Company formation

Types of Taxes in Switzerland

kovalkov — Mon, 19 Oct 2015 23:06:50 +0000

Types of Taxes in Switzerland kovalkov Tue, 10/20/2015 - 01:06

The taxes in Switzerland can be divided into three major categories: federal taxes, cantonal taxes and municipal taxes. In order to avoid overlapping taxation, Switzerland has concluded double taxation agreements with most industrialized countries, to protect foreign investors from double taxation.

Direct federal taxes

The direct federal taxes are the following:

Taxes on income, for personal income and corporate tax.
The withholding tax, applied on income from capital, such as interests and securities, bank accounts, dividends and share profits. The withholding tax is refunded if the assets and revenue they produce are declared in tax returns. Usually, the refund is set off against the amount due to the cantonal tax, or repaid directly to the solicitant.
The federal casino tax, for casinos or other entities providing gambling activities.
The military and civil service exemption tax, compensating for an exemption from military or civilian service. Swiss men who do not perform military or civilian service, starting with the age of 20, until the age of 30 for those unfit for military service, or until the age of 34, if military service is postponed, pay this tax. The military service exemption tax amounts to 3% of the taxable income, or a minimum of 400 CHF.

Federal taxes on goods and services

The VAT tax is applied to all businesses. The total annual turnover is a determining factor whether VAT needs to be deducted. A VAT rate of 8% applies to most goods and services. However, a 2.5% rate applies to certain everyday consumer goods, such as food items, non – alcoholic beverages, newspapers, magazines, medicines or even tickets for sports and cultural events. Overnight stays at a hotel benefit from a special tax rate of 3.8%.
Stamp duties
The tobacco and alcohol tax, applied to spirits and tobacco products. The alcohol tax does not apply to traditional fermented products such as wine and cider; however, beer is a subject to a tax levied by the Federal Customs Administration. Imported tobacco and alcohol products are also taxable.
The mineral oil tax refers to crude oil, other mineral oils, natural gas and their processed products. The tax rate varies according to the form of mineral oil. A surtax for mineral oil on motor fuels is charged at a flat rate of 300 CHF on each 1,000 liters.
The motor vehicle tax is paid annually for any registered motor vehicle. The amount of this tax is calculated depending on the Swiss canton in which the vehicle is registered.
The motorway vignette
The distance – related heavy vehicle tax
Custom duties.

Direct cantonal and municipal taxes

Taxes on income and on net wealth include income taxes, withholding of tax source, poll tax, wealth tax, corporate income tax, tax on equity and expenditure based taxation.
Inheritance and gift taxes. Under certain circumstances, heirs have to pay a tax on the deceased person’s estate. Spouses, persons in a registered partnership, children, step – children and foster children are usually tax exempt. Inherited personal and household goods are not taxed. In the case of received gifts, a tax may be paid on money or assets that are given away. The gift tax is paid by the recipient, however spouses, partners in a registered partnership, children, step – children and foster children are usually exempt.
Real estate tax and real estate transfer tax.
Cantonal casino tax.
Trade tax.

Cantonal and municipal taxes on goods and services

Taxes on motor vehicles
Dog taxes, paid annually by the owners. The tax is levied by the canton or by the commune, and is determined according to the size and weight of the dog. In most Swiss cantons, owners of guide dogs or rescue dogs pay a reduce tax or no tax at all.
Entertainment tax
Stamp and registration duties
Water duty
Lottery tax, for those who win certain sums of money at the lottery
Visitor’s tax

For more details and assistance regarding taxes 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.

Add new comment

Work Permit in Switzerland

kovalkov — Mon, 19 Oct 2015 23:09:23 +0000

Work Permit in Switzerland kovalkov Tue, 10/20/2015 - 01:09

Since the establishment of the Bilateral Agreements between Switzerland and the European Union, citizens from the EU residing in Switzerland for profit – making purposes, have a legal claim to the access to the Swiss labor market, given that all the required legal conditions are met. The agreements also apply to the states that are members of the European Free Trade Association. Each Swiss canton approves residence and work permit applications for non – residents, based on the submission of a signed working contract with a company in Switzerland.

