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.


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.


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.