I. Business Structures

There are two main types of business entities clearly distinguished and defined by Swiss law:

  • Capital-based companies – stock corporation and limited liability company
  • Partnership-type companies – limited or general partnership and sole partnership

The business entities are governed by the Civil Code or the Swiss Code of Obligations.

At the Federal level the legal entities are domiciled in a particular Canton where the Commercial Register is held. Anyone trading, manufacturing or otherwise engaged in business must be registered in the relevant register ofcommerce. The Register is a public document.

Stock Corporation

A stock corporation, hereinafter SA/AG, is a legal entity acting as a joint stock company similar to the corporation in US and the public limited company in UK. It is formed by at least one individual or corporation with a registered share capital and its own corporate name. The liability of shareholders is limited to the amount subscribed for share capital. The AG is often chosen by foreign companies as a legal form for Swiss subsidiaries due to its appropriateness for large companies and small to medium size businesses. This legal form can be considered as being the most prevalent among Swiss companies. The shareholders of the AG enjoy theright of anonymity, with some limitation.

I.  Formation Requisites

  • Must be registered in Commercial Registry.
  • Minimum share capital CHF 100,
  • At least 50% of share capital (CHF 50,000) must be paid up upon constitution.
  • The share capital can be divided into bearer or registered shares of a minimum par value of CHFeach.
  • Bearer shares must be paid in full and transferred by way of assignment, or if certificates are issued, by physical transfer. Registered share certificates must be endorsed, and the transfer of registered shares must be entered in the companyís share ledger.
  • A contribution in kind is subject to a special report by the founders, which needs to be confirmed bythe auditors.
  • There are no requirements of nationality or residence for directors, however at least one person with individual signature power must legally reside in Switzerland. Alternatively it is possible to have two Swiss resident persons with dual signature power.
  • The incorporation is completed with the entry of the entity into the register of commerce.

II. Taxation

AG is subject to the following taxes:

  • Corporate Tax: Income tax levied on both federal and cantonal/municipal levels, and capital tax justat cantonal level. Total income tax is based on the worldwide income and depending on the Cantonand community of residence may vary between 12% and 26% on profit before taxes.
  • Capital tax is approximately 0.3% – 0.6% of net-worth.
  • Withholding tax: On dividends and interests.
  • Stamp duties: Usually issued on capital upon formation if equity exceeds CHF 1 million.
  • VAT depending on the activities performed and turnover achieved.
  • Double taxation treaties and tax exemptions are available.

III. Accounting & Audit

Swiss law requires that a financial statement (balance sheet, income statement and annex) drawn upannually according to Swiss generally accepted accounting principles. The accounting system of thecompany can be based on any internationally accepted standard (Swiss GAAP/FER, IFRS or USGAAP) and in any currency. For tax purposes the financial statements have to be prepared according tothe Swiss law (OR) and in Swiss Francs. For non-listed companies, the accounts are only submitted tothe tax authorities and are not open for disclosure. Consolidation of financial statements of subsidiaries is required when two of the following measures aremet in two consecutive fiscal years:

  • Total assets CHF 10 million
  • Total turnover CHF 20 million
  • An average workforce over the year of 200 employees

The requirements of the audit depend on activities, financial accounts and total employees. The full auditsapply for companies:

  • Required to prepare consolidated financial statements
  • Listed on the stock exchange
  • Exceeding two of the three following measures in two successive fiscal years
  • Total assets CHF 10 million
  • Total turnover CHF 20 million

An average workforce over the year of 50 employees or more

Limited Liability Company

 The limited liability company, hereinafter GmbH, Sarl or Sagl, is a capital company with its own legal personality. Thisentity form is an alternative to the AG due to similar costs and formation procedures involved. Both formsrequire the execution of a public deed of formation by all founders, and member síliability is limited to the registered capital. Recently the proportion of GmbH has been on the rise thanks to reduced structural and capital costs incomparison AG, and therefore its viability for small-medium businesses. However as opposed to Stock Corporation it has stronger disclosure requirements.

I. Formation Requisites

  • Must be registered in Commercial Registry.
  • Share capital of the company must amount to at least CHF 20,000 and may not exceed CHF 2million. At least 50% of share capital must be paid in cash or in kind by each of the members uponthe formation of the company.
  • Each shareholder has an interest in the nominal capital in the form of one or more nominal quoteshaving a nominal value of at least CHF 100.
  • All members and all capital contributions or alterations need to be notified to the register ofcommerce on an annual basis.
  • No bearer shares allowed.
  • Swiss residents shall be able to legally bind the company.

II. Taxation, Accounting & Audit

Taxation, accounting and audit procedures applied as per AG/SA.


Types of partnerships

General Partnership

The general partnership is a person-centred association of at least two individuals, which normally has aneconomic purpose and operates as a commercial business. Legal entities are not allowed to join a generalpartnership, as it has no legal personality. It is formed and operates in accordance with a partnership agreement where strict non-competition obligations apply to all partners. Partners are liable for any debts the partnership may incur, meaning that all partners are subsidiary, personally, jointly and severally liable. No minimum capital is required. The general partnership is subject to registration in the Commercial Registry, even if considered to be established even before registration. Anonymity is preserved for each partner, unless required by tax authorities in regards to a specific partner.

Limited Partnership

Limited partnership is an association of at least two individuals or legal entities, of which at least onepartner (the general partner) is fully liable for all the liabilities of the partnership. As opposed to the general partnership, limited partnerships may have legal entities as members. Furthermore the partnership must consist of at least one fully liable general partner, in contrast with limited partners whose liability is limited to the amount of their contributions. According to the Swiss Code of Obligation the general partner must be anindividual (and not a corporate investor).

