What to Consider When Moving Your Company to Switzerland

There are many reasons why you may want to move your business to another country, and Switzerland has long been an attractive choice. Switzerland is an international financial hub known for its business-friendly environment, low taxes, and high quality of life, along with a host of other advantages for companies looking to relocate. In this article, we will explore some of the reasons why you should consider relocating your company to Switzerland and discuss various factors to consider before making the move.

Reasons to relocate your business to another country

The world of business is full of surprises, both good and bad. Whether you are looking to move your business due to some unexpected obstacles in your home country, or to take advantage of new opportunities elsewhere, there could be plenty of good reasons for doing so. Some natural reasons to relocate your business to another country include:

1. Market access: You are looking to access new markets where you feel your company will be more profitable.
2. Tax incentives: Some countries, such as Switzerland, offer beneficial tax incentives to attract foreign companies. You may be able to greatly optimise your tax position by relocating your company to a new country.
3. Regulatory environment: Corporate and tax regulations are always shifting. You may run into difficulties operating your business in your current country due to a change in legislature and be looking for a more favourable regulatory environment elsewhere.
4. Cost savings: If you are finding it increasingly costly to operate your business in your home country, you may benefit from relocating to a country with lower operational costs such as cheaper labour, real estate, and equipment.
5. Political stability: Unfortunately, political instability and upheavals are all too common, and this can be a major cause for businesses to relocate to a nation with a more stable political system and economic environment, something which Switzerland offers.
6. Quality of life: Last, but certainly not least, you may simply be looking to relocate to a new country yourself for a higher quality of life. In such a situation, it usually makes sense to relocate your business too!

Why should you move your company to Switzerland?

We have discussed some good reasons for wanting to relocate a business to another country, but the next question is: Why Switzerland?

Switzerland is an ideal location for relocating your business due to the myriad advantages it offers. Let’s explore some of the main benefits, along with some potential downsides:

 Benefits of relocating your business to Switzerland

1. Strategic location: Switzerland is perfectly situated in Central Europe and offers convenient access to major markets across the European continent. In addition, it has a well-connected transportation network which makes it easy to access customers and suppliers. This makes it a perfect location for those looking to access new markets and reach more customers.
2. Low taxes: Switzerland has a favourable corporate tax regime with tax rates well below the average of other European countries. It also has a wide network of double tax treaties, allowing businesses to easily optimise their tax liabilities and avoid double taxation, therefore boosting profitability.
3. Supportive business environment: The Swiss government actively encourages foreign investment and entrepreneurship. It offers corporate-friendly regulations and an overall supportive environment for companies of all sizes. This is a major reason to relocate to Switzerland if you find your home country is putting too many regulatory obstacles in the way of your company’s success.
4. Favourable employment law: Switzerland’s employment law protects both employers and employees. This in contrast to many other European nations where the employer is not well protected.
5. Economic and political stability: Switzerland is renowned for its political neutrality and stability, which offers a safe and secure environment for businesses. It also boasts a robust and stable economy, with a strong currency (the Swiss Franc is now stronger than both the Dollar and Euro at the time of writing). This makes Switzerland an attractive alternative for businesses who are facing the challenge of economic or political instability in their current jurisdiction.
6. Quality of life: If you are planning to move your business because you are seeking a better quality of life in another country, look no further than Switzerland. The Swiss lifestyle is of exceptional quality, with beautiful landscapes, high levels of safety, cleanliness, and advanced infrastructure. You and your employees alike will be happier in Switzerland, which also leads to greater productivity and profitability for your business.
7. Skilled Workforce: Switzerland is home to a highly educated and skilled workforce, making it easier for companies to find and retain well-qualified employees.
8. Reputation: Don’t underestimate the reputational benefits of having a Swiss Company. Your business will have a more prestigious image and therefore attract more customers, supply partners, and investors, thus leading to greater profitability and success.

Disadvantages of relocating your business to Switzerland

While it offers numerous advantages, it’s important to also consider the potential drawbacks of relocating your business to Switzerland:

1. High costs: Switzerland is costly, both in terms of living expenses and in operating a business. Swiss real estate, salaries, and other operational expenses can be high compared to other countries. This is largely offset by the increased gross income your business can generate in Switzerland and the tax savings.
2. Competitive environment: Switzerland’s reputation as a business-friendly environment attracts many companies, which also results in increased competition.
3. Limited space: Switzerland is a small country with a growing number of registered businesses. While the infrastructure is of excellent quality, the increasing demand for office and workspace may lead to rising rent and real estate purchase prices.
4. Bureaucracy: Navigating Swiss bureaucracy can be complex for businesses unfamiliar with the local regulations and procedures, as they are distinct from the EU. Fortunately though, bureaucracy in Switzerland is typically quite streamlined, which means it shouldn’t be difficult to adapt with the right expert support.

What does it mean to “move your company”?

