Switzerland / Zug: Company Formation

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  • Company Formation in Switzerland- 5 steps
    quick incorporation, easy registration without travel:

    1. First you will send us an agreement to register your company and some documents, then we will contact you to clarify the basic information. In addition, our manager will meet or phone with you to ensure correct and complete information.
    2. We prepare all documents (for non – residents this includes a power of attorney from the shareholders) while you send us a little deposit. Then we e-mail the documents to you ready to check and sign. Many documents are created in form of a table, with an official German version and an English translation aside of it.
    3. You just need to sign the documents and send the original, some papers must be signed notarized, usually from abroad with apostille (requirement for proof).
    4. In the meantime, the shareholder(s) will open a blocked capital deposit account at a Swiss bank, as required by art. 663 OR (Swiss code of obligations) and art. 777c OR (if needed, we can establish a contact), pay the capital to this account (exactly from the private account) and instruct the bank to send us a receipt.
    • Minimum paid in share capital to register a company is 20%, but at least 50.000 CHF for a Swiss AG (French and Italian: SA, which means stock corporation) and 20.000 CHF for a Swiss GmbH – (French SARL and Italian SAGL, which means Limited Liability Company – LLC). Note: companies with bearer shares are no more registered and existing ones had to change their status to registered shares until 1.5.2021.
    • If 3 banks do not accept the shareholder as a customer, create a company with capital in kind (can be a wallet that is deposited at an auditor) or buy an existing one, a so called shelf company or ready-made company.

    5. As soon as we receive your documents and the receipt from the bank, we sign on your behalf at the notary the statutes (articles of association) and memorandum of association and submit the application documents (list of documents below) for company registration.
    Within usually two weeks the commercial registry (“trade register”) of the Canton Zug will register the company.

    Company formation or takeover of a company is offered only together with other services (accounting etc.), because this way we know the activities of our clients. If we also assist the company to apply for a bank account, please be aware that banks do their own due diligence, so we have little influence on their decision. The notary submits one set to the commercial registry and gives us a second set.

    Within usually two weeks the commercial registry of the Canton Zug will register the company and send us an original extract.

    After formation, several steps have to be done:

        • You have already approached banks to open a company account. We send the original extract and the second set of the notarized documents to the bank of your choice.
        • setup of accounting infrastructure, questionnaires from authorities, VAT application, logo and stationary, stamp, website (recommended)

    8 ways to save structure costs in Switzerland, and your Swiss company pays off:

    1. Appoint foreign board members who have their residence outside Switzerland. According to art. 718 and art. 814 Swiss Code of Obligations, you need at least one Swiss resident with signature rights, but a person without formal responsibility demands less fees. To avoid misuse, you can appoint two residents with joint signatory rights. Foreign board members need no special permit. It is not mandatory that they receive a compensation or salary.
    2. When you set up a business, avoid professional fiduciary relationships and nominee directors: do not pay for compliance, but for real services that create benefits for you.
    3. Make sure there is an active business: with active business, the company does not qualify as “domicile company” and the board can avoid additional anti money laundering bureaucracy.
    4. Make sure relevant double tax treaties (double taxation agreements) are applicable: this requires regular presence and major decisions in Switzerland (or maybe in countries with lower tax and costs).
    5. For doing business, we recommend to have at least two bank accounts in different countries: banks are suppliers of relevant infrastructure; a second account reduces dependencies and increases flexibility. Check our guideline how to deal with banks and you will have more success in opening a bank account in other jurisdictions, too.
    6. Do not submit bills with small amounts to the bookkeeping: with rather low tax rates in Switzerland, it is cheaper to pay tax than to pay high bookkeeping costs.
    7. Make a foreign holding: organize an exit for your profits to a holding in a country with zero withholding tax or create a foreign company with Swiss branch.
    8. Make sure that the company has declared that it does not need an audit if such an audit is not mandatory.

    Company Formation in Switzerland – benefits:

    • Swiss image and Swiss quality
    • legal opportunities, e.g., special regulation for ICO and crypto/ blockchain companies
    • starting a business in the country when customers prefer a local presence.
    • Reasonable taxation, especially in the Canton Zug, and many double tax treaties
    • Stable political environment, friendly and predictable public administration
    • Secrecy of information for investors and their investment (e.g., the share register and the beneficial owner register of an AG is kept at the domicile, it is not submitted to the commercial registry)
    • Audit can be waived according to art. 727 Swiss Code of Obligations, if the company does not exceed two of the following thresholds in two successive financial years: balance sheet total of 20 Mio CHF, sales revenue of 40 Mio CHF, 10 full-time positions on annual average.
    • Consolidation of accounts is not required according to art. 963a Swiss Code of Obligations, if the company together with the controlled undertakings(s) does not exceed two of the following thresholds in two successive financial years: balance sheet total of 20 Mio CHF, sales revenue of 40 Mio CHF, 250 full-time positions on annual average

    Ready-made company in Switzerland – benefits:

