Company Formation in Switzerland –
5 steps for quick Registration without travel:
(Please note: Zugimpex does not provide services to US citizens and to US residents.)
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 like the company name. In addition, our manager will meet or phone with you to ensure correct and complete information.
2. We prepare all documents for the AG or for the GmbH that you form (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) of the AG or GmbH 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 form a company is 20%, but at least 50.000 CHF for a Swiss AG (French and Italian: SA, which means stock corporation). The minimal nominal capital is 20.000 CHF for a Swiss GmbH – (French SARL and Italian SAGL, which means Limited Liability Company – LLC), which has to be fully paid up. Note: companies with bearer shares are no more registered and existing ones had to change their status to registered shares until 1.5.2021.
- Be aware of the compliance procedure of Swiss banks: if the contribution capital that is paid to the capital account does not come exactly from the account of the shareholders and in relation to their share subscription, some banks send back the payment, close the account and charge enormous fees.
- If 3 banks do not accept the shareholder as a customer, you can alternatively create a company with contribution in kind (can be a wallet that is deposited at an auditor, a subsidiary, a property, a car, an inventory; it needs a statutory report plus auditor confirmation). You also can buy or buy an existing one, a so called shelf company or ready-made company. You can also buy a ready made GmbH or an AG as a shelf company, whereby in the case of an existing company, a shelf company, certain criteria must be observed for legal reasons).
5. As soon as we receive your documents and the receipt from the bank, we sign on your behalf at the notary in the Canton Zug the statutes (articles of association) and memorandum of association for the AG or for the GmbH 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 and send the original extract.
Company formation or takeover of a company is offered by us only together with ongoing 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.
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).
Which Documents are required to register a Swiss Company:
- Power of attorney (notarized, apostille) to sign your documents at the Swiss notary.
- Sample signature of each board member (notarized).
- Copy of the Articles of Association which we will sign later at the notary for you.
- Copy of the Memorandum of Association, the deed that we will sign later at the notary for you.
- Appointment and Contract with one or two Swiss resident(s) with signature rights.
- Contract regarding domicile (registered office) and flexi desk or office rental contract.
- Contract with Zugimpex and power of authority to represent to authorities.
- Declaration Stampa / Lex Friedrich (regarding real estate purchase).
- Declaration to waive the obligation for independent annual audit.
- Customer Due Diligence Form – Identification and Know your customer.
- Application to the commercial registry.
- Passport or ID copy of every founder and board member plus proof of residency.
- 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.
10 ways to save structure costs in Switzerland:
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. Reduce political risk: Swiss regulation puts liabilities on board members of all kind. Art. 305 criminal law defines „neglect of professional due diligence“ as a criminal offence, and so nominees are often scared. Therefore, Swiss resident board members experience higher pressure from authorities. If the board members live in a country with lower or no tax, there may be more obstacles with Swiss banks, but such a structure can result in an overall legal and tax advantage.
3. Avoid professional fiduciary relationships and nominee directors: do not pay for compliance, but for real services that create benefits for you.
- A nominee director who is a professional trustee and therefore qualifies as a professional financial intermediary is an expensive solution: often there is limited interest in the business, a delay in the activities, the person is not permanently available, and there are permanent compliance checks. You pay for compliance but receive no real services that create benefits for you.
- For nominee directors, the legislation defines two criteria: non-active company and professional intermediary. If the company is active, less compliance bureaucracy is required. If a company qualifies as passive and if a board member is professional intermediary, the board member must join a regulatory body, to document all relevant transactions and to keep special records.
- If the company is not clearly active, the board members do not qualify as professional intermediaries, if their revenue from the activities is less than 50.000 CHF per year, if they have less than 20 contracting parties, if they have less than 5 million CHF under administration or if they handle at least 2 million CHF external transaction volume.
4. Make sure there is an active business: with active business or as a holding with majority of assets in one or more active companies, the company does not qualify as “domicile company” and the board can avoid additional anti money laundering bureaucracy.
5. 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).
