Before starting a business in Switzerland you should have a clear picture about what kind of company you want to incorporate. Among the most common types of companies formed in Switzerland are the corporation (AG), the limited liability company (GmbH) and the sole proprietorship.
An AG requires a share capital of at least CHF 100,000. The main advantages are anonymity of investors, no publicity obligation, limited liability and simple transfer of shares.
A GmbH needs a starting capital of at least CHF 20,000. The main advantages are the requirement of a low share capital, only two founders necessary (and from 2008 only 1 founder), revision is optional, limited liability.
In principle, the nationality of a company founder doesn’t matter. Only with the occupation of the governing bodies of the company certain regulations apply, so this is something you want to look into while researching how to set up a company in Switzerland. Foreigners need any valid residence permit to be able to start a business. Of course, partnerships are possible. In the case of an AG, the majority of the members of the Board of Directors must be domiciled in Switzerland, have Swiss citizenship or that of an EU / EFTA state. In the case of a GmbH, a managing director authorized to represent the company must live in Switzerland.
Once all preliminary requirements have been made (company structure, legal form, consultancy, start-up capital) and the documents have been prepared, the company can be founded within 2 to 3 weeks.
Taxes in Switzerland
One of the aspects to consider regarding how to set up a company in Switzerland is taxation. Businesses and private individuals are taxed at three different levels – at federal, cantonal and municipal levels.
The place of value creation is decisive for a company, i.e. at the company headquarters. Compared to the taxes in other European jurisdictions these are significantly lower in Switzerland. The federal tax rate is 7.83% of the profit (effective rate). The cantonal taxes are very different and vary depending on the location. For example, the cantonal tax rate varies between 4.4% and 19%, while the municipal profit tax varies between 4% and 16%.
The tax burden comes to a total of about 16% to 25%, but can be reduced through tax optimization up to 10%.
Private individuals are taxed at their place of residence. The federal government levies an income tax of 11.5%, cantons and municipalities claim 5% to 13% for a taxable income of CHF 50,000 and 11% to 27%, for an income of CHF 500,000.
Differences between the cantons
The tax differences in Switzerland can be very important, so it’s important to look into tax rates of different cantons when gathering information about how to set up a company in Switzerland. This is expressed both through real estate prices and company formation costs.
The tax benefit of a location is an important factor in the decision-making process when starting a business or establishing a company branch in Switzerland. Of course, infrastructure, available workforce and quality of life must also be considered to decide on the Swiss canton most suitable to set up a business.
Company formation specialists
There are specialized firms that can be very helpful in founding a company, including providing more information on how to set up a company in Switzerland. For start-ups, for example, a wide range of consulting services is offered – from choosing the company name and legal, insurance and tax advice to the creation of the business plan, the establishment of the company and control over the status of the company foundation.