When we talk about “moving your company” to Switzerland, it actually involves forming an entirely new corporate entity. Switzerland has its own corporate regulations and types of registered entities, so it is generally not possible to just transfer the registered location of a company from abroad to Switzerland.

Practically, what this entails is as follows:

• When relocating your company to Switzerland, you would typically establish a new legal entity in Switzerland and transfer your existing assets, operations, and/or employees from your previous company to this new entity. Note that changing the location of your company can result in significant upheavals, so it is common that most of your employees would not make the move. You may also need to make significant changes to your operations and management structure.
• The new Swiss entity would be subject to Swiss laws and regulations, and it would become the legal entity through which your company operates in Switzerland.
• This process involves creating a new legal structure under Swiss law, which is likely to be similar to the structure of your existing company but adapted to comply with Swiss regulations and requirements. For example, if your existing business is operating as a limited liability company (LLC) in the U.S., it might make most sense to incorporate a Swiss GmbH to relocate the company to Switzerland. The new entity would have its own registration, governance, and compliance obligations in Switzerland.

How is this different from opening a branch or subsidiary in Switzerland?

Aside from moving your entire company to Switzerland, there are two other common ways to achieve a presence in Switzerland for your business.

1. Establishing a subsidiary

Instead of shutting down your existing company when forming a new entity in Switzerland, you can simply incorporate a subsidiary business. This means that the original company remains operational as the “parent company” and you create a separate legal entity in Switzerland which operates as a subsidiary of the parent.

A subsidiary company is legally distinct from the parent company, and therefore provides a level of autonomy and limited liability. However, it is still connected to the parent company through some level of ownership and control. The parent company typically holds a significant share of ownership in the subsidiary, usually more than 50% of its shares.

This option is ideal if you are looking to gain a significant corporate presence in Switzerland without shutting down your existing business in your home country.

2. Opening a branch

A branch retains the legal identity of the parent company and is an extension of its activities. In other words, you can open a branch office in Switzerland without needing to create a new legal entity or discontinue your operations in your home country. This also means that the parent company is fully responsible for the branch’s operations, debts, and obligations, whereas this is not necessarily the case for a subsidiary.

Opening a branch office in Switzerland can be a good move if you are just seeking some exposure and contact to the Swiss market, without making any significant changes in your current business situation nor having to go through the administrative burden of creating a new legal entity abroad.

Factors to consider when moving your company to Switzerland

So, you’re pretty sure that Switzerland is the ideal location for relocating your business. However, before making the move, you need to consider the following important factors:

Legal considerations

It is essential to have a thorough understanding of Swiss laws and regulations related to company incorporation, employment contracts, withholding tax, import duties, and intellectual property rights, among others. This is where it helps to have the guidance and support of an expert in Swiss company corporation, such as Nexova AG.

Taxation of businesses in Switzerland

Switzerland has an overall attractive tax regime, but it’s important to understand it’s finer nuances. Switzerland has a multi-tiered tax system which includes federal, cantonal, and municipal taxes. Research the tax implications for your specific industry and business structure in the different cantons you are considering so as to ensure compliance and minimise tax liabilities.

Swiss residence permit

Depending on your current nationality, you may need to obtain a residence permit or have special permission to open a company in Switzerland. Typically, European Union and European Free Trade Area (EU/EFTA) nationals can move to Switzerland and set up a company almost as easily as Swiss nationals, as they benefit from the Agreement on the Free Movement of Persons.

However, foreign nationals moving to Switzerland from a country outside of the EU/EFTA are categorised as “third-country” nationals, which results in stricter requirements and visa restrictions for setting up a company in Switzerland. In this case, you need to either have a valid C residence permit or be married to a Swiss resident or citizen. You will also need to fulfil other requirements such as being able to demonstrate that your business will have a lasting positive impact on the Swiss labour market, along with obtaining the necessary permission from your local cantonal authority to open a company.

Refer to our dedicated article for more information on setting up a company in Switzerland as a foreigner.  

Choosing a legal form

The choice of legal form is one of the most important decisions you will make when moving your business to Switzerland. The legal form of a business impacts everything from governance and liability to capital requirements and tax obligations. Depending on the size and nature of your business, you would typically choose one of the following company forms in Switzerland:

• Sole proprietorship
• Limited liability company (GmbH)
• Stock corporation (AG)
• Other entities such as a limited or general partnership, foundation, cooperative, etc.

For a more detailed description of each of these legal forms and how to choose the right one for your business, refer to our comprehensive comparison of legal forms in Switzerland.  

Choosing a Swiss canton

Each canton within Switzerland offers a different business environment, as well as sets its own cantonal tax rates and incentives. For example, the canton of Zug is a favourite choice for tech and financial startups in Switzerland due to its low corporate taxes, favourable regulations, and openness to innovation.

With the help of a professional advisor, choose a canton that aligns with your company’s requirements and aims. Read our more detailed discussion on which is the best canton for founding a company in Switzerland.