Information

Locational Advantage of Switzerland

Switzerland is a very good place to start your own business. It offers a stable economic environment and a high quality of life.

There are different reasons why Switzerland is an ideal location for your business:

- Strong economy and currency
- Liberal tax system
- Liberal labour market
- Efficient and reliable administration
- Outstanding infrastructure
- Important financial centre
- Head office of multinational firms
- High level of education and innovation
- High quality of life

Contact us here

Entry into the Swiss market

If you are planning to start a company or you want to expand your existing business in Switzerland, we analyze the market entry for you and prepare all necessary steps.

Switzerland is a very attractive business location that offers great potential for startups and company expansions.

If you are living outside of Switzerland and plan to start a company or want to access the Swiss market with your existing business, we analyze the market entry for you and prepare and execute the action plan on your behalf.

We screen all economical and legal aspects of the market entry and focus also on taxation and operational issues. We recommend the best suitable legal form for the company and its optimal location. On request we also take care to provide suitable personnel and a Managing Director for the launch phase. We are very familiar with the Swiss market and can thereby create accurate analyzes in the shortest possible time.

Contact us here

Expansion to other European markets

Switzerland is an excellent location to advance from there your European expansion. All major European cities are within less than two hours flying time.

Contact us here

Residence and working permits

If you want to stay in Switzerland for more than 3 months you need a residence permit. We offer our assistance with all kinds of permits.

A residence permit is required for anyone who works during their stay in Switzerland or who stays in the country for more than three months. Switzerland applies a dual system to allowing non-Swiss manpower into the country. Wage earners from the EU/EFTA states benefit from the bilateral agreements. Skilled manpower from other countries is also admitted.

Contact us here

Type of companies / legal forms

The most commonly chosen legal forms are the Gesellschaft mit beschränkter Haftung (GmbH) and the Aktiengesellschaft (AG). The most important facts and features:

Aktiengesellschaft (AG)

The Aktiengesellschaft (AG) – roughly the equivalent to a corporation (corp.) or a public limited company (plc) – is a legal person with its own company name and a predetermined company capital which is divided into shares. In contrast to partnerships (general and limited partnership) the basis is not a partnership agreement, but the articles of association. Furthermore, the shareholders of an Aktiengesellschaft are not liable with their private assets.

The main features of the AG are summarised below:

• The establishment of an Aktiengesellschaft calls for a formal, notarial incorporation process and requires at least one natural or legal person as a founder.
• The Aktiengesellschaft acquires its legal personality upon its mandatory registration in the commercial register.
• The minimum share capital for establishing an Aktiengesellschaft is CHF 100‘000 of which 20%, however at least CHF 50‘000, must be paid in. This can be done in cash or in kind.
• Liability of the Aktiengesellschaft is limited to the share capital.
• Participation of the shareholders in the company is not required. Their contribution is limited to payment of share capital.
• The corporate bodies are the general meeting (Generalversammlung) as the supreme governing body, the board of directors (Verwaltungsrat) as the executive body and the auditors as the accounts-controlling body.
• Unless otherwise stated in the Articles of Association or the Organisational Regulations, each member of the board of directors has power of representation. The board of directors can delegate the representation to individual board members (delegates) or to third parties (officers). At least one member of the board of directors must have the right of representation. The company must be represented by a person domiciled in Switzerland.
• The articles of association of the Aktiengesellschaft must contain at the very least specifications about the company name and seat, purpose, share capital amount and the contributions paid in, number, nominal value and type of shares, calling to general meeting and shareholder voting rights, administrative and auditing bodies and form in which outbound notifications will be made.
• Provided the general principles of name-giving are met, the name of the Aktiengesellschaft can be freely chosen. However, the legal form (AG) must be displayed in the company name.
• An Aktiengesellschaft must keep company accounts. This means there needs to be a double entry bookkeeping with a balance sheet, an operating or profit and loss account and an inventory.
• If an Aktiengesellschaft exceeds two of the three following thresholds in two consecutive years, an ordinary audit is required by law:
balance sheet total of over CHF 20 million
revenues of over CHF 40 million
more than 250 full-time employment positions on annual average.
• A limited statutory audit applies to all other cases, unless a company has an annual average of less than 10 full-time positions and all of the shareholders consent to dispense with an audit.

Gesellschaft mit beschränkter Haftung (GmbH)

The Gesellschaft mit beschränkter Haftung (GmbH) – roughly equivalent to a limited liability company (L.L.C) – is a legal person and a mixture between a person- and a capital-oriented company. The company capital is fixed in advance and divided into capital shares secured by the founders. Liability is limited to the company capital. In contrast to the Aktiengesellschaft, the shareholders have the right to manage and represent the company. The person-oriented nature of the GmbH is also reflected in the mandatory registration of the shareholders in the commercial register.