    • Such an entity can immediately be used, it is possible to change the name and the object.
    • However, not every company can be used, because laws prohibit the commercial registry for the registration of changes of shareholders of sleeping GmbH companies (with only financial assets). If such a company is sold, the old director shall better start again activities and eventually expand the object before his resignation and other changes happen, so an interim income statement with solid revenue can be presented.
    • For shelf companies, there are offers on the market which we cannot recommend: one provider offers on several internet pages inactive shelf companies. He suggests transferring such a company to a particular Canton where the trade register accept to incorporate a shelf company, and then offers to transfer it again to the target destination after several months. The whole process is unsecure and costs for documents, notaries and virtual office are high in the host Canton. Also, there are providers who sell shelf companies where they have no proper power of attorney, and after the client has prepaid, they explain that they act just as an agent. To avoid long delays and eventually changes or refund of the fees, we recommend: before paying anything, ask such a provider to show a proper power of attorney to sell the company.
    • It may even happen that someone had signed agreements on behalf of the company without proper power of attorney before the formal takeover; as soon as the new director is appointed, he can represent the company and he can declare in writing that the company takes over all rights and obligations from previous declarations done by this person for this company. From the Swiss company, this is favourable if the declarations result in an additional income, and the Swiss tax office receives higher taxes, too.

    Legal Forms and Types for Swiss Companies:

    Most common form of companies:

    • Gesellschaft mit beschränkter Haftung (GmbH) – Limited Liability Company – shareholders are registered publicly
    • Aktiengesellschaft (AG) – Joint Stock Company –share register held at the domicile
    • Zweigniederlassung – Branch of a foreign entity

    Additional options:

    • Kommanditgesellchaft (KG) – Limited Partnership
    • Kollektivgesellschaft – General Partnership
    • Einfache Gesellschaft – partnership without registration
    • Einzelunternehmen, Einzelfirma – Sole Enterprise, Sole Trader
    • Genossenschaft – Registered Cooperative
    • Verein – Association

    For further information: Company Structures

    Zugimpex: Professional Services:

    • At Zugimpex, clients receive advice and comprehensive services in Switzerland from one source for their company, including accounting services and tax declarations, where we have access to the online declaration forms. Based on the requirements, we recommend the best types of structures
    • There are some legal requirements to perform Customer Due Diligence, but with our support this goes quick– for us it is important that you have good financial standing, good qualification, and successful experience in your business. (Please note: Zugimpex does not provide services to US citizens and to US residents. In case of companies with domicile or in case of persons with residency in Germany, Italy or France, activities have to be coordinated with a local tax expert!!!)
    • Fair calculation for your Swiss business:
        • Company formation Switzerland- costs/prices: Calculate formation costs plus notary and public fees. If required, you also need to include fees for a Swiss resident person. After prepayment and proof of capital (banking document), we start the formation procedure.
        • Annual costs depending on the activities: domicile, flexi desk and basic post service, bookkeeping/accounting, VAT declaration per quarter or per month, annual financial statement, and tax declaration.
        • our firm works based on invoices and prepayment; our services are charged per time, so customers who work efficient have lower costs.
    • Payroll services:
      • We assist the Swiss company in planning the requirements and inform about the special Swiss employment conditions.
      • A preselection and scheduling of video interviews can be offered. If required, we can organize background checks, too.
      • After your decision, we provide all necessary registrations for your employees
      • We administrate monitoring of actual working time, ongoing payroll and social charges, so you need just to transfer the amounts.
      • From the very beginning, we provide you with a guideline and the necessary sample texts how to terminate an employment correctly, so you have everything ready in case it is required.
    • Professional consulting:
      • Our company is proud to offer customers quick responses to inquiries- consultants are often available for clients in the evening and at the weekend. You find this not everywhere in Switzerland.
      • Use our experience at Zugimpex, our contacts and our know how as consultants in international business and in international tax planning.
      • We can review your international business contracts and check if it is possible to enforce them internationally. In addition, differences in national law (e.g., continental law, common law, or France/Italy/Spain) can be considered- they can work for your disadvantage, but also for your advantage.
      • If required, our sister services company can act as escrow agent or take over fiduciary tasks.
      • We can assist to apply for tax benefit in the area of Research and Development, and in the registration of trademarks, designs and patents.

    Sometimes it is reasonable to ask for a Second Opinion:

    Although many lawyers, tax advisors and corporate service providers in Switzerland have good knowledge and work honestly, there are situations where it is useful to ask for a second opinion. Here are some examples:

    1. Your service provider charges high costs – higher than expected, especially as fiduciary
    2. Your service provider has rarely time or he answers your questions late, general or never
    3. You have the impression that your fiduciary does not fully act in your interest
    4. Your service provider permanently tries to frighten you without offering economically reasonable solutions
    5. You think about changing the canton
    6. Your company structure does not take into account a tax free exit – your money is stuck in the company
    7. You have the impression that there may be other solutions to some topics

    Option: Swiss branch of a foreign company –
    works like a Swiss business with additional benefits:

