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Switzerland Company Formation : How to Set Up Now?

by | Mar 28, 2022 | Corporate Structuring

How to set up a company in Switzerland

Switzerland is an undeniably appealing location to form a company among foreign investors. The government has made all efforts to develop a business-friendly company formation process. Coupled with its world-class banking system as well as strong financial and fiduciary industries, Switzerland has made itself one of world’s best investment jurisdictions. 

Here is a brief overview on the steps Swiss non-residents must take in setting up a company in Switzerland. 

Switzerland Company Structures

Private Limited Liability Company (GMbH/SARL)

  • A private limited liability company requires all members to participate in the management and operation of the company. 
  • Members are permitted to transfer their decision-making role to the non-members. 
  • Less costly to start a limited liability company. 
  • All shareholders are required to register with the Switzerland Chamber of Commerce.
  • Allowed to engage in contracts with local clients. 
  • Allowed to invoice local clients.
  • Owners can rent office locations in Switzerland.
  • A private limited liability company is allowed to import goods from overseas.
  • A private limited liability company is allowed to export good to other countries.
  • Income tax is assessed at the three levels, federal, cantons, and communes. Applicable income tax rates vary depending on which canton or commune a private limited liability company is located. 
  • Corporate tax rate for a private limited liability company is between 12.5% and 24%.
  • Capital tax rates ranges between 0.001% and 0.5%.
  • Dividend distribution made by a Swiss company triggers a 35% withholding tax rate, which can be claimed back in full or partially.
  • On the other hand, the Swiss Parliament recently amended its withholding tax act and introduced the abolishment of withholding tax on bond interest payments.
  • Issuance stamp duty at 1% is owed if the capital exceeds CHF 1 million.
  • Value added tax rate at 7.7%, if annual turnover reaches CHF 100,000. 
  • Private limited liability companies are not required to file an audit report at the end of the financial year. 
  • Private limited liability companies are required to submit their tax return at the end of the financial year. 
  • Private Limited liability companies have access to double taxation avoidance agreements with other countries. For instance, the Swiss Confederation and the Grand Duchy of Luxembourg has a signed a convention for the avoidance of double taxation  with respect to taxes on income and capital applicable to persons who are residents of one or both countries. 
  • Minimum share capital required at CHF 20,000.
  • There should be at least one director in a private limited liability company. 
  • There should be at least one designated manager in a private limited liability company. 
  • There should be at least one shareholder in a private limited liability company. 
  • Upon success company formation, a private limited liability must register the name of its shareholders and directors before the Swiss Companies Registry.
  • Individual and corporate shareholders are allowed. 
  • Work permit will be approved within three months. 
  • Company formation usually takes up to three weeks. 
  • Corporate bank account opening takes up to four weeks. 

Public Limited Liability Company or Joint Stock Company (AG/SA)

  • A joint stock company is the most popular legal business structure among international entities in Switzerland. 
  • Ideally used for larger investments and for businesses looking for additional governance oversight and management. 
  • It is the only business structure allowed on the Switzerland stock exchange. 
  • Allowed to engage in contracts with local clients. 
  • Allowed to invoice local clients.
  • Owners can rent office locations in Switzerland.
  • A joint stock company is allowed to import goods from overseas. 
  • A joint stock company is allowed to export good to other countries.
  • Income tax is assessed at the three levels, federal, cantons, and communes. Applicable income tax rates vary depending on which canton or commune a private limited liability company is located. 
  • Corporate tax rate for a public limited liability company ranges between 12.5% for a public and 24%. 
  • Income tax is assessed at the three levels, federal, cantons, and communes. Applicable income tax rates vary depending on which canton or commune a private limited liability company is located. 
  • Capital tax rates ranges between 0.001% and 0.5%.
  • Dividend distribution made by a Swiss company triggers a 35% withholding tax rate, which can be claimed back in full or partially.
  • Issuance stamp duty at 1% is owed if the capital exceeds CHF 1 million.
  • Value added tax rate at 7.7%, if annual turnover reaches CHF 100,000. 
  • It is required to submit an audited annual report at the end of every financial year. 
  • Public limited liability companies are required to submit their tax return at the end of the financial year. 
  • Public limited liability companies have access to double taxation avoidance agreements with other countries. 
  • Minimum share capital required at CHF 100,000.
  • There should be at least one director in a public limited liability company. 
  • There should be at least three designated directors and manager in a public limited liability company. 
  • There should be at least one shareholder in a public limited liability company. 
  • Upon success company formation, a public limited liability must register the name of its shareholders and directors before the Swiss Companies Registry.
  • Individual and corporate shareholders are allowed. 
  • Work permit will be approved within three months. 
  • Company formation usually takes up to three weeks. 
  • Corporate bank account opening takes up to four weeks. 