Bulgaria and Romania also joined the EU on January 1st 2007, which means that the Bilateral Agreements apply to those countries as well. Concerning the free movement of persons, a transitional period was established for no later than 2016. Switzerland continues to provide priority to its domestic employees and applies a separate quota system.

Registration and permit application process in Switzerland

Citizens of the EU/EFTA member states, without Romania and Bulgaria

Citizens of the EU or EFTA member states, asides from Romania and Bulgaria are no longer required to register with the Swiss authorities, if they work less than three months or 90 days per calendar year for a company in Switzerland. Self – employed service providers and persons who are being sent from a company are not required to obtain a work permit for cross – border services, as long as their activities don’t last longer than three months or 90 days per calendar year. However, an online registration with the Swiss authorities is required for any work activity lasting more than 8 days per calendar year.

Work activities in primary and auxiliary construction industry, hotel and restaurant businesses, cleaning industry, security and surveillance services, as well as activities in the erotic business must be registered online starting with the first day of work. This rule also applies to commercial travelers.

Online registrations are free of charge and registrations sent by fax or e – mail are not accepted.

Self – employed service providers and persons who are being sent to Switzerland by various companies are required to obtain a work permit if their cross – border services exceed the duration of three months / 90 days per calendar year. A permit application D1 must be submitted to the cantonal authority.

EU and EFTA citizens being employed by a Swiss company are required to submit application forms in order to obtain a work permit, depending on their work contracts. A K1 form is submitted for a short-term permit application – up to 4 months of uninterrupted stay or 120 sporadic days per year and a A1 form is submitted for a short term permit application – up to one year based on a limited employment contract. The same A1 form is submitted also for a long-term permit application – up to 5 years, based on an unlimited employment contract.

Those who start working in a self – employed status for one year must submit the SE1 permit application form, for sole proprietorship or GmbH, together with a business plan, proof of financial means and a certificate of registration, in the case of a GmbH.

Citizens that are part of the EU - 15 member states and EFTA citizens can be issued a permanent residence permit after 5 years of uninterrupted stay in Switzerland. Citizens of the EU – 8 member states and citizens from Malta and Cyprus can be issued a permanent residence permit after 10 years of uninterrupted stay in Switzerland, which is still subject to renewal after 5 years.

Citizens of Romania and Bulgaria

Self – employed service providers and persons sent from a foreign company are not required to obtain a work permit, as long as their cross – border activities don’t take longer than three months / 90 days per calendar year. If their activities last longer than 8 days per calendar year, they must register online with the Swiss authorities, free of charge.

If citizens from Romania and Bulgaria work in the following industries: primary and auxiliary construction, hotel and restaurants, cleaning, security and surveillance services, erotic businesses, must require a work permit prior to the first day of work. This rule also applies to commercial travelers. In order to obtain a work permit, it is required to submit an application form K8 / B8 to the cantonal authority.

Romanians and Bulgarians sent by a company in Switzerland must obtain a work an residence permit prior to starting their job in the country.

In order to acquire a work permit for longer than three months / 90 days per calendar year, Romanian and Bulgarian citizens must submit a D1 permit application form to the cantonal authority, which then reviews the priority of domestic employees, salary level and working conditions.

Even if they work for less than three months / 90 days per calendar year, Romanian and Bulgarian citizens must obtain a work permit prior to starting their job in Switzerland. In order to obtain a work permit, it is necessary submitting a K8 form for a short-term work permit – up to 4 months of uninterrupted stay or 120 sporadic days and a B8 form for a short-term work permit – up to one year based on a limited business contract. The same form is submitted to obtain a long-term work and residence permit for up to 5 years, based on an unlimited employment contract.

The cantonal authorities review the priority of domestic employees, salary level and working conditions.

