As one of the most attractive business locations for entrepreneurs from all over the world, Switzerland maintains one of the top spots in various ranking regarding the business environment, quality of life, education and other important aspects which contribute to the success of a new business located there. However, foreign citizens who intend to incorporate in Switzerland should know a few things before they go ahead with the procedure.
- Swiss business structures
The most common business structures used to incorporate in Switzerland are the Aktiengesellschaft (AG) which is a joint stock company similar in structure to a corporation and the Gesellschaft mit beschränkter Haftung (GmbH) which is a private limited liability company. The costs are significantly higher to incorporate in Switzerland in the case of an AG. The minimum required share capital is 100,000 CHF, out of which at least 20% (for larger capital) or 50,000 CHF must be paid up upon registration. For a GmbH, the minimum required share capital is only 20, 000 CHF.
- Foreigners are allowed to incorporate in Switzerland
There are no laws preventing foreigners to incorporate in Switzerland, but there are certain rules regarding the composition of the governing bodies. For example, for a GmbH, at least one of the managing directors must be a Swiss resident, while an AG requires that at least one member of the company board or a director must be a Swiss resident. In both cases the respective directors must have sole signatory rights.
- It doesn’t take long to incorporate in Switzerland
Once all the paperwork is prepared and all the legal requirements are met, it’s only a matter of weeks to incorporate in Switzerland. Usually, the company deeds are drafted and notarized by a Swiss notary and after that they are sent to the Swiss Commercial Register. The entire procedure takes just 2-3 weeks, if there aren’t any other issues.
- The share capital must be deposited with a Swiss bank
If the chosen business structure for company incorporation in Switzerland requires a minimum share capital, the respective sum is deposited into a blocked bank account with a Swiss bank. The bank issues a certificate of deposit which is necessary to be able to register the newly-formed company. After the registration process is completed, the bank account can become a business account for the company and the money is no longer blocked.
- Accounting standards
The Swiss accounting laws are very clear and straightforward. Every type of company must draft an income statement and a balance sheet at the end of each year, following universally accepted commercial standards. For some companies it’s mandatory to appoint an auditor. Accounting may comply with any of the international standards such as IAS, FER, US-GAAP.
- Corporate taxation
Taxes paid by companies vary depending on the cantonal tax rates, as each Swiss canton has the right to levy their own tax rates. In general, the total tax burden for a company ranges from 11% to 25%, but it all depends on the location, on the type of company or conducted activities. Cantons practically compete with one another to offer several tax incentives and tax exemptions to determine foreign entrepreneurs and businesses to incorporate in Switzerland.
- Work and residence permits
A residence permit is required for anyone who works in Switzerland or who stays in the country for more than three months. For citizens from countries that are not EU or EFTA members, it can take longer two obtain a work permit since Switzerland applies a dual quota system to encourage companies to use local workforce more.
Switzerland has excellent commercial relationships with most countries and has concluded several double taxation avoidance treaties and trade agreements; therefore, foreign entrepreneurs who would like to incorporate in Switzerland will find a very friendly business environment.