    1. A Swiss branch of a foreign company works like a Switzerland company and the branch can act as a holding company as well. The manager of the main seat can run the branch if a Swiss resident person with signature rights is appointed.
    2. A branch is part of the same legal entity. Therefore, the transfer of funds from the branch to the main seat is no dividend and there is no withholding tax on dividends and interests. However, there are restrictions if the main seat is an offshore company.
    3. Later, you can transfer money almost tax free from corporate to private level using the right foreign structure. There is no need to change your private residence.
    4. Minimum share capital contribution for a foreign entity is low, the branch does not need any initial capital.
    5. You avoid the challenging task to open a blocked capital deposit account for the initial capital. Foreign banks treat you friendly and act quickly if you want to open a bank account
    6. Some foreign law has less bureaucratic regulations with regards to nominees.
    7. All steps can be done with power of attorney.

    Additional information: List of Documents to register a Swiss Company:

    1. Power of attorney (notarized, apostille) to sign your documents at the Swiss notary.
    2. Sample signature of each board member (notarized)
    3. Copy of the Articles of Association which we will sign later at the notary for you
    4. Copy of the Memorandum of Association, the deed that we will sign later at the notary for you
    5. Appointment and Contract with one or two Swiss resident(s) with signature rights
    6. Contract regarding domicile (registered office) and flexi desk or office rental contract
    7. Contract with Zugimpex and power of authority to represent to authorities
    8. Declaration Stampa / Lex Friedrich (regarding real estate purchase)
    9. Declaration to waive the obligation for independent annual audit
    10. Customer Due Diligence Form – Identification and Know your customer
    11. Application to the commercial registry
    12. Passport or ID copy of every founder and board member plus proof of residency
    13. If the founder is a corporate body: company documents (extract from commercial register and articles of association, both notarized with apostille) and declaration of the board to incorporate a subsidiary

    Residence and Working in Switzerland

    Switzerland know several forms of residence permit:

    • L permit (3 – 12 months), usually granted to non EU/EEA citizens or for simple jobs
    • B permit (5 years or 1 year)
    • C permit (permanent, after 5 years)
    • G permit – for cross border EU commuters (from any other EU country)
    • 120 Day Permit – within a 12 month period for EU citizens

    Based on the agreement of free movement between Switzerland and the EU, EU citizens can apply for the B permit if they are employed in a company, have a residence and a health insurance. The B permit is issued and renewed if there is an employment in place, a residency and a health insurance. For self-employed or employed in their own company, there is additional bureaucracy as the authorities try to avoid misuse. Service providers from the EU have the right to enter and to claim residence for a maximum of 90 Working days per calendar year.

    Because of the Cross Border Service provision (Posted Workers Act), it is possible for every employee of an EU company or for EU self-employed persons, to work more than 8 days and up to 90 days annually in Switzerland by submitting an online notification at least 8 days in advance. Swiss work conditions must be met, and for some industries, this is restricted further (construction, security, hotel and catering etc.).

    To protect the wage level and the labour market, the so called Accompanying Measures are in place since 2006:

    • Employers must register EU employees 8 days in advance online and are obliged to respect work time regulations and minimum wages.
    • Self-employed from the EU also must register 8 days in advance, but they have to prove their entrepreneur status.
    • EU companies can perform services in Switzerland for up to 90 working days per calendar year (=90 days per company and 90 days per employee). For posted employees, there is an obligation to register 8 days in advance (identity of workers, place of work, gross salary, duration of work).
    • To check if they respect minimum wages, work time etc., often a deposit is required, the following inspections are frequently, very tough and often result in the seizure of the deposit.
    • frequently there is an order from the Swiss company to an EU company that asks an EU subcontractor to send employees to Switzerland (some advisors recommend in such a case to expect to lose the deposit because the legal costs to fight against the bureaucrats can be expensive)

    For Non-EU citizens and for citizens of Croatia, there is a quota of residence permits issued every quarter. Decisions are made by the cantonal migration authorities. Priority is given to senior executives and technical specialists with university qualification and several years of experience. Because of the quarterly quota system, timing is relevant, and we recommend that all papers are ready and submitted at the beginning of a new period. After the employer submits a request, a recommendation of the cantonal authorities is needed, but there is a final decision by the federal authorities.

    The Swiss Federal Act on Acquisition of Real Estate by Persons Abroad Lex Koller restricts the acquisition of Swiss residential and other non-commercial real estate by foreigners to purchase residential apartments, except for own purposes in case of a C permit.  In addition, there are detailed rules to avoid circumvention, in particular with legal persons.

    Outlook: Switzerland and the EU have bilateral agreements in place. To replace them, there were tough negotiations between Switzerland and the EU for a “framework agreement”. Although it seemed in 2018 that an agreement was reached, critical open points remained: wage protection, Union Citizens Directive (social benefits for all citizens) and state aid (limitations in the EU). Also, Switzerland resisted to dynamic changes of the agreement (automatism to take over new EU regulations) and to the EU-dominated mechanism for settling disputes. In May 2021, the Swiss government decided to stop the negotiations.

    (updated June 2021)