Company formation in Switzerland

Before deciding to set up a new company in Switzerland, read the information below to understand the characteristics of a Limited Liability Company (LLC) / a Gesellschaft mit beschränkter Haftung (GmbH) and Joint Stock Company (JSC) / Aktiengesellschaft (AG):

Shareholders: GmbH - it must have at least one shareholder, which can be an individual or corporate person of any residency. AG - there is a requirement to have at least one stockholder.

Director: GmbH - the company must have at least one director, who is an individual with Swiss residency and subsequent directors may be non-residents. AG - at least one director or member of the board must have Swiss residency.

Company secretary: GmbH - it is not mandatory. AG - not required.

Minimum share capital: GmbH - it is CHF 20,000 (approx. €20,873) and the entire amount must be paid before company registration. AG - the minimum amount is set at CHF 100,000 (approx. €104,163) and at least 50% must be formed prior to the start of the registration procedure.

Legal address: GmbH - the company is required to have its address in the country of incorporation (Swiss address) where the company's accounting records will be kept. AG - the company is required to have a Swiss address.

Liability: GmbH - all shareholders are jointly liable for the debts of the company up to the authorized principal amount. AG - the liability of the members is limited to their contribution to the capital of the company.

Accounting: every Swiss company is required to keep accounting records and submit annual financial statements to the tax authorities. In addition, if the company is a VAT payer, then quarterly reports must be filed.

The Swiss tax system is quite different from the traditional European one. The country is organized into 26 cantons, which, in turn, are divided into municipalities, so there are three levels of taxation.

Due to the tiered tax system, it is not possible to calculate average tax rates. Taxes are calculated based on specific figures for individual cantons and municipalities.

• Corporate income tax is divided into two categories:
• Federal income tax: it is a tax of 8.5% intended for the Confederation. It is the same in all cantons of Switzerland. It is charged by the cantons on behalf of the Confederation when a company files its annual tax return.
• Cantonal and municipal income tax: it varies from canton to canton and municipality to municipality.
• The Swiss government does not issue separate corporate rates for cantonal and municipal levels, however, there are consolidated tax rates that already include rates for all three levels. For example, in Zug - 11,85%, Geneva - 14%, Fribourg - 13,87%.

• The individuals taxed by federal and cantonal/municipal income tax are resident or domiciled in Switzerland. A person is deemed to be resident in Switzerland if he or she, without any significant interruption:
• resides in the country for at least 30 days and has a paid job there;
• resides in the country for at least 90 days without being gainfully employed.
• The tax rate for individuals is progressive, with a maximum rate of 11.5% at the federal level.
• There is no federal tax for individuals with a taxable income of less than CHF 14,500 (approx. €15,136) and for married couples with a taxable income of less than CHF 28,300 (approx. €29,541).

• The standard rate is 8.1%.
• The reduced rates are 3.8% (accommodation including breakfast), 2.6% (medicines, food, newspapers, books) and exemption from VAT (health, education, rent on property, culture).
• Companies with an annual turnover of more than CHF 100,000 (approx. €104,163) are subject to VAT. They have to register with the Federal Tax Administration (FTA) and report their sales annually. Upon registration, they are assigned a VAT number. This also concerns companies based abroad if they provide services in Switzerland.
• The application procedure is done online: the FTA specifies whether the business must pay VAT and the company must indicate how it intends to account for VAT.

Double taxation avoidance agreements in Switzerland: Albania, Algeria, Anguilla, Antigua, Argentina, Armenia, Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Barbados, Belarus, Belgium, Belize, Brazil, British Virgin Islands, Bulgaria, Canada, Chile, China, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Dominica, Ecuador, Egypt, Estonia, Faroe Islands, Finland, France, Gambia, Georgia, Germany, Ghana, Greece, Grenada, Hong Kong, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Ivory Coast, Jamaica, Japan, Kazakhstan, Korea (South), Kosovo, Kuwait, Kyrgyzstan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malawi, Malaysia, Malta, Mexico, Moldova, Mongolia, Montenegro, Montserrat, Morocco, Netherlands, New Zealand, North Macedonia, Norway, Oman, Pakistan, Peru, Philippines, Poland, Portugal, Qatar, Romania, Russia, Rwanda, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, St. Kitts & Nevis, St. Lucia, St. Vincent & Grenadines, Sweden, Switzerland, Taiwan, Tajikistan, Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States, Uruguay, Uzbekistan, Venezuela, Vietnam, Zambia.