Main Characteristics of a Company in Switzerland:
General Background – Switzerland is a small country with 7.4 million residents and 26 independent districts. The most populated cities are Zurich, Basel, Geneva and Bern. The country shares borders with Germany, France, Italy and Austria. Incorporating a company in Switzerland is a major advantage for French speakers. Switzerland is a democratic country led by the federalism principle. The judicial system in Switzerland is based on civil law with a modern, stable and prosperous economy. Companies in Switzerland benefit from a modernized media platform that provides telephone lines and internet to every corner of the country.
Tax – Swiss companies are subject to the federal corporate tax system, local corporate tax and municipal tax. In order to incorporate a company in Switzerland, one must have an allocated location for the company or meet the conditions of managing the company from inside the state. Swiss residents are obligated to pay federal tax as well as provincial tax, therefore the Swiss tax system is not considered to be centralized. Swiss companies must pay municipal tax as well as federal tax though the effective tax rate is not higher than 29%. Real estate companies that are interested in incorporating a company in Switzerland can take advantage of the fact that there is no tax on capital gains on property transactions, although one must remember that this law does not apply to real estate agents who sell property. VAT is considered low and stands at 7.6% for residents as well as foreigners. The effective tax rate is no higher than 40% despite that it varies depending on the district. In order to attain a residential status in Switzerland, one must be employed in the country for at least 30 days, run a business in Switzerland or remain in the country for more than 90 days within one tax year.
Confidentiality – Switzerland is known for its high level of confidentiality in the banking and business sector. One can register various types of companies, therefore, each type has a different level of confidentiality with the local registrar. With regards to holdings companies, the details of the director is open to the public while the details of the shareholder are not. In a regular company (LLC), the details of the director as well as the shareholders are listed with the local registrar and therefore are open to the public. GBO offers the service of having a nominee director and nominee shareholder to retain confidentiality.
Name of the Company – Any name may be used as long as it meets certain requirements: a name cannot be used that is similar to one that already exists, that is offensive and no phrases relating to banks or the Swiss government may be used. Every name passes through the local registrar for approval.
Shareholders – At least one shareholder must be appointed, private or a corporation and must be a Swiss resident.
Directors – At least one director must be appointed, private or a corporation and must be a Swiss resident.
Financial Statements – One must submit financial statements.
Documents Required for Incorporating a Swiss Company
There is a long list of documents required in order to incorporate a company in Switzerland. Firstly, the beneficial owners of the company need to sign a document entitled “The Swiss Code of Obligations.” Secondly, they need to sign a customary document by the federal law regarding debt and bankruptcy, on “direct tax law” and on the Swiss federal law regarding banks and associations. Two additional documents that need to be signed before incorporating a Swiss company are the federal law on investment funds in the country and a document detailing the international law enforced by Switzerland.
In addition, throughout the process of company formation in Switzerland one must present documents to the local registrar of companies in order to prove the incorporation of the company before a notary as well as attaining approval for the name of the company. Switzerland does not charge for a license but all companies are required to keep financial documentation. Therefore, it is important to turn to experts in this field to get all the information regarding the conditions in each district and to consult with experienced professionals to do the proper tax planning.