6. For doing business, we recommend having at least two bank accounts in different countries: banks are suppliers of relevant infrastructure; a second account reduces dependencies and increases flexibility in case a bank starts to be problematic, it is easy to move the money to the account at the second bank. If there is only one account, it is stressful to start a new opening procedure under time pressure. Check our guideline how to deal with banks and you will have more success in opening a bank account in other jurisdictions, too. Remember: a Swiss company can have bank accounts in every country. Several banks worldwide offer good conditions.
7. 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.
8. 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.
9. Make sure that the company has declared that it does not need an audit if such an audit is not mandatory.A waiver is possible if the company does not exceed two of the following threshold values in two consecutive financial years (Art. 727 OR): CHF 20 million balance sheet total, CHF 40 million turnover and 250 full-time positions.
10. Decide if you need a full address or if a c/o address is sufficient. The criteria for the commercial register to register a regular address vary among the Cantons. In most cases they require proof of a separate area (in a shared office), a separate post box and a presence, so registered mail can be delivered. For those who can handle the tasks in blocks, it is possible to join a shared office and have a c/o address. However, some Swiss banks qualify a c/o address as a higher risk.
What are the Benefits of a Company in Switzerland:
- 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
- Switzerland is a neutral country with a hard currency, friendly and predictable public administration: The political systems of “Konkordanz” and of “Direct Democracy” ensures political stability: there is an ongoing coalition government. When this government proposes a law and the parliament approves it, the population still can ask for a referendum against the law. Several times a year, there is a voting about multiple national and regional subjects.
- Most Swiss Cantons have a friendly and predictable public administration, and in many Cantons the officers of the tax administration are competent and helpful.
- 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; even here, beneficial owners only need to be registered if they own at least 25% of shares or control at least 25% of voting rights).
- In EU countries, there is an obligation to publish certain financial data. This can be reduced with an EU branch of a Swiss company, because in most countries a branch cannot be forced to publish more than is required at the main seat.
- In case of an AG, ownership of shares is bound to registration at the share register by the board and there may be conditions (e.g., a certain approval) that delay (on purpose) a change of ownership or voting rights. Shareholders rights can be isolated, waived or transferred temporarily to someone else (by power of attorney): the right to receive dividends, the right to vote and the right to sell the shares. Alternatively, a temporary delay of ownership can be organized with options, futures, and private profit-sharing contracts.
- It therefore often makes sense for entrepreneurs to set up an AG (share company) as a holding company because the shareholders are not known to third parties and the shares can be sold or pledged unbureaucratically. This protects against family desires, enables structuring in the event of inheritance and secures assets in countries with an uncertain political structure.
- In case of GmbH, silent partnerships or participating loans are possible instruments on the contractual level that allow investors to invest into an entity without being named in the commercial register.
- According to Swiss law, an asymmetrical distribution of profits is possible based on a resolution of the shareholders’ meeting or general meeting.
- 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.
How Company Formation with a Wallet works:
- The founder opens a wallet with a well-known provider and deposits the amount in a “stable coin”.
- In a contribution agreement, the founder confirms that the company can dispose of the contribution immediately after registration without restriction.
- A founding report is prepared in accordance with Art. 635 CO and Art. 777c CO on the nature and condition of the contributions in kind and their appropriate valuation.
- The founder hands over the “public code” (not the “private code”) of the wallet to an approved auditor and provides him with proof that the funds come from clean sources.
- The auditor confirms the founding report.
- In the deed of incorporation, which is signed at the notary, and in the entry in the commercial register, reference is made to the non-cash contribution contract and the founding report.
What are the Legal Forms of 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
- Kommanditgesellschaft (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 – the company that provides: 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, as this is the country with by far the highest incarceration rate in the world and therefore by far the highest risk of money laundering exists. 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!!!).
How to create Substance and when this is required?
- Evidence for substance can be required by the tax authorities at the jurisdiction of a foreign entity (customers, connected enterprises) in order to accept expenses (e.g., invoice from the Swiss company). Also, check which international tax treaties are applicable and which requirements for substance they define. Most foreign tax authorities ask for a tax residency certificate which is issued by the authorities on demand.
- Regarding Swiss banks, Swiss law differentiates between “active” and passive companies. For a passive company that mainly administrates assets, reporting from a Swiss bank may go to the country of residence of the shareholders. However, reporting from a foreign bank goes almost always to Switzerland.
