Setting up a company in Switzerland can be relatively easy, but the process and requirements can vary depending on the type of company you wish to establish. Therefore, before
Working in Switzerland
If you’re considering working in Switzerland, it’s important to note that the country has strict limits on the number of foreign workers allowed to move there.
However, options are still available for those looking to work in Switzerland, such as becoming self-employed freelancers, sole traders, or even starting your own Swiss company as a director.
These options may require additional paperwork and legal requirements, but they can provide a pathway to working and living in Switzerland.
Foreign Resident Setting Up A Company
If you’re a foreign resident looking to set up a company in Switzerland, there are specific requirements you need to meet.
According to expatica.com, EU/EFTA nationals have an easier time, as they can become self-employed or start a business relatively quickly.
All you need to do is register for a permit at your local canton (keep reading to see our section on cantons) and provide proof of your self-employed activity, such as a detailed business plan or VAT number.
However, third-country nationals need a valid C residence permit unless they are married to a Swiss citizen/permanent resident. In this case, you’ll need to apply through your local cantonal authority and meet the personal requirements for a Swiss work visa.
Additionally, you’ll need to demonstrate that your business will have lasting positive benefits for the Swiss labor market, such as a detailed business plan or evidence of strong relationships with existing Swiss companies.
Let’s focus on the different business structures available when setting up a company in Switzerland.
Business Entity Structures
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 the 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, and limited liability.
In principle, the nationality of a company founder doesn’t matter. Only with the occupation of the company’s governing bodies do specific regulations apply, so you want to look into this while researching how to set up a company in Switzerland.
However, as mentioned earlier, foreigners need a valid residence permit 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 and have Swiss citizenship or that of an EU / EFTA state.
Similarly, with a GmbH, a managing director authorized to represent the company must live in Switzerland.
Once all preliminary requirements (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 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 about 16% to 25% but can be reduced by up to 10% through tax optimization.
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 a gain of CHF 500,000.
Differences between the cantons
Cantons were mentioned earlier. What are the differences between the cantons?
Canton is the word for district or region, and there are different languages spoken in many of the cantons. Expect the cantons’ language to be Italian, French, German, or Romansh. In the canton of Graubünden, both German and Romash are spoken.
The tax differences in Switzerland can be significant, so it’s essential to look into the 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 essential 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 when deciding on the Swiss canton most suitable to set up a business.
Company formation specialists
If you’re interested in setting up a company in Switzerland, several resources are available to help you navigate the process.
One option is to work with specialized firms that can provide guidance on everything from choosing a company name to creating a business plan and establishing the company. These firms can also offer legal, insurance, and tax advice and ongoing support to ensure your company is on track and meeting all necessary requirements.
Whether you’re a start-up or an established business looking to expand into Switzerland, these services can be invaluable in helping you achieve your goals.