A permanent work and residence permit is issued only after 10 years of uninterrupted stay in Switzerland, and is subject for renewal after 5 years.

Citizens from non – EU/EFA member states

The number of immigrants from non – EU/EFTA member states is limited by a strict quota system.

For these citizens it is required to obtain a work permit and online registration is not possible. It is necessary to submit a K2 form by a Swiss – based company to employ a specialist from these countries in order to obtain a work permit for up to four months / 120 working days per calendar year.

In order to register non – EU/EFTA specialists for more than four months / 120 working days per calendar year, a B2 application form is required, for a work permit up to one year based on a limited employment contract, with the one – time option to extend it for another 364 days. The same form is submitted to obtain a long – term work permit, up to 5 years, based on an unlimited employment contract.

Non – EU/EFTA citizens who wish to work on a self – employment status in Switzerland are only issued a residence and work permit on exceptional basis.

A permanent residence permit can be issued after 10 years of uninterrupted stay in Switzerland and is subject to renewal after 5 years.

Add new comment

Corporate Taxes in Switzerland

kovalkov — Mon, 19 Oct 2015 23:10:41 +0000

Corporate Taxes in Switzerland kovalkov Tue, 10/20/2015 - 01:10

The Swiss tax system is characterized by various levels of direct taxation: direct federal tax, cantonal taxes and municipal taxes. The tax legislation in the individual Swiss cantons is often very different from one canton to another. The cantons were required to adapt their tax legislation according to the federal tax – harmonization law. However, this law did not aim to make every canton accept the same tax legislation.

Important decisions regarding tax rates continue to remain under the authority of the cantons.

Cantonal and federal taxes in Switzerland

In principle, individuals and legal entities are liable for tax in any Swiss canton, if their residential or business domicile is located there, or if they operate a branch there. An obligation to pay tax on assets and income can also exist if the domicile of the legal entity is outside Switzerland. Foreign persons can be taxed at source for income, which they earn professionally in a Swiss canton, such as remunerations for attending company meeting or director’s fee.

To find out if this is the case, it is advisable to consult the double taxation treaties that Switzerland has with various countries. Switzerland has such treaties with most industrialized countries, regardless if they’re part of the European Union or not.

Income and capital tax

Direct federal tax, cantonal taxes and municipal taxes are levied on the income of a corporation, while the capital is subject only to cantonal and municipal taxes. Depending on the activity of a corporation, the tax rates may vary. Different tax rates apply to operating companies, holdings, domicile companies and mixed companies. Some cantons offer tax privileges to holding, mixed and domicile companies.

Operating companies are legal entities that carry out trading, manufacturing or service activities. These companies are subject to ordinary taxation. Tax is payable on the taxable net profit and the paid up share or foundation capital as well as on disclosed and tax hidden reserves.

Privileged taxation

Opposite to federal tax, which provides limited privileges for holding companies, the tax legislation in some Swiss cantons provides privileged taxation for certain corporations, depending on their activity.

Holding companies are exempt from cantonal income tax and pay a reduced rate of capital tax. At federal level, based on the income from significant investments in other companies, it is possible to claim a tax reduction, known as participation deduction.

Investment companies are granted a tax reduction at cantonal level for significant investments in other companies, similar to the participation deduction.

Management companies are fully taxed for revenues from Swiss sources, however the income from foreign sources is proportionally taxed, depending on the extent of the activity. Income from investments in other companies is tax – exempt.

Mixed companies are taxed according to various regulations. The taxable net profit of a mixed company is assessed in accordance with divisional calculation. A certain sum consisting of management costs and taxes may be allocated as a deduction. Income derived from outside Switzerland is taxed on a scale calculated in accordance with the number of fulltime employees in Switzerland.

Principal companies can claim a deduction at the level of direct federal tax for business conducted outside Switzerland, such as trading transactions with foreign subsidiaries and sister companies or allocation of manufacturing orders to such foreign companies.

