Registration of a company in Switzerland

The Swiss Confederation is an excellent starting point for companies that want to enter the European market. The country is a member of the European Free Trade Association and has several existing bilateral agreements with the EU, but it is not a member of the European Union. Thus, establishing a business in Bern or any other city in Switzerland will allow trading freely with EU countries. In doing so, the company must comply only with local law. Due to low inflation and solid-state support, registration of a company in Switzerland is considered beneficial and promising.

Advantages of registering a company

• favorable and stable business environment;
• loyal taxation;
• the openness of state borders for the movement of goods and people across the EU;
• the anonymity of business owners;
• protection of assets from unjustified lawsuits.

Main forms of legal presence and doing business

• sole proprietorship (SP);
• limited liability company (SA);
• private limited liability company (SARL);
• corporation.

To open a business in Switzerland, most foreign investors choose SARL. The minimum share capital required to establish a company is 20,000 Swiss francs (about 22,000 U.S. dollars). At the time of its establishment, it must be fully paid or covered by contributions. Registering a SARL requires one or more natural and legal persons. At the same time, the company can be founded and managed by one person.

Registration procedure

• choose and reserve a unique company name;
• to open a consignment account with a bank and deposit the amount of the share capital therein;
• register the company in Switzerland in the Commercial Register;
• obtain a VAT number from the Swiss Federal Tax Office;
• open a current bank account and transfer the funds from the consignment account to it;
• obtain additional permits and licenses.

Legislation and regulatory environment

To be self-employed and stay in Switzerland, non-EU or EFTA citizens must have a residence permit. To do so, an application must be submitted to the cantonal authorities, and all the conditions required for a foreigner to stay in the Confederation must be met. In addition, non-resident entrepreneurs also have to prove their company's positive and lasting impact on the Swiss labor market. The main legal act regulating the process of creation and operation of companies in the country is the Civil Code. The legislation obliges the owners of SARL to form reserves in the amount of 5% of the annual profit of a limited liability company until they reach 20% of the paid-up share capital. SARLs are required to maintain and file accounts. Companies are subject to audit if:

• the sum of the balance exceeded 20 million Swiss francs;
• the trade turnover amounted to more than 40 million Swiss francs;
• the number of employees hired was more than 250.

Tax system

A common misconception is that Switzerland is offshore. The country has signed more than 70 agreements on avoiding double taxation, which allows companies and entrepreneurs to benefit from lower tax rates. Taxes are levied at the federal, cantonal, and municipal levels and are among the lowest in the European region for companies and individuals. General tax rates:

• Corporate tax - from 11.9% to 21.0% (depending on location in Switzerland), of which federal tax is 8.5% (on profits after tax) or 7.83% (on earnings before tax);
• Depending on the canton, personal income tax is between 22.1 % and 45.5 %. The federal tax rate is 11.5%;
• VAT - 7.7% (scheduled to increase to 8.1% from 01.01.2024);
• Dividend tax - from 0% to 35%;
• Capital gains tax - not levied (profits are subject to corporate tax).

Companies in Switzerland with research and development departments or with patents can take advantage of the Swiss Patent Box. In this case, incentives such as a reduced tax rate on profits from research activities of up to 90% can be granted upon request. Cantons provide different types of preferences for businesses and compete with each other to attract investment. Many offer tax incentives for new companies or investments in expansion. For example, tax vacations of up to 10 years can be taken advantage of. In some specific economic development regions and regional centers, tax vacations can even be granted for federal income tax purposes if certain conditions are met.

Open a business in Switzerland: how Aotopay lawyers can assist

Low tax rates and the openness of the Swiss economy encourage foreign entrepreneurs to create companies in the country. However, to maximize the benefits of overseas business, investors need to understand the nuances of local law and the opportunities offered by the various cantons. Aotopay specialists will advise on critical legal issues, help to prepare constituent documents, and register a company in Switzerland. In addition, we can be entrusted with your foreign company's accounting and annual maintenance.