Switzerland Entity Set Up
Switzerland Entity Set Up
Switzerland welcomes Foreign Direct Investment (FDI), with few controls apart from in certain sectors, such as banking, finance, and investment – areas where the Swiss have built an unrivalled global reputation. The Swiss ranked 20th globally with Gross Domestic Product (GDP) of 810.8 billion US dollars for 2021 and third in the world for GDP per capita at US$93,500.
A highly-qualified, well-educated workforce earning high wages to support an enviable standard of living add to the attractions for incoming investment – in addition to stunning landscapes of mountains, lakes, and forests.
Even so, expanding overseas is a major step, especially for companies considering opening a legal entity in their new territory. The sensible alternative is to use a Professional Employer Organization (PEO) and Employer of Record (EOR) such as Bradford Jacobs to locate the finest local talent and administer your payroll in Switzerland – speedily and risk free.
How to set up a Switzerland Subsidiary
Setting up a subsidiary in Switzerland? First, choose a company type. Foreign companies wanting to hire staff and run payroll must establish a legal entity subsidiary in Switzerland. The usual choice is a Société á Responsabilité Limitée (SARL). In German cantons these are known as Gesellschaftmitbeschränkter Haftung (GmbH) and in Italian cantons as a Società a garanzia limitata (S.a.g.l). This company typegenerally has the characteristics of a private limited liability company and is regulated by the Swiss Company Act, which operates under the Swiss Code of Obligations.
The subsidiary is a legal entity entirely independent of the parent company and is incorporated in Switzerland as a local company. Various documents and procedures must be completed to set up the subsidiary. These include:
- Register the company name in the relevant canton’s Commercial Register (Registre du Commerce) which is published in the Swiss Official Gazette of Commerce
- Deposit CHF 20,000 (€19,272, US$21,780) in a Swiss bank account prior to incorporation
- Register at least one founder, an individual or entity, with no upper limit on numbers
- At least one director with single signatory responsibility, or two directors or officers with joint signatory power, must be resident in Switzerland
- A local legal representative
- Local registered office
- Notarized Articles of Association of the subsidiary in the relevant language for the canton, some of which allow documentation in English
- Registration with the Federal Tax Administration for VAT if necessary
- Relevant business licenses for area of operation
Benefits of setting up a Subsidiary in Switzerland
A Swiss subsidiary of a foreign parent company has its own legal identity in Switzerland. The parent company generally has no responsibility for the debts and liabilities of the subsidiary. The responsibility of the shareholders (or quota holders) is generally limited by the extent of their contribution. Also, the foreign parent company’s financial statements and accounts do not need to be presented to Switzerland Tax Administration authorities.
The subsidiary can operate under a different name to the parent company and pursue independent business activities.
Through its subsidiary, the parent company has the advantage of exploring the Swiss market and further afield among European nations. Although Switzerland is not a member of the EU it is part of the ‘single market’ and its citizens have the same rights to freedom of movement.
Other benefits for a subsidiary:
- Easier to obtain regulatory approvals, loans and finance and enter contracts with other Swiss and European companies
- More impact with clients and suppliers, as subsidiaries imply more permanency than branches
- Employees feel there is more stability and job security than from being with a branch
In the wider commercial sense, opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case the opportunities offered by the European economies.
However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Switzerland.