Withholding tax

The distribution of a corporation’s profits is a subject to the Swiss Confederation withholding tax. This tax is levied at source and is currently at the rate of 35%. A refund is possible, depending on the tax treaty between Switzerland and the country of residence.

In the case of a Swiss company and a Swiss subsidiary, the company that is paying out a cash dividend may choose between delivering up the withholding tax or applying the notification procedure.

Value – added tax

The supplies of goods and services within the territory of Switzerland give rise to the value - added tax, levied on gross sales. Export and services rendered abroad are exempt from VAT. Liable for this tax is any legal entity, which carries on a business. Exempt from tax liability is anyone who generates turn – over from taxable supplies of less than 100,000 CHF within a year. The normal VAT rate is 8%, a low rate in comparison to other UE countries. For certain goods and services the rate is even lower, just 2.5%.

Add new comment

Benefits of holding company in Switzerland

kovalkov — Tue, 20 Oct 2015 04:52:11 +0000

Benefits of holding company in Switzerland kovalkov Tue, 10/20/2015 - 06:52

A Swiss holding company is usually founded in the form of a GmbH or AG. This type of company holds and manages long – term financial investments and participations in other corporations.

A holding company is the perfect solution for investors that need to manage the majority of the shares from other companies. Switzerland is currently one of the countries that offer the best tax benefits for foreign investors.

If you need to decide which type of holding company you should found in Switzerland, probably the best option is an AG, or a joint stock corporation, because of the advantages if offers.

Tax benefits of a holding company in Switzerland

If the affiliates are located in foreign jurisdictions, the Swiss holding company will enjoy certain tax advantages, regulated by double tax treaties and other incentives, depending on each Swiss canton. The nature of the company’s income will also determine its tax rate. Holding companies will have the most tax advantages, if the investments in foreign companies represent at least two – thirds of the total assets or revenues.

The beneficial tax regime is somewhere around 8%, consisting of 7.8% for the corporate income tax on capital and of the corporate officer tax that oscillates between 0.35% and 0.075% of the capital.

Although the standard tax rate for the source in Switzerland is 35%, due to double tax treaties, this rate can be reduced to somewhere between 5% and 15%. These advantages applly to dividends as well, as dividends paid by a subsidiary of a Swiss holding company are not liable for taxation, depending on various conditions. Therefore, Switzerland is able to receive dividends from countries that are part of the European Union free of withholding tax.

Considering that cantons have the right to apply their own taxes, it’s important to note that they exempt Swiss holding companies from all income taxes, which creates a privilege for holding companies. This enables holding companies to not depend on deductions made on capital investments.

Given all these privileges and regulations for Swiss companies, the result is that all dividends and profits, as well as interest income are exempted from tax payments.

Requirements and conditions to found a holding company in Switzerland

In order to qualify as a holding company under Swiss tax authorities, a company must meet the following conditions:

The company may not conduct any commercial activities in Switzerland, except in the case of long – term asset management of the company and for investments management of its subsidiaries.
The company must own at least 20% or 2 million CHF of other corporations’ outstanding assets. The total revenue or income can be derived from dividends or capital gains, but also from shares, cooperatives LLC’s and share certificates.

Founding an AG or a GmbH is a relatively simple process, that shouldn’t take more than two or three weeks. Both types of companies require registration, but the advantage of an AG is that the shareholders may remain anonymous, if they wish so.

Before you decide to found a holding company in Switzerland, it’s important to verify if Switzerland has a tax treaty with your country and under what type of conditions and regulations. Countries that have tax treaties wit Switzerland can benefit from the many advantages this country has to offer, especially in terms of tax rates. It is equally important to verify the tax rates applied by each Swiss canton, as some cantons have significantly lower tax rates than others.

For more details and assistance regarding company formation in Switzerland, feel free to 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.

