Switzerland: How To Do Business In Switzerland

Last Updated: 28 February 2018

Located in the heart of Europe, Switzerland is one of the leading business locations in the world. Its success is mainly based on high productivity combined with high quality products and services, and on an investor and business friendly government in a country with modest taxation. Currency and price stability, a first rate infrastructure, efficient capital markets and a highly professional international banking system, excellent education, as well as political stability further contribute to Switzerland's attractiveness. Switzerland offers an advantageous, multilingual environment for establishing a business or the European headquarters of a group of companies.

Corporate Law

Swiss corporate law is characterized by a relatively low level of regulation. There are several options when it comes to selecting the most suitable form of organization for a business. Swiss corporate law offers a variety of legal forms, both in the form of a legal (and separately taxable) entity or in the form of a partnership. Among the corporations, the lim­ited liability company (Gesellschaft mit beschränkter Haftung, GmbH, [LLC]) and the stock corporation (Ak­tiengesellschaft, AG [Ltd.]) are very widely used. The registration procedure for a legal entity usually takes around one to two weeks from the date of filing.

To set up a stock corporation, a minimum share capital of CHF 100'000 is required, of witch at least 20% (and in any case not less than CHF 50'000) need to be paid-in. At least one authorized and registered signatory must be a resident in Switzer­land. A stock corporation can issue different types of shares, including preferred shares, voting shares or shares without voting rights.

To set up a limited liability company, a minimum capital of CHF 20'000 is required and needs to be fully paid-in. At least one authorized and regis­tered signatory has to be resident in Switzerland. Due to the smaller amount of registered capital, the limited liability company is a practical alterna­tive to the stock corporation, in particular for small to mediumsized companies. In contrast to the stock corporation, each member of the company must be registered in the commercial register.

A Swiss branch office of a foreign company is aimed to provide a registered Swiss business ad­dress. However, the branch office is not considered an independent Swiss entity, i.e. the foreign par­ent company bears the financial responsibility. The foreign parent company, the branch itself as well as at least one authorized signatory (who must be a Swiss resident) need to be entered into the com­mercial register.

The general accounting regulations are brief. The annual report of a stock corporation or a limited liability company must contain the financial state­ment (balance sheet and profit and loss statement), the business report, and the consolidated financial statements to the extent required by law. Pub­licly listed companies and large to mediumsized companies must have their accounts audited by an independent certified auditor. Small compa­nies may have their accounts audited in a limited form or may choose to opt out of the obligation to audit, provided that they have not more than ten fulltime employees. The financial statements may be prepared according to internationally accepted standards such as for example US-GAAP, IFRS or FER.

Taxes

The Swiss tax system features different taxes at federal, cantonal, and communal level and enables competition among Cantons and municipalities to attract good taxpayers by offering a better tax cli­mate. As a result, there are certain Cantons with particularly low tax rates. Generally speaking, tax­ation in Switzerland is moderate when compared to European standard. Switzerland has one of the most comprehensive networks of Double Taxation Agreements and is, therefore, very attractive as a business location from a tax perspective.

Generally, a company is taxable on its profit and capital. The basis for the calculation of taxable net income is the profit and loss statement, to which certain adjustments may be made (e.g., for losses carried forward). The tax rates vary from Canton to Canton. For ordinary taxed companies the range is between 12% to 24% on the profit before tax.

The tax itself is tax deductible. The regular 2012 corporate tax rate, for example in the Canton of Lucerne, stands at approx. 12% on profit before tax (cantonal, communal and federal tax combined), with capital tax of up to 0.18%. A variety of tax privileges are granted on request, e.g., for holding companies, domiciliary or mixed companies (i.e. companies with primarily foreign activities). Tax incentives are available for headquarters activities and new investments (for detailed information go to: www.estv.admin.ch).

For individuals who work or are domiciled in Swit­zerland, income is taxed at the federal, cantonal, and communal level, while net wealth is taxed on cantonal and communal level. Capital gains on privately held movable assets of individuals are generally tax exempt. Taxation of net income is progressive but capped at a maximum rate. The net wealth tax varies from Canton to Canton, the maximum rate being 0.9%. Expatriates working in Switzerland pay a withholding tax levied at source, i.e. directly by the employer. As a result of the tax competition, most Cantons have abolished inher­itance and gift tax for descendants; currently the federal government does not levy an inheritance or gift tax.