I. Taxation of Partnerships

General and limited partnerships are not regarded as tax entities. Any profits made are taxed as personal income of the partners. The same applies to partnership assets that are subject to the personal net-worthtax of partners.

II.  Accounting

Commercial bookkeeping rules apply as per the Swiss Code of Obligations, that requires double entry accounts with balance, inventory and income statement. Audit is not required.

Sole Proprietorship

Sole proprietorship is similar to general partnership, but created by only one person (entrepreneur).

This means, that a single person manages the business and does not create a company. The entrepreneur provides the capital and is therefore fully and unlimitedly liable for the debts of the business. If the business is successful it can easily be converted into a corporation such as AG or GmbH.

I.  Formation Requisites

  • No cogent statutory provisions and formal acts of foundation i.e. no minimum capital requirements
  • Subject to inscription in the Commercial Registry only if turnover exceeds CHF 100,000

II. Taxation

A sole proprietorship is not subject to cantonal or federal taxation. However the sole proprietor is liable for income tax and net-worth tax on profits generated and assets owned by the business.

Accounting Swiss commercial bookkeeping rules apply as per the Swiss Code of Obligations, that requires double entryaccounts with balance, inventory and income statement. Audit is not required.


As far as licensing, registration, taxation and accounting records are concerned a branch is treated as any Swiss company. The branch office is legally dependent on the principal enterprise and therefore must carry the same company name along with business activities.

I.  Formation Requisites

  • Must be registered in Commercial Registry
  • In case of branch of foreign company, it must have a legal representative whose legal residence is in Switzerland

II.  Taxation

  • Treated as legal entities
  • Share issuance tax not levied upon formation
  • Withholding tax not levied on profits from Swiss branch to its foreign headquarters

III.  Accounting

Commercial bookkeeping rules apply as per Swiss Code of Obligations, that requires double entry accounts with balance, inventory and income statement. Audit is not required.

I. A glimpse on time and fees to build a business structure

 Place the paid-in capital in an escrow account with a bank

Agency: Bank

The capital is released by the bank upon completing the registration procedure at the Commercial Registry. Bank fees range from CHF 200 to CHF 2,000. A minimum bank fee of CHF 200 is charged for transferring capital from the escrow account to the company account after the company registration. For an incorporation with a cash contribution, the capital must be put in escrow at an institution subject to the Swiss Federal Law on Banks and Savings Banks.

Draft the articles of association in the presence of a notary public

Agency: Public Notary

The Public Notary notarizes the personal and corporate signatures on the application form and authenticate the articles of association and the public deed of incorporation. All signatures on the company registration application form have to be legalized (CHF 20 per personal or corporate signature). The Stamp Declaration Form (a negative declaration on investments in kind or chattels or founders’privileges, which is compulsory as documentary evidence) and the Lex Friedrich Declaration Form (a permit for foreigners to acquire real estate) must be signed and handed to the Register of Commerce.

The filing of both declaration forms is obligatory for all company incorporation applicants. The name check is not mandatory but is recommended. The fee is CHF 50. Required for incorporation and available on the Internet are the public deed, the application form, the Stamp Declaration Form, and the Lex Friedrich Declaration Form.

File the deed certifying the articles of association to the local commercial register to obtain a legal entity

Agency: Commercial Registry

The time indicated must be seen as a general average. If by express mail, registration takes 3 to 5 days, and if by regular mail, about 7 days. The fee ranges from CHF 600 (for capital of CHF 20,000) to a maximum of CHF 10,000. The costs of the commercial register will be increased depending on the number of signatories and shareholders of the company (CHF 20 for each person and CHF 30 for each signatory power) according to the Ordinance on Commercial Register Fees.

In 5 to 9 days, the Registry publishes the date of the statutes and all names of shareholders in the Swiss Commercial Gazette; the announcement fee is included in the registration fee. Entry in the Commercial Register protects the company’s trade name and makes it a legal entity. Required documents also include the Stampa Declaration Form and Lex Friedrich Declaration Form as well as automatic registration for income tax payment.

Pay stamp tax at post office or bank after receiving an assessment by mail

Agency: Bank or post office

In case the stamp duty threshold has been reached, every company has the duty to fill out a form, file it with the Federal Tax Administration, and pay the relevant amount due within 30 days upon registration in the commercial register. No assessment is sent out from the Federal Tax Administration beforehand.

Register for VAT

Agency: Federal Tax Administration

Within 30 days of being subject to VAT, an application for VAT registration can be filed with the Federal Tax Administration only after incorporating the company with the Commercial Registry. According to Art. 10 Paragraph 2 Lit. A of the “Bundesgesetzüber die Mehrwertsteuer,” the turnover threshold for mandatory VAT registration is CHF 100,000. Because not every company is subject to VAT, a procedure exists to determine whether the company is subject to this tax.

Enroll employees in the social insurance system (federal and cantonal authorities)

Agency: Social Insurance System (federal and cantonal authorities)

After the company has registered with the Commercial Registry, the Cantonal Social Security Office (Ausgleichskasse) will send the employer an application for registering employees in the social insurance system, which includes retirement and survivors’insurance benefits (AHV), disability insurance (IV), occupational accident insurance (UVG), and retirement pension (BVG).
Publisher: Legal Ferrari Rei