Generally known for banking, Switzerland has also recently established itself as a hub for startups. And due to its stable economic conditions and developed financial systems, Switzerland is one of the most desirable places to open a company in Europe.
Switzerland has several company structures with one standing out the most – Swiss limited liability company (Gesellschaft mit beschränkter Haftung – GMBH).
A Swiss GmbH is a combination of a public limited company and a partnership. The Swiss GmbH is comparable to a limited liability company in the United States, and a private company limited by shares in the United Kingdom.
A Swiss Limited Liability Company is a commercial company with its own legal personality, which is especially suited to SMEs and family-owned firms. And its primary uses include collective investment, trading or holding, and international investment.
The main features of the Swiss GmbH
- The incorporation and the management of GmbH are relatively simple and it is possible to start the company with only one founder/ shareholder. So a minimum of one founder is necessary.
- The minimum contribution or paid-up capital required is 20,000 CHF and liability is restricted to the contributions. Cash and in-kind contributions are allowed. Also, responsibility is limited to the capital of the company.
- There’s a required minimum of one director who must be a Swiss resident. Nominee directors are allowed.
- Every GmbH must maintain an office in Switzerland and assign a local registered agent to accept service of process and official notices. But, a virtual office can be registered.
- The shareholders’ meeting comprises the main body of the GmbH and sets forth specifications for the articles of association, the management, and the auditor.
- Every executive director of a Swiss GmbH has the right to act on behalf of the company, except if the articles of association specify otherwise.
- You can assign any name for the company, but the company name must be unique, unlike any other Swiss legal entity’s name. The GmbH company name must insert “GmbH” at the end of its name.
- Financial statements are expected to be maintained under the double-entry bookkeeping system. A Balance Sheet and an operating profit and loss Account and an inventory must also be maintained.
- Small and medium sized GmbHs which do not exceed the thresholds – total assets of CHF 20 million, sales of CHF 40 million, and an average of 250 full-time employees over the year, are subject to a limited audit.
Register your Swiss company
Forming a Swiss Limited Liability Company requires the official, notarial process to be formed. The Company Registry is where all mandated documents for incorporation will be filed. All corporate and personal signatures will be signed in front of a public notary who will validate the Articles of Association and the Public Deed of Incorporation. The Swiss GmbH gets will then get its corporate body after it finalizes registration in the commercial register.
Swiss taxes
The Swiss limited liability company files its tax return as a separate legal entity or Firm.
The Swiss GMBH is taxed on its net profit and the shareholders must declare the distributed profit as income.
After authorization of registration by the Commercial Registry for corporate tax and VAT identity numbers, new GMBHs must apply to the Federal Tax Administration.
Taxes are exacted by the federal government and each canton which have different tax rates. Switzerland and the Swiss GMBH also have access to 80 different Double Taxation Treaties with countries.
Opting for the Swiss LLC (Sarl/GMBH) structure lowers the amount of initial capital investment to start the company. Also, Switzerland LLCs have the following benefits: 100% foreign ownership is possible, single-member ownership is acceptable, disclosure of beneficial owner is not mandated, and finally it has low corporate tax rates.
Want to set up an LLC in Switzerland? – Let’s go ahead and contact your Damalion expert now.
