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Incentive programs for small businesses in Switzerland

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Switzerland is offering one of the most competitive business environments, not only on European level, but also globally. This is a consequence of the business – friendly strategy adopted by the Swiss government. Although many important global corporations have their headquarters in Switzerland, most companies incorporated in Switzerland belong to small businesses. Therefore, it’s only natural that small businesses benefit from various tax incentives, available through dedicated government programs.

Governmental and Municipal incentive programs

Some Swiss cantons offer grants to companies that create new jobs in the local community. Typically, these grants are offered for new businesses that create at least 30 new jobs within their first five years of activity. The amount of the grant varies between 5,000 CHF and 10,000 CHF for each new job created. However, the grant is offered only if the jobs are permanent and the amount varies depending on the priority given to the grant project by Swiss cantonal authorities. Cantonal authorities have the right to offer grants, but they are not obliged to enroll in this incentive programs. Grants are given only if new jobs are created.

It is also possible for a small business to receive allowances for technical training, in order to encourage the recruitment of local workers. The allowance is paid as a form of contribution towards and employee’s salary and only for new jobs. The allowance can reach up to 50% of the employee’s gross salary and is paid up to six months. In regards of allowances, there is a ceiling of 15,000 CHF.

Incentives for start – ups in Switzerland

The Swiss Government provides guarantees for federal loans to cantons that wish to offer incentives for new businesses set up in a particular Swiss region. The incentives on offers have been largely decentralized and cantons have the necessary autonomy to offer fiscal and other types of incentives to new businesses. Foreign investors are equally eligible to benefit from incentives, just like in the case of domestic investors. Cantons also reduce corporate tax rates on a competitive level, which means that investors should consider opening a company in Swiss cantons with lower tax rates.

Investment companies that invest 50% of their fund assets in establishing new Swiss companies are eligible to receive tax breaks. These tax breaks are normally against federal tax liability; therefore, they are restricted to certain regions in Swiss cantons. The maximum tax break is 50%.

There are also other incentives available. For example, the Swiss society for Hotel Credit assists new hotels to fund infrastructure expenditure by arranging loans and offering assistance with drafting of business plans. IT projects also receive support in certain Swiss regions. The Foundation for Technical Innovation in the canton of Vaud and Finergence in the canton of Neuchatel offer support for high – tech start – ups in the form of commencing production of the first product. Financial backing for up to 100,000 CHF is also available.

Support programs for bank loans

The Swiss Government is able to assist new small businesses and entrepreneurs looking to obtain bank loans, by offering commercial guarantees as back-ups. Loan guarantees are available for up to 500,000 CHF and the Swiss Federal Government underwrites 65% of the debt exposure.

There is also the possibility to obtain assistance for bank funding from several regional Swiss co – operatives. All state- backed funding guarantees are overseen by the state secretariat for Economic Affairs. Major Swiss banks usually support new businesses initiatives in Switzerland and they also offer alternative forms of financing according to the needs of each individual or company.

Therefore, it’s worth considering incorporating in Switzerland, especially for start – ups or small businesses, as tax incentives, tax breaks and other incentives should not be neglected.

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