OPENING COMPANY IN SWITZERLAND OPEN COMPANY IN SWITZERLAND BY A NON-SWISS OR NON-RESIDENT.
Introduction Switzerland is certainly one of the most attractive countries in the world in which to live, work, and run a company. It offers a combination of political and economic stability, a clean and safe environment, and comparatively low personal and company tax rates. However the tax regime, complicated by the various cantons, is quite complex. If you want register your company in the quickest possible timeframe, and ensure your company is structured in the most tax-efficient way, please contact us today for further details.
SWISS CANTONS
Switzerland as an alternative location The marketing of particular locations is becoming more and more important for companies. Competition requires a mature European and international market strategy. The choice of a European location is a key element of this strategy. By choosing Switzerland or moving the head office or headquarters to Switzerland, there are clear advantages as far as the procurement of capital is concerned on the one hand and the well-known tax advantages on the other. Company formations in Switzerland have for a long time been attractive to the business community because of the liberal basic conditions. There are different legal forms and forms of company to choose from. The business and trading freedom of the Swiss Federal Constitution combined with low levels of regulation also create the ideal conditions for foreigners to organise business activities in Switzerland on a permanent basis and in a successful way. Zug is the strongest canton in Switzerland from a financial point of view with a model tax policy for natural and legal persons. The extensive infrastructure in the areas of banking, trusts, asset management, and legal and tax advice is completely able to meet the requirements of international business.
What are the main types of company in Switzerland?
There are two major types of business entity for foreign investors, and they are as follows: Limited Liability Company (Sàrl) Corporation (SA) What are the main features of an Sàrl? Mainly used for small to medium sized businesses Minimum share capital is 20,000 Swiss Francs (€12,320) No restrictions on foreign ownership Minimum of two people required to establish the company One of the directors must be a Swiss resident What are the main features of an SA? Mainly used for medium to large sized businesses Minimum share capital is 100,000 Swiss Francs (€61,600) At least 50% of share capital to be paid up Shareholders can remain completely anonymous Majority of board directors must be Swiss residents Is it complicated to set up a company in Switzerland? Swiss director required by Swiss laws (We can arange a Nominee for you) Preparation of memorandum and articles Opening a Swiss bank account File with the Registrar of Companies Switzerland divided into 26 different Cantons, which are member states of the federal state of Switzerland. Most popular for company registrations are Zugge, Zurich, Geneva, Fribourg, Lucerne.
How easy is it to recruit staff in Switzerland?
Even though Switzerland has one of the lowest unemployment rates in Europe, (3.9% in 2009) you will not have any problems recruiting the right people for your business. The workforce is well educated and highly skilled, with over 80% of the labour pool in possession of a secondary diploma or vocational training. Switzerland has four official languages – French, German Italian and Romansh and English is widely used. The country has an advanced recruitment sector and EuroCompanyFormations.com will be happy to help you if you require advice on this.
What is the regulatory environment like? Swiss authorities do their best to ensure that business regulation is as light as possible, but it should be noted that companies are subject to canton (state) as well as federal laws. Cantons have regulatory and taxation powers of their own and they differ from one canton to another, so expert advice is essential. We have local specialists on standby to guide you through everything you need to know.
What about banking facilities? Swiss banks represent the last word in efficiency and discretion, managing about a third of the world's private assets and most international financial institutions have a base here. So when it comes to selecting a bank for your newly-opened Swiss company, you will be spoiled for choice.
To what extent are Swiss banks regulated? Heavily regulated. In recent times, the Swiss authorities have introduced strict regulations to guard against money laundering and to ensure compliance and co-operation with international pressures. The banks here face heavy due diligence requirements and are very cautious in dealing with new clients. They prefer new clients to be introduced by people they already know and trust. This is one of the reasons why it makes sense to open a bank account with the help of our local experts, as well as incorporate a company in Switzerland with us.
How can I get more information?
Are there financial incentives available?
All you need to do is contact us and EuroCompanyFormations.com will provide you with all the help you require to open a Swiss company and begin doing business as quickly and profitably as possible. Our professional sevice ensures you can register a company in Switzerland in the quickest possible timeframe!
Not much support for investment is available at federal level. The Government does, however, support some infrastructure investment, such as tourism facilities, communications and training, with subsidised loans of up to 25%. At cantonal level, it is possible to qualify for other kinds of support such as rent subsidies, waiving of work permit requirements, tax holidays up to 10 years, cheap energy, etc.
Taxes
The Swiss tax system is strongly influenced by the federal structure of the country. Emphasis is on direct taxes. By European standards, the tax burden in Switzerland is moderate - both for companies and individuals. The Value Added Tax (VAT) and custom duties are also moderate. The federal structure leaves ample room for healthy competition between the Cantons. Numerous bilateral conventions prevent double taxation internationally. Switzerland, as a business location, is therefore also attractive from a tax viewpoint. Efficient Legal Procedures As a general rule, the freedom of trade and industry allows everyone, including foreign nationals, to set up a business in Switzerland or to hold a financial interest in one. An overseas individual or foreign company may choose the business form which best meets their needs. The general regulations on accounting in Switzerland are clear and concise. In the event of a corporate restructuring, the rules governing employee layoffs and notice periods are relatively uncomplicated.