The main features of the GmbH are summarised below:

• The establishment of a GmbH calls for a formal, notarial incorporation process and requires at least one natural or legal person as a founder.
• The GmbH acquires its legal personality upon its mandatory registration in the commercial register.
• The GmbH can be established and operated with one person.
• The minimum company capital for establishing a GmbH is CHF 20‘000 which must be fully paid in, either in cash or in kind.
• Liability is limited to the company capital.
• The GmbH must be represented by a person domiciled in Switzerland, but who does not have to be a shareholder.
• The corporate bodies of the GmbH are: shareholders‘ meeting (Gesellschafterversammlung) as the supreme governing body, the management board (Geschäftsführer) as the executive body and the auditors as the accounts-controlling body.
• Each management board member is entitled to represent the company. Whereas the Articles of Association can stipulate representation otherwise, at least one member of the management board must have the right of representation. The company must be represented by a person domiciled in Switzerland
• The articles of association of the GmbH must contain at the very least specifications about the company name and seat, purpose, company capital amount, capital share amount of each shareholder and form in which outbound notifications will be made.
• Provided the general principles of name-giving are met, the name of the GmbH can be freely chosen. However, the legal form (GmbH) must be displayed in the company name.
• A GmbH must keep company accounts. This means there needs to be a double entry bookkeeping with a balance sheet, an operating or profit and loss account and an inventory.
• If a GmbH exceeds two of the three following thresholds in two consecutive years, an ordinary audit is required by law:
- balance sheet total of over CHF 20 million
- revenues of over CHF 40 million
- more than 250 full-time employment positions on annual average
• A limited statutory audit applies to all other cases, unless a company has an annual average of less than 10 full-time positions and all of the shareholders consent to dispense with an audit.

Taxation

Switzerland has a very attractive tax system, both for companies and individuals. In the following, we present the main pillars of the Swiss tax system.

Taxation on three levels

The Swiss tax system is shaped by the country’s federal structure. Companies and individuals are taxed at three different levels in Switzerland:

• national level (federal taxes)
• cantonal level (cantonal taxes)
• communal level (communal taxes)
The largest portion of taxes is levied by the cantons and municipalities, resulting in intense tax competition at these two levels. Each canton has its own tax laws, which the population can vote on democratically and directly. However, all taxes are collected by a single authority.

Companies are taxed at their place of value creation, i.e. where the company is based or where it carries out its business activities.

Contact us here

Low corporate taxes

Compared with other countries in Europe, corporate taxes are very low in Switzerland. Federal taxes are charged at a flat rate, while cantonal tax rates vary by location and sometimes by level of capital or profit. Taxes are currently levied in the following ranges:

• Direct federal taxes on profits: 8.5%
• Cantonal tax on profits: 5.9% – 16%
• Cantonal tax on capital: 0.05% – 0.3%
• Total tax burden: 14.5% – 25%

Taxation on after-tax profits (effective taxes)
Direct federal taxes are charged at a regular rate of 8.5%. Because taxes are levied on after-tax profits, this yields an effective tax rate of 7.83%.

Other reductions through company-specific tax models
Tax optimization makes it possible to lower tax rates to below 10%. Companies may solicit a binding (advance) tax ruling for their effective tax burden from the tax authorities. Tax benefits are granted on a case by case basis, depending on the location and the type of business.

Contact us here

Low taxes for individuals

Natural persons (employees) pay taxes at their place of residence. Federal tax varies by income, while cantonal and communal tax rates vary by place of residence, income and size of assets. Taxation is progressive, whereby the maximum rate takes effect only at very high income levels. For self-employed people, special regulations apply.

• Federal income tax (maximum rate): 11.5%
• Cantonal and communal income taxes (examples):

Taxable income of CHF 50’000: 5% – 13%
Taxable income of CHF 500’000: 11% – 27%
• Cantonal and communal taxes on assets (examples):

Assets of CHF 100’000: 0% – 0.225%
Maximum rate: 0.89%
• Church tax (depending on denomination): 0% – 2.3%

Contact us here

Case-by-case treatment in case of expatriates

For expatriates, i.e. taxable foreign nationals on a temporary work assignment in Switzerland, there are special federal tax benefits. Most cantons also give expatriates preferred tax treatment.

Expatriates are treated on a case by case basis. Either they are assessed by process of law, or they are subject to withholding tax, which the employer deducts directly from their pay check. The tax rates include certain tax-free allowances for work-related expenses, insurance premiums and family upkeep. Expenses such as moving costs or tuition for international schools are also deductible.

Contact us here

Avoiding double taxation

Intergovernmental treaties are in place to prevent double taxation. Switzerland has signed double taxation conventions with almost 60 states, including nearly all Western industrial nations.

Contact us here

Lowest value-added tax in Europe

Switzerland has by far the lowest value-added tax (VAT) rate anywhere in Europe. Regular VAT is 8%. Hotels are taxed at 3.8%, and necessities/convenience goods at just 2.5%. Other goods and services, such as medical care and education, are completely exempt from VAT.

