(The combined set-up and running costs of a Swiss company are no greater than those in most OECD jurisdictions – and the procedures, though Civil law, are easy to adapt to. The minimum cost will come to about CHF 5’000 for set-up and CHF 10’000 annually for maintenance (including filing of accounts, but assuming with minimal activity). The minimum initial capital requirements range from CHF 20’000 for an LLC-type vehicle (“Sàrl” or “GmbH”) to CHF 50’000 for the issuing of 50% paid up shares in an “SA”/“AG” – see summary details inset below. There are a number of details to attend to concerning directors (which can only be physical persons), and legal and tax implicationsneed to be considered when selecting thecanton of incorporation, tax status, domiciliation, holding structures, financing etc. (which are beyond the scope of this article).
Clearly, Switzerland is not the cheapest of jurisdictions in which to establish a new business, but it does have many substantial advantages which make it more attractive than other countries for family-owned companies and cross-border entrepreneurs, large and small.
Incorporating a Swiss company (usually an “SA” or “Sàrl” - see details inset above) can offer many valuable benefits to its owners, including the following unbeatable fundamentals:
A. Low tax rates (* see inset)
Tax liability and assessments are based on a clear inter-cantonal tax system and the use of tax rulings for special categories such as:
Holding companies & financing companies
Trading & IP licensing companies
Service companies (‘auxiliary’ companies for administration of international groups)
Swiss branches of a foreign company
Foreign branch of a Swiss company
Worldwide Double Tax Treaty (DTT) network – permitting efficient tax and exit planning – and Bilateral Investment Treaty (BIT) network for the protection of Swiss corporate investments in many emerging economies
Relatively inexpensive, simple accounting &tax reporting obligations, with generous allowances for various deductions, travel & entertainment expenses, etc.
B. Friendly business environment
In addition to this relatively tax-friendly environment, the benefits of owning a business in Switzerland, however modest by comparison to the country’s corporate giants, are not to be sneezed at, thanks to a uniquely stable macro-economic and legal infrastructure which offer exceptionally high levels of both corporate and individual security. Even after the tsunami of new compliance and disclosure rules imposed by FINMA and the banks with increasing severity over the last three years, the country’s traditional discretion and liberal attitude to business means that Swiss companies still enjoy:
a high level of confidentiality and discretion in professional matters (including, for some years still, bearer shares)
uncompromised attorney–client privilege
low reporting requirements
good understanding of cross-border business throughout the financial community
unsurpassed economic stability
robust legal environment
C. Banking advantages of setting up a Swiss company
Setting up any kind of company in Switzerland - whether a Swiss commercial and/or holding company or Swiss branch of a foreign company - provides the immediate benefit of a bank account with one of the large domestic banks in Switzerland.
This provides a legitimate economic base onshore and, for purely statutory and legal reasons, requires a local bank (UBS, CS, a cantonal bank or similar, via a notary) to provide a consignation account to receive the capital deposit for the incorporation. The incorporation process necessarily involves making a deposit of all or part of the authorised capital with one of those banks (either CHF 20’000 for an Sarl or CHF 50’000 for an SA – see details below).
Provided that the company’s founders can show minimal substance and a good purpose for the company, the bank will provide a current account in CHF and a choice of different currencies, plus an entry into the banks retail and corporate banking platforms, including debit and credit cards, comprehensive e-banking and corporate banking operations, international IBANs and payments facilities, payments & treasury arrangements, letters of credit facilities, etc.
D. Creating a ‘Swiss multi-national small/medium sized enterprise’
A banking relationship with the bank’s domestic corporate banking department provides both a good basic commercial service for domestic Swiss business (including employment in Switzerland for the company’s founders (see personal residency / tax issues below)
a direct route to into the bank’s international banking services, since the compliance work done on opening the account for the Swiss company necessarily qualifies the founders for consideration as clients of banks' global business services.
In most cases this ‘mini-multinational SME’ structure will – subject to certain requirements, such as minimum fee volume, etc. – will facilitate the bank in opening normal corporate banking accounts for the client, providing commercial banking services across the board to the parent group, both on and offshore.
Advantages of Swiss companies