A federal withholding tax of 35% is levied on in­come from capital assets, such as interest on bonds, dividends or other distributions to shareholders. For taxpayers in Switzerland, this withholding tax is fully credited against regular taxation, while for persons or entities residing outside Switzerland the tax reduction respectively refund depends on the relevant Double Taxation Treaty or the Swiss-EU Agreement on Saving Tax.

The standard value added tax (VAT) rate is 8%.

Cantonal and federal tax authorities issue tax rul­ings on the tax consequences of any transaction submitted to them prior to the consumption of the transaction.

Labor Regulations

Foreign nationals need a residence and work permit for pursuing remunerated employment in Switzerland. The regulations for EU-citizens are different from those for individuals coming from other countries, as the free movement of individ­uals between Switzerland and the EU is guaran­teed by an agreement which grants EU nationals the same treatment as Swiss nationals. In contrast, non-EU citizens need an authorization in order to be employed.

Swiss labor law is considerably liberal. The freedom of the employer or the employee to terminate the employment agreement, subject to the applicable notice period, is a fundamental principle of Swiss labor law. With strictly limited exceptions, termi­nations are legally valid and binding while subject to relatively low compensation.

Real Estate

Swiss law (the so-called "Lex Koller") restricts the acquisition of residential real estate by persons liv­ing abroad. The restrictions do not apply to Swiss citizen, foreigners holding a residence permit C and EU- and EFTA-nationals with permanent residence in Switzerland. The acquisition of real estate by per­sons living abroad requires prior approval from the appropriate cantonal authority. No such approval is required for the acquisition of real estate used for commercial purposes (i.e. permanent business establishments, such as manufacturing premises, warehouse facilities, offices, shopping centers, retail premises, hotels, restaurants, workshops or doctors' offices).

Title relating to all real estate is entered in the re­spective land register; entries are presumed by law to be true and correct and any party relying in good faith on such entry is fully protected.

Intellectual Property

Switzerland regularly positions itself in the top ranks of the WEF Global Competitiveness Index. One of the country's most notable strengths are its renowned scientific research institutions and Switzerland is renowned as an innovation driven country. Switzer­land is a member state of all the major international intellectual property rights agreements and is re­puted to have an excellent regime for the protec­tion of intellectual property. Protection is equally granted to foreign and domestic rightsholders. The procedures to register trademarks, patents and de­signs with the Swiss Intellectual Property Institute are straightfor-ward, expedited and "customer friendly". The World Intellectual Property Institute which ad-ministers international registrations un­der the Madrid Agreement and Protocol has its of­fices in Switzerland (Geneva). Due to Switzerland's stable and efficient legal and tax environment a great number of international companies have moved their IP portfolio to Switzerland by either setting up their headquarters in Switzerland or es­tablishing IP branches in Switzerland.

Financial Services

A license from the Swiss Financial Market Supervi­sory Authority (FINMA) is required in order to en­gage in activities in Switzerland as a bank, broker/ dealer, a distributor of a foreign investment fund or manager of a fund. As of January 1, 2013, asset managers of foreign investment funds of a certain size shall also require a license. The applicant must demonstrate the viability of its business plan, cap­italization, logistical infrastructure and human re­sources. Financial intermediaries are subject to the regulations against money laundering. Compliance with financial market regulations is supervised by the FINMA whose website provides helpful informa­tion under www.finma.ch.

Collective Investments

Joint investments by several investors or investment companies may be considered a collective invest­ment scheme and be subject to the supervision of FINMA. The relevant documents such as sales pro­spectuses, articles of association or fund contracts require the approval of FINMA. No such approval is necessary if foreign collective investment schemes are distributed to qualified investors only (such as banks, securities dealers, insurance companies, en­terprises with a professional treasury or high net worth individuals which have declared themselves to be qualified investors).

The distribution of regulated foreign collective in­vestment schemes to nonqualified investors requires the appointment of a legal representative and paying agent which as of January 1, 2013 shall also be nec­essary in order to promote non-regulated collective investment schemes to certain qualified investors.

VERSION 2015

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
meyerlustenberger | lachenal
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
meyerlustenberger | lachenal
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions