Swiss company formation

Swiss company formation takes approximately between one and two weeks to establish either an AG or a GmbH . There has to be at least one shareholder and one director. Also, a local director is required. However, there is no need to appoint a company secretary. The corporate tax rate normally varies between 8% and 30%, depending on the canton. For both cases there is no need to disclose the beneficial owner, while the government register of directors is compulsory.

There are a few types of company that an individual can establish in Switzerland

• Gesellschaft mit beschränkter Haftung (GmbH)

A GmbH is a type of limited liability company, common in German-speaking countries like Austria, Germany and Switzerland. It has to be formed with a minimum of one shareholder and the share capital has to be not less than CHF20,000. With such a company, the liability of the members is limited according to their contribution to the capital. In a GmbH company, bearer shares are not allowed. At least one of the directors is required to have Swiss resident status and the management is approved at the shareholders' meetings, where at least one director ought to be present as well.

• Aktiengesellschaft (JSC)

This stands for stock corporation, and at least one shareholder is required for this company to be established with a starting capital of CHF100,000. As in a GmbH, the liability of the shareholders is also limited according to the contribution of the shareholders to the capital. The manager is approved in the same way as in a GmbH, by the board of managers and shareholders. It has to be considered that the managers ought to be Swiss residents. In the case of a stock corporation company, bearer shares are allowed, if the share capital is fully paid up. Another similarity with a GmbH foundation is that the disclosure of the beneficial owner is not necessary. However, unlike a GmbH, the government register of shareholders is not required , while it is obligatory in the case of a limited liability company.

• Unlimited liability company

Another option for those willing to establish a company in Switzerland is sole proprietorship. The founder of this type of company will be fully liable for the obligations of the company. There is no need to register with the Trade Register until the annual turnover count is over CHF100,000. To form such a company, at least two members with the same economic purpose, united under the same name, are required. The members do not have to contribute a minimum share capital. However, they will have unlimited liability for the entity's debts.

There is a possibility to carry out the registration process with the help of local authorities or via express mail. The last variant suggests the process can be finalized in 3 to 5 days. Not every legal entity established in Switzerland must be registered for tax purposes. It depends on the business activities carried out by companies.

However, companies that are applicable for registration have to submit the corresponding document with the Federal Tax Administration. It should be done as soon as the legal entity is incorporated at the Swiss Commercial Register. This rule is also applicable for VAT registration.

It is important to know that, for those who are considering a company opening in Switzerland the main costs are the following:
● registration fee - it is a mandatory payment, the amount may vary depending on the canton, but on average it is €212;
● virtual office - for the virtual office management is required about €120 per month;
● minimum share capital - for a GmbH it costs about €17.660, for an AG it costs approximately €95.100;
● company opening - this procedure can cost about €2.500

There are also some accounting costs - it is about €180 per month.

Foreign entrepreneurs are welcome to set up a legal entity in Switzerland following the requirements applicable to Swiss citizens. Foreigners may apply for several available types of investor visas. It provides them with the right to gain the status of resident and start a business. For example, investors can use the Swiss Residence Program or the Swiss Business Investor Program.

Regardless of the type of visa, the foreigner is applied for, Swiss legislation suggests foreigner to comply with certain eligibility requirements, including the age, financial resources, etc.

Legal entities established in this country are subject to taxation applicable on 3 levels - federal, cantonal, communal. The main tax applies to firms in this jurisdiction, the corporate income tax could vary depending on the canton in which the entity is registered. Usually, the rate of this tax is from 11,5% to 24,2%.

Switzerland offers some of the lowest VAT rates. The standard Swiss VAT is 7,7% (since January 2018). It should be noted, that the VAT rate was cut. The previous rate was 8%. VAT is applicable to a long list of products, including vehicles, watchers, alcohol, etc.

It's also worth noting that Switzerland also providing entrepreneurs with reduced VAT rates. Thus, legal entities involved in the hospitality sector are subject to a reduced VAT (3,7%). At the same time some goods, including medicines, typographical products, are subject to the tax rate of 2,5%.

Moreover, legal entities involved in some economic sectors are exempted from VAT. For example, these benefits are applicable to companies that offer cultural and insurance services.

Companies that are subjected to this taxation must facilitate the registration for VAT. The tax filing should be done once in every 3 months. The VAT registration is a requirement once a legal entity receives an annual income of CHF 100,000. In Switzerland, this tax is imposed for the supply of products and services.

Foreign entrepreneurs are welcome to set up a legal entity in Switzerland following the requirements applicable to Swiss citizens. Foreigners may apply for several available types of investor visas. It provides them with the right to gain the status of resident and start a business. For example, investors can use the Swiss Residence Program or the Swiss Business Investor Program.

Regardless of the type of visa, the foreigner is applied for, Swiss legislation suggests foreigner to comply with certain eligibility requirements, including the age, financial resources, etc.