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How to Create a Subsidiary in Switzerland

 

How to Create a Subsidiary in Switzerland

 

Many business owners frequently ask us how to create a subsidiary in Switzerland and whether or not it is a suitable solution for their global business expansion. Switzerland is a highly attractive location for foreign investors considering establishing a subsidiary thanks to its incentivizing financial opportunities and strategic positioning in the very heart of Europe. Adding to its allure are the country’s open economy and efficient banking system. Furthermore, its interesting corporate tax rates averaging 11% make the mountainous country an ideal investment location.

 

What is A Subsidiary?

In Switzerland, a subsidiary is a separate legal entity partially or wholly owned by a foreign company. Unlike branch offices, subsidiaries operate independently under Swiss law, allowing them to sign contracts, hire employees, and handle shares without the foreign parent company’s direct control. Being fully local Swiss entities, they abide by Swiss regulations, and the foreign parent company must follow the same steps for setting up a standard Swiss company.

Usually, the foreign parent company owns most or all subsidiary shares and has limited liability for its debts. Notably, Switzerland imposes no restrictions on foreign ownership of shares. However, there is a requirement for at least one board member to be a resident of Switzerland, ensuring local representation and integrating the subsidiary into the Swiss business environment.

 

Types of Swiss Subsidiaries 

In Switzerland, subsidiaries primarily adopt one of two corporate structures: the “Aktiengesellschaft” (AG, equivalent to a Company Limited by Shares or Ltd.) and the “Gesellschaft mit beschränkter Haftung” (GmbH, akin to a Limited Liability Company or LLC). 

Both types are distinct legal entities solely liable for their debts, operating based on their capital contributions. Investors may also want to choose between the Foundation/Verein or General and Limited Partnership company structures.

 

  • GmbH (Limited Liability Company): To establish a GmbH, a minimum nominal capital of CHF 20,000 is required. All members and directors must be listed in the commercial registry, and the capital contributions cannot be transferred without member approval. The nominal value of each capital contribution must be at least CHF 100.
  • AG (Company Limited by Shares): Creating an AG demands a minimum share capital of CHF 100,000. Unlike the GmbH, only board members, directors, and people with signatory power must be listed in the commercial registry, providing shareholders anonymity. Shares can be transferred without prior approval unless stated otherwise in the Articles of Association.

The choice between GmbH and AG hinges on factors like required capital (GmbH: CHF 20,000, AG: CHF 100,000). An AG offers more flexibility, especially in shareholding structure and shareholder anonymity. GmbHs are suitable for smaller businesses with fewer shareholders and a more personalized or family-oriented structure. The decision ultimately hinges on the specific needs and structure of the business.

 

How to Set Up a Switzerland Subsidiary

Creating a subsidiary in Switzerland requires careful consideration and planning. If you choose to establish your Switzerland subsidiary independently, here are key factors to explore:

 

  1. Research Cantons: Switzerland is divided into cantons, each with unique incorporation laws. Research these laws to find the best location for your industry or business based on trade agreements and relationships.
  1. Language Considerations: Switzerland has four national languages—French, German, Italian, and Romansh. While most citizens speak Swiss-German, business procedures are often conducted in German, Italian, and French. Therefore, ensure your team speaks the local language or hire a translator.
 

Steps involved in Creating a Subsidiary in Switzerland

 

Here’s a brief overview of the general steps:

 

  • Budgeting: Determine the costs associated with the establishment.
  • Legal Form: Choose between GmbH or AG, considering the capital requirements and structure.
  • Trade Name: Select and check the trade name, ensuring it’s distinct and includes the legal form.
  • Board Members and Domicile: Identify board members, auditors (if needed), and a local address.
  • Capital Contribution: Open a Swiss bank account, pay the capital, and obtain the necessary documentation.
  • Notarization: Coordinate with a Swiss notary, provide the required information, and set a date for document notarization.
  • Registration: Submit documents to the commercial register.
  • VAT Registration: Register with the Federal Tax Administration for VAT.
  • Licenses: Ensure compliance with any necessary licenses for your business activities.
  • Insurance and Social Insurance: Enroll employees in the Social Insurance System and secure necessary contracts.
 

Switzerland Subsidiary Laws

Switzerland welcomes foreign ownership without restrictions, but a Swiss Subsidiary requires at least one resident. Non-EU individuals overseeing the subsidiary or relocating foreign staff need a work permit. While EU immigration rules don’t apply, Switzerland being in the Schengen region allows open access with neighboring countries. 

 

To run the subsidiary, a residence permit is also necessary. The subsidiary functions as an independent Swiss entity governed by local laws. 

 

 

Key Considerations to Keep in Mind

Beyond the legalities of establishing your subsidiary in Switzerland, there are crucial considerations to bear. These include insurance, residence permits, potential licenses, and registration with the federal tax administration.

 

While many business activities don’t require a license, specific sectors, like financial services, may have regulatory requirements. This applies to education, employment agencies, energy, gambling, healthcare, and public transport.

 

Setting up a subsidiary in Switzerland demands both time and financial resources. Be prepared for multiple trips to Switzerland, as certain steps may require in-person presence. In addition to the initial capital, allocate extra funds for potential extra costs and budget meticulously. Familiarizing yourself with Swiss subsidiary laws is essential, but you also have the option to hire an advisor to guide you through the process.

 

Alternatively, to save time and costs, you may consider partnering with Nectar Treuhand, a company specializing in navigating the intricacies of setting up subsidiaries in Switzerland.

 

 

Benefits of Setting Up a Swiss Subsidiary

Creating a subsidiary in Switzerland comes with notable benefits:

 

  • Independence: Subsidiaries operate autonomously under Swiss law, enabling them to make decisions independently.
  • Limited Liability: The foreign parent company enjoys limited liability for the subsidiary’s debts, safeguarding its financial interests.
  • Flexibility: Foreign investors can choose between GmbH and AG structures, tailoring the subsidiary to their business needs.
  • No Citizenship Requirement: Swiss citizenship is not mandatory. This means flexibility for foreign investors to access the Swiss market without direct liability.
 

Let Nectar Treuhand Help With Your Swiss Business Expansion

Thinking about setting up a subsidiary in Switzerland? Let Nectar Treuhand help you simplify the process. We specialize in navigating the complexities of establishing subsidiaries in Switzerland so you can save time and money.

Contact us today to learn how we can help you streamline your expansion into the Swiss market. With Nectar Treuhand as your partner and guide, you’ll be able to realize your projects seamlessly.

When choosing between a GmbH and AG structure for a subsidiary, consider the business’s specific needs. Navigating local laws also will require careful planning. However, the benefits of autonomy, limited liability, and market access make establishing a Swiss subsidiary worthwhile. For a seamless process, you should partner with a specialist in company formation Switzerland you can trust, like Nectar Treuhand.

 

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