Switzerland is often considered one of the best locations for incorporating a company. It is a prestigious country with a relatively low tax rate and, above all, a credible reputation for the quality and security of its business environment.
Furthermore, Switzerland has concluded double taxation treaties with the majority of industrialized countries. Therefore, there is no risk that your company will be taxed in two countries. Taking all these advantages into account, setting up a Swiss company, or opening a Swiss business branch is a rewarding experience. Switzerland also presents an excellent opportunity for young entrepreneurs, start-ups or small and medium-sized businesses to enter the European Union.
The Swiss government continues to support a very attractive business environment through economic measures designed to encourage foreign investors to open companies or subsidiaries in Switzerland.
As a general rule, the freedom of trade and industrial activities, guaranteed by the Swiss Constitution, allows any person, including non-residents, to operate a business in Switzerland, to set up a company or to hold interests in an existing one. The incorporation process is completed only with the registration in the district where the headquarter is set up.
The registration of different types of companies in Switzerland
The main types of legal entities among which foreign and local investors can choose are sole proprietorships, limited liability companies, stock companies, limited partnerships, and general partnerships.
A sole proprietorship can be opened by a single individual who carries out his economic activity. The individual can initiate and independently run their business on a commercial basis, without fulfilling formalities related to incorporation, registration in the trade register, social capital, accounting. Company registration is optional but becomes compulsory if annual revenues outweigh 100.000 CHF.
The limited liability company is formed by association, based on the statute, of two or more persons or companies (Swiss or foreign). When the company is registered with the Trade Register, it acquires a legal personality. The company must hold an annual general meeting where major business decisions will be discussed. Our team of Swiss consultants can help you with detailed information on the registration of a limited liability company. Company taxation is made on profit and capital, and for associates, it is done individually, on social shares (wealth) and distributed benefits (as income).
The stock company is the form of organization that entirely separates the assets of the company from the private assets of the shareholders. This is what mainly distinguishes it from other types of companies. The minimum number of associates, natural or legal persons, is 3, of which at least one must be a Swiss resident living in Switzerland. All the company rules are defined in its statute—they should be notarized together with the constitutive act. Registration with the Trade Register is mandatory. The minimum share capital that is set by law is CHF 100,000. Also, under Swiss law, the board of directors must be composed mostly of Swiss citizens residing in Switzerland. A stock company is the most common type of business in Switzerland. In most cases, foreign companies operating here opt for this form of organization for their branches.
The significant legal difference between a limited liability company and a stock company is that: the shares of the former cannot be freely traded on the market; however, the stocks of the later are transferable to the public through the stock market.
The general partnership or limited partnership in Switzerland can be formed by two or more partners. The main advantage of these legal entities is that no minimum capital for registration is required. Furthermore, to incorporate a partnership, an agreement signed by the partners is required. A limited partnership is formed by at least one general partner with full rights and at least one silent partner who has rights and responsibilities within the limit of the contribution to the entity. On the other hand, a general partnership consists of members responsible for the entity’s actions in the same manner and with equal rights in decision making.
Simple detailed steps for company incorporation in Switzerland
Under the agreement on the free movement of persons, an entrepreneur can also work in Switzerland without a residence permit (permit C). A residence permit (permit B) with a validity of 5 years is enough. When obtaining a permit in Switzerland, the entrepreneur must, however, be able to provide evidence for their business endeavours.
The establishment of a company in Switzerland starts with the opening of a bank account and depositing the paid-up capital, after which a receipt will be received to register the company. The following requirements to be completed after this first step are signing the company’s articles of association to a notary public in Switzerland, the authentication of the company’s incorporation documents and the authentication of the association memorandum. You also need to notarize company representatives and corporate signatures on the application form.
All these documents must be submitted to the local commercial register to obtain legal status. After the Swiss Company Register issues the incorporation certificate, the company must also register for VAT and tax purposes. The last step you need to do is register your employees with the social insurance system, at federal and cantonal authorities.
Be sure to properly fulfil these requirements by appealing to specialized consultants in opening a legal entity in Switzerland.
Swiss Trade Register
It’s designed to provide basic information about all types of Swiss companies as well as addresses, shareholders and other people. It is a commercial register in which each company is registered, registration of the entity should be in the district where it has its official headquarters. Moreover, through this institution, investors can check whether their favourite business name is already registered or not.
Formalities for starting a business in Switzerland
If the documentation process is followed properly, and the minimum share capital is available, a Swiss company can be incorporated in about three weeks average.
Then, companies should keep financial records and must submit annual financial statements following the accounting procedures applicable in this country. Besides, some businesses need to obtain individual licenses or permits depending on the type of activity they carry out. The tax system in Switzerland is quite complex. It's characterized by the existence of three distinct levels: federal, cantonal and communal.
If you want to quickly open your company or make sure there no mistakes during the incorporation process, it is advisable to ask for help from a specialized firm with expertise in such procedures. Our company has an entire network of professionals with extensive experience and solid knowledge of Swiss and European legislation.
Moreover, you can also benefit from other services such as tax planning, accounting, or corporate administration services for companies established in Switzerland. If necessary, we also offer our clients the epportunity of renting office spaces in Swiss business centres, and provide all the facilities required for opening a virtual office. For more details and assistance regarding registering a company in Switzerland, you can reach out to our expert consultants. Our highly experienced and well-informed team is ready to answer all your questions and give you all the help you might need.