Setting up a Business In general, no approval from the authorities, chambers of commerce or professional associations is required to establish a business. To conduct a business personally on a permanent basis, a work and residence permit is, however, required. The exercise of certain professions or the establishment of specific businesses may, however, require special licenses or diplomas. Foreigners who do not have a residence permit may have their business operated by Swiss nationals. All business sectors are open to foreign investment. It is not necessary that Swiss persons hold a certain percentage of the equity. Certain restrictions still exist with respect to government monopolies. However, liberalization is in full progress within the framework of the Bilateral Agreements between Switzerland and the EU for traditional monopolies such as railway and postal services. For some professions and for certain businesses, the Federal government or the Cantons impose rules. In such cases, a special license or permit is needed. This applies to activities for which a recognized diploma is required, such as: 1. Banks, insurance companies and investment brokers 2. Hotels and restaurants (only in certain Cantons) 3. Physicians, dentists, pharmacists and attorneys 4. Certain mercantile and services businesses (e.g. wine merchants, private employment agencies, temporary employment services)
Types of legal form of a company
Swiss law recognizes the following types of business forms: 1. Partnership or a joint stock company 2. Subsidiary or branch 3. Joint venture (partnership or joint stock company) 4. Strategic alliance with or without an equity investment The most common forms of domicile for a foreign company in Switzerland are the subsidiary and the branch. Swiss civil law distinguishes between partnerships and joint stock companies, whereas tax law distinguishes between various business purposes.
The Confederation, the Cantons and municipalities impose direct taxes on the profits and capital of businesses, and on the income and net worth of individual persons. Only the Confederation can levy indirect taxes and duties on consumption. Therefore, for a company or an individual the effective tax burden depends from the mix of direct and indirect taxes. It differs by tax type. Taxpayers are required to submit an income and tax declaration every year (or two years, depending on the Canton of residence) to the local tax office. By European standards, the tax burden in Switzerland is moderate. The country's federal structure leaves ample latitude for healthy competition between the Cantons.
Low Tax Burden for all Types of Companies
Operating companies principally engaged in manufacturing, trading or the provision of services benefit from traditionally low taxation on net income. In addition, various tax-planning possibilities are available. Both the Cantons and the Federal authorities give preferential treatment to holding companies relieving them from all income taxes, while extensive tax privileges are granted by the Cantons to domiciliary companies without direct business activities in Switzerland. Swiss branches of a corporation based abroad are taxed only on earnings attributable to the operation in Switzerland.
Operating Companies An operating company is a business that is principally engaged in manufacturing, trading or the provision of services. What is relevant for tax purposes is not whether the business is a partnership or a joint stock company according to Swiss civil law, but rather whether the business is an operating company, a holding company, or domiciliary company. Partnerships are not considered legal entities for tax purposes. The profit or the net worth of a partnership is taxable to the partners as individuals, in proportion to their equity participation. In order to be eligible for this tax treatment, the partnership must have an operating facility or business location in Switzerland. A Swiss company or operating facility is subject to taxes on profits and capital. The business is taxed at its domicile or at the actual place of its economic activity. Corporations and limited liability companies are taxed as legal entities. The tax law distinguishes between corporations according to their purpose. The company's purpose determines whether it will be taxed normally or preferentially. On average, total taxes amount to approximately 25% (Federal, Cantonal and municipal taxes combined), even though the nominal tax rates are generally higher, because in Switzerland, taxes can be deducted as an expense.
Holding Companies
Both the Cantons and the Federal authorities give preferential treatment to holding companies. Companies holding at least 20% or CHF 2 million of the nominal capital of other companies pay a reduced tax on the earned dividend. The reduction of the tax due is based on the ratio of the (net) dividend income to gross profit. The equity holding deduction is granted at the Federal as well as Cantonal level. The end result is that there is largely no Federal tax on pure holding companies. The Cantons relieve holding companies from all income taxes (holding privilege). The holding company is, therefore, not dependent on an equity holding deduction. The net result is that all dividends, and any profit from the sale thereof, and even interest income, etc. are tax-free. A holding situation exists if, as a rule, two-thirds of the assets are equity investments or two-thirds of the income is equity investment income.
Domiciliary Companies The cantons grant domiciliary companies extensive tax privileges. Profits (and capital) are taxed at a reduced rate, with the condition that the company must not have (direct) business activities in Switzerland. The Federal Government gives domiciliary companies no relief on the net income tax. At the Cantonal level, a domiciliary company pays a tax of up to 15% of the regular Cantonal net income tax. The domiciliary company may be controlled by either Swiss or foreign nationals.
Branches Under the tax laws, a branch is a business entity belonging to an individual person or a corporation based abroad. Accordingly, tax liability for economic links to Switzerland is limited. A branch of a foreign corporation or a foreign partnership is taxed in Switzerland as a joint stock company. For a business entity to be subject to the tax laws, there must be a permanent business facility that contributes to the profits of the company on its own account, or is important for the operation of the business. Swiss branches are taxed only on earnings attributable to the operation in Switzerland. The division of profit between the parent company and the operating facility is based on the accounts of the branch.
Lowest Value Added Tax in Europe As with other indirect taxes and duties on consumption, the VAT can be levied only by the Confederation. To reduce administrative requirements, very small companies are exempt from VAT, and certain goods and services are exempt as well.
VAT rate is a maximum of only 7.6%, making it the lowest VAT burden in all of Europe. As the emphasis is on direct taxes, the
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