Swiss Companies
Switzerland is home to a diverse range of companies, from small startups to large multinational corporations. In this page, we will provide an overview of the Swiss business landscape and highlight the key features of the most common types of companies found in the country. Whether you're a local entrepreneur an international investor, this guide will give you a comprehensive understanding of the Swiss business environment.
Overview of the Swiss Corporate system
Overview of the Swiss Corporate System
Each business has a specific legal structure. When creating a business, one of the most important decisions is the choice of its legal form. Swiss law provides several forms, each with its own distinctions.
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These different forms have both advantages and disadvantages, and the final choice will be a compromise. Important criteria to consider include:
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Capital: Founding costs, capital requirements, and minimum capital imposed vary by legal form. Consider the capital intensity of current commercial activities and projected capital needs for the next 3 to 5 years.
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Risk/Liability: Generally, the greater the risk for the business or the founder's financial contribution, the more it is recommended to opt for a limited liability company.
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Independence: The degree of flexibility is restricted by the legal form. The founder must determine if they wish to work alone or with partners and whether they prefer to include investors or associates.
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Taxes: Different legal forms have different tax implications. Depending on the company's form, the income and assets of the business and the owner are taxed separately or together. Generally, high incomes of capital companies are taxed less than those of partnerships.
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Social Security: Certain social insurances are mandatory, optional, or non-existent depending on the legal form. For example, the owner of a sole proprietorship is not insured against unemployment and pension fund membership is optional. In contrast, for corporations (SA) and limited liability companies (Sàrl), the director is also considered an employee and included in social insurances.
Sole Proprietorship
Sole Proprietorship (SP)
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Definition
An industrial or commercial enterprise owned by a single person who operates it in their own name and independently. It does not have a legal existence separate from its owner; in other words, it is not a legal entity.
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Owner
Swiss or holding a work permit and residence permit.
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Name (trade name)
The owner's last name must appear in the business name, which may also include a fantasy name (e.g., Bob Winner – The Key to Success).
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Formation and Registration with the Commercial Register (CR)
Formation requires no contract or notarized act. Registration with the CR is mandatory unless the annual gross revenue is less than CHF 100,000. The revenue is calculated at the time of the registration request.
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Accounting
Mandatory if the SP is registered with the CR.
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Formation Costs
Low (approximately CHF 400 to 700) for registration with the CR.
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Capital
Free; no minimum capital required by law. There are no “social shares” of any kind.
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Representation and Engagement
The person operating the SP represents and engages the business alone.
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Liability
The owner is personally liable with all their professional and private assets for the business's commitments.
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Fiscal Characteristics
Subject to personal income tax on profits. VAT required only if the annual turnover exceeds CHF 100,000.
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Advantages
Ease, speed, simplicity of formation and operation, low creation costs. Once registered, the spouse's consent is not required to sign a surety.
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Disadvantages
The owner is liable for commitments with all their assets. If the business develops (e.g., new partners), the legal form must change.
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Social Insurance
The owner of an SP is considered self-employed, contributing to AVS, AI, and APG at the self-employed rate (variable based on income) and paying in full. They are not subject to the 2nd pillar but can establish a 3rd pillar. They are entitled to unemployment insurance benefits only if they have contributed for at least 6 months within the last framework period (2 years). They are entitled to other unemployment insurance benefits: active labor market measures, work initiation allowances, temporary employment, specific allowances for creating their own business. Accident insurance is not mandatory. Finally, they are not subject to family allowances except in Geneva. As self-employed, the owner must register with the relevant insurance schemes.
General Partnership
General Partnership (GP)
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Definition
An industrial or commercial enterprise operated exclusively by natural persons who pool their efforts and resources to achieve the set goal. The GP is a legal entity distinct from its members. It can act, engage, sue, and be sued as such.
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Operators
At least two natural persons, Swiss or holding a work permit and residence permit.
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Name (trade name)
Must include at least one partner's name and the legal form designation. Otherwise, partners can choose freely (e.g., The Key to Success – Winner and Loser GP).
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Formation and Registration with the Commercial Register (CR)
Formed by a partnership contract. A notarized act is not necessary. Registration with the CR is mandatory in all cases.
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Accounting
Mandatory in all cases.
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Formation Costs
Low (approximately CHF 400 to 700) for registration with the CR plus any contract drafting costs.
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Capital
Free; no minimum capital required by law. Each partner contributes capital, resources, and/or services. The total contributions constitute the company’s equity.