Add new comment

Cantons with the lowest tax in Switzerland

kovalkov — Tue, 20 Oct 2015 04:53:43 +0000

Cantons with the lowest tax in Switzerland kovalkov Tue, 10/20/2015 - 06:53

Switzerland is a confederation formed of 26 cantons that are free to organize their own tax systems. This includes the sampling methods and scales of their taxes. Each canton is entitled to collect any tax that is not in the competence of the Swiss Confederation. The cantonal laws and tax rates may vary considerably from one canton to another, which is why it’s important where it’s best to found a company in Switzerland.

The cost of living, for example is not the same everywhere in Switzerland, as well as other factors might vary in establishing which Swiss cantons have the lowest tax rates.

For many years, Central Swiss cantons and Swiss German cantons were considered the ones with the lowest taxes in Switzerland, especially the Uri canton. The Geneva canton offers various business opportunities, but it does have some important weak points, such as fixed costs and taxes are relatively higher, compared to other cantons. The Vaud canton has low fixed costs, however the compulsory levy remain high. Let’s not forget about the most well-known canton, Zurich, which has a low tax rate, but high fixed costs, such as housing costs.

Considering all these factors, it’s extremely important to do proper research, comparison and evaluation of all the advantages and disadvantages in terms of taxes, that each Swiss canton has to offer.

Tax rates in Switzerland

In Switzerland, taxes represent approximately 11.6% of the average gross household income, which is considered an important expense. Considering this factor, the cantons found in the eastern and central side of the country, are considered cantons with the lowest taxes in Switzerland. In the French cantons and in Bern, Basel or Solothurn, the taxes are some of the highest in the country. Especially the Neuchatel canton is where all taxpayers have to pay the highest tax rates.

Fiscal sovereignty in Switzerland is shared on different administrative levels: the Confederation, the cantons and the communes. This enables cantons to set their own tax rates, which results in regional disparities, even up to double tax rates in some cantons as opposite to others. Nevertheless, the mobility of the capital and labor increased competition between cantons to attract new investors, which is why cantons such as Zug, Schwyz or Nidwalden have removed their estate taxes, lowered their prices and offered other types of incentives.

Cantons with low tax rates in Switzerland

Considering corporate tax rates and taxes for businesses in Switzerland, currently the most attractive cantons to found a company in are Zug, Nidwalden, Appenzell Ausserhoden, Luzern, Appenzell Innerrhoden, Schwyz and Obwalden, Uri and Glaurus.

However, you do have to consider the fact that economical changes do occur from time to time, such as disadvantaged townships located in the Jura Mountains or in the Alps that require an income distribution, which might affect the tax rates in other cantons as well. Therefore, a careful analysis of the economical indicators and other factors that might influence the tax rates is more then necessary for any company seeking to open a subsidiary in Switzerland, or for entrepreneurs interested in establishing a company in any of the Swiss cantons.

For more details and assistance regarding taxes in Swiss cantons, feel free to 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.

Add new comment

Double Tax Treaties in Switzerland

kovalkov — Tue, 20 Oct 2015 05:00:44 +0000

Double Tax Treaties in Switzerland kovalkov Tue, 10/20/2015 - 07:00

Double taxation refers to the fact that two countries collect simultaneously taxes on the same company. This situation often arises when companies have subsidiaries or branches in various countries. Switzerland has a corporate tax system in which a corporation and its shareholders or owners are individually taxed, causing economic double taxation.

In order to avoid a duplication of taxes for companies, Switzerland has signed double taxation treaties with most industrial nations, including USA and countries from the European Union. Switzerland applies the Organization of Economic Cooperation and Development (OECD) standard for its double tax treaties.

Switzerland has also signed tax information exchange agreements with 10 countries, which have the purpose of exchanging tax information between Switzerland and the respective countries.

These treaties cover the following aspects of tax:

Exemption of profits from branches in Switzerland
Reclaiming of source taxes
Taxation of royalties and license fees

The general effect of those treaties for non – residents from treaty countries is that they can obtain a total or partial refund of the tax withheld by the Swiss paying agent. Also, no withholding tax is levied on royalties paid to foreign beneficiaries. Profits redistributed abroad by a Swiss branch or subsidiary don not attract withholding taxes irrespective of any double taxation treaty.

