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Business Management
David Merz | Founding Partner
Zurich, August 12, 2023
Switzerland has established and maintained its reputation as an ideal location for setting up a company. It offers political stability, a strong economy, and a favourable corporate environment, among many other benefits. It is no surprise that entrepreneurs from around the world are attracted to Switzerland for setting up a company abroad. In this comprehensive guide, we will explore the process of opening a company in Switzerland, covering the advantages and disadvantages, the choice of legal form, various practical setup considerations, and the role of Nexova AG in assisting you through the process.
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Switzerland has long been an attractive jurisdiction for company formation. It offers a multitude of advantages for businesses seeking to establish themselves in the country. These advantages have contributed to its reputation as a hub for global commerce and investment. Let’s take a closer look at some of the key reasons why entrepreneurs choose to set up a company in Switzerland:
While Switzerland offers numerous benefits as a jurisdiction for setting up a company, there are also some potential downsides to keep in mind:
Despite these minor drawbacks, Switzerland remains an overall excellent jurisdiction to open a company.
Calculate the costs of your company incorporation here.
Foreign entrepreneurs can certainly open a company in Switzerland. The Swiss government actively encourages foreign investments and welcomes entrepreneurs from around the world. Their favourable business regulations and territorial tax system is a major draw for foreigners looking to set up a company abroad. However, there are some considerations and requirements for foreign individuals or entities looking to establish a company in Switzerland.
It is important to understand how the regulations differ for European Union (EU)/European Free Trade Association (EFTA) citizens and so-called “third-country” nationals (individuals from non-EU/EFTA countries). In general, third-country nationals face stricter requirements and restrictions for setting up a company in Switzerland, as they do not benefit from the same Agreement on the Free Movement of Persons which EU/EFTA citizens do.
While EU/EFTA citizens may set up a company in Switzerland under almost the same conditions as Swiss citizens, third-country nationals must fulfil specific conditions and criteria, and obtain the right permits to establish and operate a business in the country.
Choosing the right legal form for your Swiss company is a critical decision that has significant implications for your business operations, taxation, liability, and governance. Switzerland offers several legal forms for businesses, each with its own advantages and considerations:
When choosing the right legal form, prospective business owners should carefully assess their business objectives and consult with legal and financial experts before making a final decision.
The choice of location for setting up a Swiss company has important implications. Switzerland has a multi-tier tax system, whereby businesses are taxed at the cantonal level in addition to the national level. Each Swiss canton has the power to set its own cantonal tax rates, as well having differences in regulations, business environment, infrastructure, and proximity to target markets. All these factors should be kept in mind when selecting the right canton for your Swiss company. Some of the most popular cantons for incorporating a new business include:
Once you have selected the appropriate legal form and location for your Swiss company, the actual setup process involves several steps and documentation requirements. Here’s an overview of some of the documents which are typically required, as well as a step-by-step guide on how to open a company in Switzerland:
The specific documentation required may vary depending on the chosen legal form and canton, as well as whether you are an EU/EFTA citizen or a third-country national. In general, the following basic documents are needed:
In addition to the above mentioned documents, there may be additional requirements in certain cantons and for different legal forms. Furthermore, non-EU/EFTA citizens (third-country nationals) looking to incorporate a company in Switzerland will have to submit additional documents such as relevant permits and residence certificates (usually a C-permit).
The exact steps for opening a company in Switzerland also varies depending on a few factors, but generally goes as follows:
Swiss companies must comply with Swiss accounting standards and prepare financial statements, which includes a balance sheet and income statement. Sole proprietorships and general partnerships with an annual turnover of less than CHF 500,000 may be exempt from preparing and submitting detailed financial reports. All legal entities (which includes GmbHs and AGs) need to prepare financial statements irrespective of their annual turnover.
Publicly listed companies and those exceeding certain thresholds are required to conduct an ordinary audit which is performed by an external auditor. Most small-to-medium sized companies are only subject to a limited audit (also known as a review), which is less onerous and provides a lower level of assurance. Very small companies with an average of less than 10 full-time employees over the year are allowed to entirely opt out of undergoing an audit if all the shareholders unanimously agree.
The tax requirements of a company in Switzerland depends on the type of legal form you have chosen, and in which canton the company is registered. Tax treatment of legal corporate entities such as a GmbH or AG differs to that of companies which are not a distinct legal personality such as a sole proprietorship or general partnership. GmbHs and AGs are required to pay a corporate income tax on profits to the tax authorities, along with other business taxes such as capital tax, with the rate varying significantly across different cantons.
Sole proprietorships and general partnerships are not distinct legal entities, and the profits are therefore taxed as personal income tax directly to the owner/owners.
Different types of companies have certain legal minimum capital requirements in Switzerland. As things stand:
Here you can easily calculate the costs of your accounting.
Navigating the process of opening a company in Switzerland can be challenging, especially for foreign entrepreneurs. Nexova AG specialises in company formation in Switzerland and can therefore act as your trusted partner in this endeavour. From company formation and registration to legal compliance, accounting, and tax advisory, we offer comprehensive solutions tailored to your specific needs.
Our team of experienced professionals can guide you through the entire setup process, ensuring a smooth and efficient start to your Swiss company. With Nexova’s support, you can focus on growing your business and taking advantage of the many opportunities Switzerland has to offer while we take care of the rest!
Contact us today to find out more about how we can help you on your road to business success in Switzerland!
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