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Representation and Engagement
Unless otherwise registered with the CR, each partner is deemed able to represent and engage the GP.
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Liability
The GP itself is liable for its commitments. Partners are jointly and severally liable with all their assets, but only subsidiarily if the GP is dissolved, pursued unsuccessfully, or the partner is bankrupt.
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Fiscal Characteristics
Profits taxed as personal income of the partners. VAT required if the annual turnover exceeds CHF 100,000.
Advantages
Ease, speed, simplicity of formation and operation, low creation costs. Partners can agree on a right of exit. No double taxation; only partners are taxed.
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Disadvantages
Partners are liable with all their assets (subsidiarily). Not suitable for activities requiring significant investments or if there are too many partners.
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Social Insurance
Partners have the same status as the owner of a sole proprietorship (see above).
Limited Liability Company
Limited Liability Company (LLC)
Definition
A company formed by one or more persons with capital determined in advance. The LLC is a legal entity distinct from its members, acting and engaging as a legal person.
Members
One or more natural or legal persons, with no nationality or residence constraints, but at least one manager or director must be domiciled in Switzerland.
Name (trade name)
Free, but must include the legal form designation (e.g., The Key to Success LLC).
Formation and Registration with the Commercial Register (CR)
Formed by a notarized act. CR registration is mandatory, and the LLC acquires legal personality upon registration.
Accounting
Mandatory in all cases.
Formation Costs
Approximately CHF 2,500 to 6,000 (CR registration and notary fees).
Capital
Minimum CHF 20,000, fully paid in cash or kind at foundation. The nominal value of each member’s share must be at least CHF 100, with multiple shares possible per member.
Representation and Engagement
The LLC’s organs are at least the general meeting and the management. Management handles administration and commitments to third parties. Unless otherwise stated in the statutes, members represent and engage the company collectively, though this power can be conferred to third parties.
Liability
The LLC itself is liable for its commitments. Members are jointly liable only up to the capital.
Fiscal Characteristics
Subject to corporate tax on profits and capital. VAT required if the annual turnover exceeds CHF 100,000.
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Advantages
Limited liability for members. Low initial capital.
Disadvantages
More formal structure than SP or GP. Transfer of shares subject to conditions (mandatory notification to the company, CR registration, and agreement by three-quarters of members representing at least three-quarters of the capital), not modifiable in the statutes.
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Social Insurance
Members are considered employees if they receive compensation. They are subject to the standard social insurance regime (AVS, AI, APG, 2nd and possibly 3rd pillars, AC, accident insurance, family allowances). If compensation is only in the form of dividends, accident insurance is not mandatory. The company must report its employees to the various insurances.
Corporation
Corporation (Corp/SA)
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Definition
A company formed by one or more natural and/or legal persons with capital determined in advance, divided into shares, and whose debts are guaranteed only by the company’s assets. It is the preferred form for substantial commercial enterprises. The Corp is a legal entity distinct from its members, acting and engaging as a legal person.
Members
One or more natural or legal persons, with no nationality or residence constraints, but at least the minimum number needed to constitute the board of directors. At least one member of the board or a director must be domiciled in Switzerland.
Name (trade name)
Free, but must include the legal form designation (e.g., The Key to Success Corp).
Formation and Registration with the Commercial Register (CR)
Formed by a notarized act. CR registration is mandatory, and the Corp acquires legal personality upon registration.
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Accounting
Mandatory in all cases.
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Formation Costs
Approximately CHF 2,500 to 6,000 (CR registration and notary fees).
Capital
Minimum CHF 100,000, divided into nominal or bearer shares. The nominal value of shares cannot be less than CHF 0.01. At least 20% of the nominal value of each share must be paid at foundation, but only for nominal shares, and at least CHF 50,000 in total. Contributions can be in cash or kind, subject to specific conditions.
Representation and Engagement
The Corp’s organs are at least the general meeting, the board of directors, and the auditor. Unless otherwise stated in the statutes, directors and management represent and engage the company collectively, though this power can be conferred to third parties or exercised individually.
Liability
The Corp itself is liable for its commitments. Shareholders are liable only up to their contributions, except for their responsibility as company organs.
Fiscal Characteristics
Subject to corporate tax on profits and capital. VAT required if annual turnover exceeds CHF 100,000.
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Advantages
Limited liability for members. More flexible than LLC (especially in share transfer). Anonymity.
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Disadvantages
Significant initial capital. More complex and costly formation procedure. Requires an auditor.
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Social Insurance
Same status as for LLC (see above).
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