How to avoid tax treaties abuse

A repayment of withholding taxes will be denied if foreign – controlled legal entities that are doing business operations in Switzerland fail to meet the following regulations:

The entity must have a reasonable debt / equality ratio, meaning that the total of interest – bearing loans should not exceed by times the company’s equity;
The entity must not pay an excessive interest rate in debt;
The entity must not pay more than 50% of its income for management fees, interests or royalties to non – residents;
The entity must distribute at least 25% of the income, which can also be distributed as dividend.

How to benefit from the double tax treaties in Switzerland

Switzerland is constantly adapting its policy regarding information exchange, tax fraud and tax evasion, which is why many tax treaties were amended accordingly. In order to obtain benefits under one of Switzerland’s tax treaties, the income payer, the recipient and the tax authorities in the treaty partner country must sign a form to certify the residence of the recipient and to confirm that the information on the recipient is accurate. The form is afterwards submitted to the Federal Tax Administration, before the payment is made.

Situations in which treaty provisions don’t apply

Treaty provisions don’t apply to dividends, interests or royalties paid by a Swiss entity to German, Italian, French or Belgian entities, if the Swiss entity is partly or wholly exempt from cantonal tax, under tax incentives that are applicable to specific types of companies or industries, such as domiciliary, auxiliary, holding, mixed and service companies.

Considering all these aspects, it’s important to benefit from the double tax treaties existing between Switzerland and its partner – countries, as they offer a great opportunity for companies that want to avoid excessive taxes or double taxing for their profits.

Double taxation treaties signed by Switzerland

As part of its favourable taxation system, Switzerland has signed various double taxation treaties with most industrialized countries all over the world. The respective treaties follow the rules and regulations provided by international tax law, but they also contain specific provisions according to the taxation system of each state.

Since the beginning of 2019, Switzerland has signed a double taxation agreement with Zambia and implemented some protocol amendments to the DTA with Ecuador. Furthermore, new protocol amendments were also implemented to the Double Taxation Agreements previously signed with New Zeland, Norway, Sweden, Ireland, the Netherlands, Iran, South Korea and Ukraine.

At present, Switzerland has signed:

Double taxation treaties in accordance with the OECD standard with: Albania, Argentina, Australia, Austria, Belgium, Bulgaria, Canada, China, Chinese Taipei, Cyprus, Czech Republic, Denmark, Ecuador, Estonia, Faroe Islands, Finland, France, Germany, Ghana, Great Britain, Greece, Hong Kong, Hungary, Iceland, India, Ireland, Italy, Japan, Kazakhstan, Kosovo, South Korea, Latvia, Liechtenstein, Luxembourg, Malta, Mexico, Netherlands, Norway, Oman, Pakistan, Peru, Poland, Portugal, Qatar, Romania, Russia, Singapore, Slovakia, Slovenia, Spain, Sweden, Turkey, Turkmenistan, United Arab Emirates, USA, Uruguay and Uzbekistan.

Double taxation treaties without the OECD standard were signed with: Algeria, Antigua, Armenia, Azerbaijan, Bangladesh, Barbardos, Belarus, Chile, Colombia, Croatia, Dominica, Egypt, Gambia, Georgia, Indonesia, Iran, Israel, Ivory Coast, Jamaica, Kuwait, Kyrgyzstan, Lithuania, Macedonia, Malawi, Malaysia, Moldova, Mongolia, Montenegro, Montserrat, Morocco, New Zealand, Philippines, Serbia, South Africa, Sri Lanka, St. Christopher, Nevis and Anguilla, St. Lucia, St. Vincent, Tajikistan, Thailand, Trinidad and Tobago, Tunisia, Ukraine, Venezuela, Vietnam, Virgin Islands and Zambia.