Branch Office (Succursale) 

  • This business structure will function as a section of its company headquarters operating in another country. 
  • Although a branch office depends on its foreign company, it is deemed to pay Swiss taxes independently as a local Swiss company would. 
  • Parent company based in another country assumes all liabilities of its branch office. 
  • At least one member of a branch office must be a Swiss resident. 
  • Allowed to engage in contracts with local clients. 
  • Allowed to invoice local clients.
  • Owners can rent office locations in Switzerland.
  • A branch office is allowed to import goods from overseas. 
  • A branch office is allowed to export good to other countries.
  • Income tax is assessed at the three levels, federal, cantons, and communes. Applicable income tax rates vary depending on which canton or commune a private limited liability company is located. 
  • Corporate tax rate for a branch office ranges between 12.5% for a public and 24%. 
  • Income tax is assessed at the three levels, federal, cantons, and communes. Applicable income tax rates vary depending on which canton or commune a branch office is located. 
  • Capital tax rates ranges between 0.001% and 0.5%.
  • Dividend distribution made by a Swiss company triggers a 35% withholding tax rate, which can be claimed back in full or partially.
  • Issuance stamp duty at 1% is owed if the capital exceeds CHF 1 million.
  • Value added tax rate at 7.7%, if annual turnover reaches CHF 100,000. 
  • Branch offices are not required to file an audit report at the end of the financial year. 
  • Branch offices are required to submit their tax return at the end of the financial year. 
  • Branch offices have access to double taxation avoidance agreements with other countries. 
  • No minimum share capital required. 
  • There should be at least one director in a branch office. 
  • The parent company must be named as one of its shareholders or partners. 
  • Does not allow individual and corporate shareholders. 
  • Upon success company formation, a branch office must register the name of its shareholders and directors before the Swiss Companies Registry. 
  • Work permit will be approved within three months. 
  • Company formation usually takes up to three weeks. 
  • Corporate bank account opening takes up to four weeks. 

Switzerland Holding Company 

When you incorporate a holding company in Switzerland, it can take advantage from full or total exemption from cantonal and corporate income tax provided the following conditions:

  • Equity investments represent more than 66% of a holding company’s total assets. 
  • Income generated by such investments exceeds 66% of the total annual income. 
  • Dividends earned from subsidiaries are exempt from federal income tax if the investment of a holding company consists of over CHF 1 million or 10% of the total capital of its distributing subsidiary. 

Companies that are not qualified to become holding companies are still allowed to apply for the following:

  • Domiciliary status provided they do not run commercially in Switzerland.
  • Obtain an auxiliary or mixed status provided less than 20% of its sales are from Switzerland. 

The Switzerland holding company structure is best for investors looking to raise corporate finance or hold various asset types, including intellectual property and subsidiary. 

Switzerland Foundation (Private and Charitable Foundations)

  • Can be registered with a minimum capital of CHF 20,000 in cash or other asset types. 
  • Managed by a Board of Directors, with at least one member of the board. 
  • Can operate as a Charitable Foundation during application to the Switzerland Tax Office. This is only allowed if a foundation will act as a non-profit organization, financing humanitarian, educational, scientific, ecological, or cultural initiatives. 
  • Upon successful registration as a charitable foundation, the structure will be exempt from paying taxes in Switzerland. 
  • While it can appoint at least one member to the Board, there must be at least three members, with at least being a resident of Switzerland. 
  • It is the best structure to hold private and corporate assets. 

Company Incorporation in Switzerland

  • Find a suitable company name 
  • Create a comprehensive corporate structure, identifying shareholders, directors, and appointment of a Swiss resident director for successful incorporation for foreign-owned business in Switzerland.
  • Conduct company name search with your specific Cantonal Office of the Commercial Registry. Once the company name is approved, the incorporation process may then begin. This entire process will take up to five days to complete. 
  • Prepare all the necessary documents, including articles of incorporation, resolutions to appoint members of the Board of Directors, and statutory auditors. 
  • All required documents will be presented to a public notary within your specific Swiss Canton. 
  • Opening a bank account in Switzerland. Make sure to have all standard bank account opening requirements for approval. Private limited liability companies must pay CHF 20,000 while a public limited liability company must deposit a minimum paid-up capital of CHF 100,000. After successful deposit, the bank will issue confirmation of deposit documentation.
  • Securing a lease agreement for physical office in Switzerland. 
  • All corporate documents must be signed for official company registration: Notarized Deed of Incorporation, Certified Memorandum and Articles of Association, written consent from the person acting as director/s and shareholder/s. All signatured documents must be duly notarized and legalized by the Swiss Embassy or Consulate in the country of origin. 
  • All corporate documents will be registered before the Office of the Commercial Registry of your specific Swiss Canton, including the deposit statement from the bank. 

Setting up a company in Switzerland is a complicated and complex process for foreign entities and private foreign investors. Damalion will support  you through the entire company formation process by providing you with valuable information, helping you find an office space, opening a bank account, finding local talents, and connecting with professional service providers such as tax experts, lawyers, and accountants that will help you run your company in Switzerland over the long term. Whether you need professional consulting before opening a business in Switzerland or you need a dedicated adviser who knows how to navigate the various regulations, tax regimes, and compliance requirements in Switzerland, our extensive global service network will provide you with valuable insights to succeed in your undertakings. Reach out to a Damalion expert today to learn more. 

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.