- Usually, substance includes the place of business and staff.
- For the place of business, the rental in the business centre with proper equipment is usually sufficient.
- Regarding staff, it is usual to employ staff part time. This is done particularly with elder employees. The second pillar of social security requires a certain threshold, and this second pillar of costs can be avoided with part time employment.
- For employments up to 2300 CHF per year, there is no requirement at all for social charges. When the employees are living outside Switzerland (e.g. home office), this can be a reasonable amount and at the same time such a contract can provide proof of substance. They can be regular part time employees of the Swiss company and work in countries with low tax and lower wages.
- Another possible solution is to temporarily post a person from another country to Switzerland. This person remains in the social system of his home country and benefits from low Swiss tax on the salary. This structure is useful when the original residence country has a low ceiling for social security contributions or when the maximum level in the home country is already given (if the tax progression according to article 23 does not kick in negatively).
For further information: International Tax Planning and Substance
Ready-made company in Switzerland – benefits:
- Such an entity can immediately be used, it is possible to change the company name and the object.
- However, not every company can be used, because laws prohibit the commercial registry for the registration of changes of shareholders if the GmbH is inactive (only has financial assets) and if there is no business activity. Therefore, care must be taken that an activity can be presented in the income statement and the company has some tangible assets, when the share transfer is done. Before such a company is sold, the existing director can 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:
- Less reputable providers offer inactive shelf companies (self GmbHs or shelf AGs) on several websites and propose to relocate such a company to a specific Canton where the commercial register accepts the registration of a shell company. After several months, the shelf GmbH shall be further transferred to the final destination. While the price for the GmbH seems attractive, the customer is charged enormously high costs for the double transfer and for the domicile in the host canton.
- There are also providers who offer a GmbH shell or a AG shell as shelf company, although they are entitled, but have not received a corresponding power of attorney. Initially, prepayment is requested and after the customer has paid in advance, they declare that they are only acting 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. In the case of an AG (joint-stock company), the shares should also be physically available.
How much it costs to register a Company in Switzerland:
When you form a GmbH or an AG, calculate formation costs between 500 CHF and 2900 CHF plus notary (between 600 CHF and 1500 CHF dependent on the structure) and public fees (between 500 CHF and 800 CHF). If required, you also need to include fees for a Swiss resident person (from 800 CHF). After prepayment and certificate of capital (banking document or audit report in case of a formation in kind), we start the formation procedure.
What are the ongoing costs for Accounting, Domicile and other services for a Swiss Company at Zugimpex:
Accounting and Domicile services:
- Annual costs are mainly calculated by time and depend on the activities, starting from 3300 CHF per year: domicile, flexi desk and basic post service, bookkeeping/accounting, VAT declaration per quarter or per month, balance sheet profit and loss statement and tax declaration. The largest amount of accounting time is spent sorting documents, matching payments, and contacting customers about missing documentation or unclear information (e.g., when there are payments without an invoice).
- Switzerland has the highest labour costs in Europe, so processes have to be efficient. Therefore, we engage with the clients to improve automatization, but also to remind to send documents in time and in the required way.
- Our firm works based on invoices and prepayment; our services are charged per time, so customers who work efficient have lower
- 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.
- 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.
Consider a Swiss branch of a foreign company – avoid capital and withholding tax
This structure works like a Swiss business with additional benefits:
- 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.
- 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.
- 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.
- Minimum share capital contribution for a foreign entity is low, the branch does not need any initial capital.
- 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.
- Some foreign law has less bureaucratic regulations with regards to nominees.
- All steps can be done with power of attorney.
You have already offers – ask us 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:
- Your service provider charges high costs – higher than expected, especially as fiduciary
- Your service provider has rarely time or he answers your questions late, general or never
- You have the impression that your fiduciary does not fully act in your interest
- Your service provider permanently tries to frighten you without offering economically reasonable solutions
- You think about changing the canton
- Your company structure does not take into account a tax free exit – your money is stuck in the company
- You have the impression that there may be other solutions to some topics
(Updated April 2023)