Switzerland has also signed tax information exchange agreements with Andorra, Belize, Brazil, Grenada, Greenland, Guernsey, Isle of Man, Jersey, San Marino and Seychell

For more details and assistance regarding double tax treaties 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.

Add new comment

Establish a subsidiary in Switzerland

kovalkov — Tue, 20 Oct 2015 05:02:06 +0000

Establish a subsidiary in Switzerland kovalkov Tue, 10/20/2015 - 07:02

Subsidiaries are legal entities with capital that is partially or totally owned by foreign companies. However, the management of the subsidiary is not conditioned by the foreign capital, and the entity is able to handle business contracts, hire employees or issue and transfer shares.

Why should you found a subsidiary in Switzerland?

Subsidiaries follow a decentralized business model, which means that the independently managed entities are financially and operationally self – sufficient. Each business unit finances itself, manages its own risks and deals with the consequences of its own bad decisions, without affecting the foreign companies.

By founding a subsidiary, it’s easier to contain losses in the event of failure. It’s also the most common practice for those interested in forming a company in Switzerland, by simply expanding their business operations.

Certain Swiss regulation favor subsidiaries opened in this country, for instance, different tax treaties are regulating the way the withholding taxes on dividends, interests or royalties paid to the treaty country are issued. In many cases, the withholding tax is consistently minimized, or even exempt.

The corporate tax on profits is paid only in the country of origin, or if an exception is made and it’s paid in Switzerland, a refund is offered.

How to register a subsidiary in Switzerland

A subsidiary is usually registered as a GmbH or an AG. The process is similar for both types of companies. You don’t need a special license to perform activities under this form of business, however it is mandatory to register the new subsidiary with the Swiss Companies Register.

Subsidiaries in Switzerland are formed as companies with limited liability, and they may be public or private, depending on their type – GmbH or AG.

At least two shareholders, with a minimum deposit of 20,000 CHF in a Swiss bank account must form a GmbH. It’s also mandatory that the director is a Swiss resident.

In the case of an AG, this company must be formed by at least three shareholders, with a minimum share capital of 100,000 CHF. It’s important to note that the capital cannot be increased more than a half at a time, which is why you need to decide right from the start how much you’re willing to invest. Half of the sum must be provided prior to registration. The majority of the directors should also be Swiss residents.

If you want to start the registration process for an AG, the first step is depositing the required minimum share capital in the bank and receiving an extract from the bank that certifies the financial operation.

Documentation needed to register a Swiss subsidiary

After the deposit was made, the articles of association are drafted in front of a notary, who must notarize the personal and the corporate signature from the application.

The next step is depositing the notarized articles of association, the decision to incorporate the company in Switzerland and the bank certificate to the commercial registry. The process of registering a subsidiary in Switzerland should take no more than two or three weeks.

If necessary, your Swiss subsidiary should be registered for VAT and the employees need to be registered at the social insurance system.

Overall, establishing a subsidiary in Switzerland is a relatively simple process and it offers many great business opportunities for various companies looking to expand their businesses abroad.

For more details and assistance regarding opening a subsidiary in Switzerland, feel free to 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.

Add new comment

Register a company in Switzerland

kovalkov — Tue, 20 Oct 2015 05:02:58 +0000

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.

Add new comment

New blockchain era for Switzerland. What you need to know?

kovalkov — Tue, 09 Feb 2021 16:12:58 +0000

New blockchain era for Switzerland. What you need to know?

kovalkov Tue, 02/09/2021 - 17:12

New blockchain era for Switzerland. What you need to know?

Switzerland is one of the leading fintech hubs worldwide. According to a study conducted by the Institute for Financial Services Zug (IFZ), the country has unimaginable potential for innovation, entrepreneurship, and financial technologies internationally.

Last year, Switzerland introduced a new law, the "blockchain law". The implementation of this law will follow two stages: the first which already occured on the 1st of February, and the other to eventuate in August. Invoked on the 1st of February were reforms on company law. In the second phase in August, the State will put into effect upgrades of the financial market infrastructure. These will allow Switzerland to have a properly managed cryptocurrency industry where all actors are fully informed of the opportunities & risks associated.