Contact us here

No inheritance taxes for immediate descendants

No inheritance tax is charged at the federal level. In most cantons, immediate descendants are exempt from inheritance taxes. The inheritance and capital transfer tax rates for third parties range between 10 and 50%.

Contact us here

Other federal taxes

• Capital gains and lottery winnings: 35%
• Life annuity and pensions: 15%
• Other insurance benefits: 8%

Contact us here

Other cantonal and communal taxes

• Tax on capital gains on real estate: 3% – 64%
• Real estate transfer tax (abolished in some places): 0.8% – 3.3%

Contact us here

FAQ

What are the most frequent legal forms?

The most frequent legal forms are

• Public limited company (AG)
• Limited Liability Company (GmbH)

You will find detailed information above under the point „Type of companies / legal forms”

Are there any laws regarding the nationality of the company’s founder(s)?

No, the nationality of the founders is of no importance. Rules do apply when it comes to the composition of the bodies that govern the corporate entity:

Public limited company (AG)
A member of the board or a director must be resident of Switzerland, with sole signatory rights. This prerequisite can also be met if two members of the board or two directors have joint signatory rights and are residents of Switzerland.

Limited liability company (GmbH)
At least one managing director who is authorised to sign on behalf of the company must be resident in Switzerland.

How long does it take to establish a company, and how much does it cost?

Once the terms for setting up the business have been settled (corporate structure, legal form, consultation etc.) and all the documents have been sent to us, a company can be set up in just 2-3 weeks. If you apply for the express foundational procedure (bearing additional costs), the company will be inscribed in the commercial register within approximately 5 days.

The costs for setting up a company depend on the legal form and the seed capital of the company.

Please contact us to get a tentative offer.

Where should the seed capital be deposited?

Public limited company (AG)
The share capital must be deposited at any Swiss bank which will then issue the letter of deposit. This is required to form the company.

Cost: CHF 150 – 400

Limited liability company (GmbH)
The nominal capital must be deposited at any Swiss bank which will then issue the letter of deposit. This is required to form the company.
Cost: CHF 150 – 400

We are happy to assist you in chosing the right bank.

Note
For legal reasons, the share or nominal capital cannot be transferred to a private account after the company has been formed. A business account is required.

When can the founders dispose of the seed capital?

After the company has entered the commercial register, the money is transferred to the account of the newly formed company (a business account is mandatory, see note above).

Do the founders have to appear in person?

No, they don’t. Every founder who would like to have a signatory right in the Swiss commercial register has to have his or her signature certified.

Where can I have my signature certified in countries other than Switzerland so that it is accepted in Switzerland?

This can be done at a Swiss consulate or with a specially qualified Swiss notary (by means of apostille).

What are the laws on corporate accounting?

The general laws governing accounting in Switzerland are brief and straightforward. By law, an income statement (profit and loss statement) and balance sheet must be drafted each year clearly and lucidly according to universally accepted commercial standards. Accounting may thus comply with any of the various international standards (e.g. US-GAAP, IAS, FER).

What are the taxes for companies? Are there tax incentives available? Switzerland marks out with generally low taxes for companies and individuals but they vary from canton to canton. The overall tax burden can be in the range of between 11% and 25%. There are attractive options for case-specific optimization. Depending on the location and business there are tax incentives and other privileges.

How can I obtain residence and work permits?

A residence permit is required for anyone who works during their stay in Switzerland or who stays in the country for more than three months. Switzerland applies a dual system to allowing non-Swiss manpower into the country. Wage earners from the EU/EFTA states benefit from the bilateral agreements. Skilled manpower from other countries is also admitted.

How easy is the exchange of goods with other European countries for a company in Switzerland?

Except from a few product groups, there is complete freedom of trade between Switzerland and Europe.

Can you pay in Euros in Switzerland?

The official currency is the Swiss franc (CHF). However, the Euro is widely accepted as means of payment by most shops and businesses, especially in cities and in tourist centres. Banks will open and manage accounts in Euro. Accounting may be kept in a foreign currency – however, the inventory, operating statement and financial statement must be converted to and submitted in Swiss francs at the end of the fiscal year.

Can foreigners buy property and real estate?

EU/EFTA citizens who have permanent residence is in Switzerland can buy property without a permit. Non-EU/EFTA citizens generally require a permit for buying property and real estate for their personal use (exception: buying a main residence when your primary place of residence is Switzerland).

What type of residency permit is required to start up a company in Switzerland?

For all legal forms, any valid residency permit is required.

Comments are closed.

  • Stay Connected

  •  

     
    Tel. +41 44 542 34 00
    Fax. +41 44 542 34 01
    info@prospera-consult.com

  • Contact

    Prospera Consult GmbH
    Othmar Blumer-Strasse 1
    CH-8427 Freienstein / Zurich
    Switzerland