existence and incorporation by providing the competent Swiss Commercial Register with and excerpt from the foreign commercial register or register of companies. If no such register exists in the country where the parent company was incorporated, it is necessary to provide other types of official evidence that the company exists.
  2. An excerpt of the minutes of a meeting of the board of directors or other corporate body of the foreign company empowered to establish a company branch in Switzerland must be provided in order to prove that the decision to establish a company branch was made.
  3. The Swiss company branch must have a name according to the Swiss standards – the company branch name must include the name of the parent company, the place of the registered office in Switzerland and an expressed designation of the company branch as such.
  4. The company branch must indicate the nature of its business and the business purpose of the foreign parent company.
  5. It is necessary to have one or several authorized signatures to act on behalf of the Swiss company branch – the designated individuals with authorized signatures must be Swiss residents.
  6. The foreign parent company may establish additional rules applicable only to the company branch in Switzerland; however under certain circumstances the said rules are also recorded into the Commercial Register.
  7. The company branch must be registered with the competent Swiss Commercial Register. The registration application needs to be filed by one or more members of the board of directors of the foreign parent company who are authorized to act on behalf of the respective company.

To ensure that all legal requirements are met in order to establish a company branch in Switzerland, it is highly recommended to acquire the help of a firm specialized in company formation in Switzerland.

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