Other benefits of the blockchain law are:

It will allow swift trading;
It will attract a larger number of participants;
A diverse range of products may be accessible affordably.

Who are the first beneficiaries

There are about 3 organizations which already started to benefit from the blockchain law. These are:

Crypto Finance
SEBA
Sygnum banks

The Crypto Finance company received a securities house licence from FINMA. This license will enable the company's Crypto Broker division to activate trade for new digital securities. These securities may include shares, collectibles, assets (e.g. real estate), and luxury goods.

Sygnum banks and SEBA already received their licenses in 2019. They also recently announced their digital assets. Sygnum tokenized a variety of wines from another company on its Desygnate platform. It's believed that more companies will deliver their digital assets via the bank.

In addition to the above companies, more entities have shown interest in company formation in Switzerland and the acquisition of FINMA licenses. These entities include Bitcoin Suisse, Taurus and Lykke, etc.

Are there any drawbacks?

So far, there are no major challenges as far as obtaining a license is concerned. By the way, similar processes were initiated in 2019, but could not work out as expected. However, 2021 has a greater potential to yield better results. For more insights and tax guidance, feel free to reach out to our specialists at SIGTAX.

Add new comment

DLT regulations [2021 Update]

kovalkov — Fri, 22 Jan 2021 03:45:49 +0000

DLT regulations [2021 Update]

kovalkov Fri, 01/22/2021 - 04:45

Recently, Switzerland adopted a new DLT Regulations which sets the country as a leader in FinTech, Blockchain, DLT Technologies and other related programs. The new regulations will enter into force starting from this year.

The DLT amendments will mainly focus on security token exchanges. That means there would be a new license types for trading venues. These would be focused on digital assets; new custody service providers, clearer regulatory regime for digital asset custody providers; and edited asset token, enabling the creation and transaction of digital uncertified securities in a DLT ecosystem without legal hindrances.

A new DLT will amend such legal areas and bring in new solutions to the Civil Law, Insolvency law, Financial market law and most importantly Anti-Money laundering regulation and International private law. All these new amendments will bring a more legal consciousness to the area of blockchain applications.

Below you will find detailed information regarding how these new changes are being implemented:

The first central element of the new regulation is a new licence category for “DLT Trading Facilities” which is called (DLT-Handelssysteme) introduced in the Financial market infrastructure law (FMIA). This new licence type has been defined as a professionally operated venue for the multilateral and non-discretionary trading of Digital (DLT) Securities. Its goal is to offer service in trading, clearing, settlement and custody with DLT based assets not only for regulated financial market players, but regulating even private customers.
The new regulation allows the segregation of the digital assets for the benefit of the relevant creditors or investors, provided certain requirements are met. If the digital assets are held by the custodian in a way that unambiguously allows the identification of the owner on-chain or off-chain (through a sufficient internal ledger), the property to the digital assets remains with the client. In such case, banking regulations are not triggered, even if the digital assets of various clients will be pooled within the custody solution of the custodian.
Under the existing legal framework, the Civil law treatment of “security token” has created uncertainty. To solve this, the new law introduces a new type of digital securities, the so called “Uncertificated Register Securities” (Registerwertrechte). Alongside, new rules for corporations looking to issue shares in a tokenized form are being released. The goal of the legislator is to allow for a stable and legally robust tokenization of rights, through the electronic registration of rights, that entails the same protection and functionality as a security. The creation itself is made by the parties, through a registration agreement according to which the relevant right is entered into a “Register of Uncertificated Securities” and may exclusively be asserted based on and transferred via the register.

As a result, this new legal amendments will allow more secure exchange of shares and other securities, trading facility, a better banking regulation, release of assets and access to data in bankruptcy procedures.

If you have any further question, related to this subject. Please don’t hesitate to contact us, we will provide with professional help from our specialists.