Switzerland

Establishing a Business in Switzerland

Located in the heart of Europe, Switzerland is one of the leading business locations in the world

Dr Andreas Huenerwadel

With its high standard of living and exceptional social and political stability, Switzerland offers an advantageous environment for establishing a business or the headquarters of a group of companies. Innovation and investment are well supported by the business-friendly regulatory background. Its low capital costs and inflation, its excellent infrastructure, the high working morale of its well-trained workforce and the efficiency of the administration make Switzerland a privileged business location.

Switzerland maintains excellent relationships with other nations and has strengthened its ties with the European Union through bilateral agreements. Switzerland is an important business partner of the European Union, whether as a supplier of goods and services, a customer or an investor.

Taxes

The Swiss tax system is characterised by its federal structure, featuring different taxes at federal, cantonal and community level. Because of this system, the municipalities and the Cantons are engaged in healthy competition to attract good taxpayers by offering a better tax climate. As a result, there are certain Cantons with particularly low tax rates (eg, Zug www.zug.ch/economy). Generally speaking, the tax rates in Switzerland are moderate in comparison with the European standard.

A corporation or a limited liability partnership is taxable on its profit and capital. The basis for the calculation of taxable net income is the profit and loss statement, to which certain adjustments may be made (eg, for losses carried forward or for taxes paid). The tax rates vary from Canton to Canton. A regular corporate tax rate on profits, for example in the Canton of Zug, amounts to 17% (cantonal and federal tax combined), with capital tax of up to 0.1 % (as of 2005). A variety of tax privileges are granted on request, e.g., for holding companies or domiciliary companies (ie, companies without direct business activities in Switzerland). Tax incentives are available for headquarters activities and new investments. See the following federal website for detailed information: www.estv.admin.ch.

For individuals who work or are domiciled in Switzerland, income is taxed at the cantonal and federal levels, while net wealth is taxed on cantonal level. Capital gains on the movable property of individuals are generally tax exempt. Net income is taxed progressively but is capped at a maximum rate. The net wealth tax is less than 1%. Expatriates working in Switzerland pay a withholding tax levied at the source, ie, directly from the employer. As a result of the tax competition between the Cantons, most Cantons have abolished inheritance tax for descendants, and the federal government does not levy an inheritance tax.

A federal withholding tax of 35% is levied on income from capital assets, such as interest on bonds or dividends or other distributions to shareholders. For taxpayers in Switzerland, this withholding tax is fully credited against regular taxation, while for persons or entities outside Switzerland the tax recognition depends on the relevant double taxation treaty. Switzerland maintains double taxation treaties with all economically significant countries in the world. The value added tax (VAT) is 7.6%. Cantonal and federal tax authorities issue reliable tax rulings on the tax consequences of any transaction submitted to them prior to the conclusion of the transaction. This well-established procedure is a great advantage in tax planning.

Corporate law

Swiss corporate law offers a variety of legal forms for a business, both in the form of a legal (and taxable) entity or in the form of a (transparently for tax purposes) partnership. Among the corporations, the limited liability company (GmbH) and the stock corporation (AG) are very common. To set up a stock corporation, a minimum stated capital of CHF 100,000, is required, of which at least CHF 50,000 must be paid in. Swiss corporate law does not allow the board of directors to be composed of foreigners only. The majority of directors has to be of Swiss citizenship (or have the citizenship of a European Union country) and must have residence in Switzerland. Holding companies may apply for exemptions. To set up a limited liability company, a minimum capital of CHF 20’000, is required. At least one of the officers has to be resident in Switzerland. A legal entity comes into existence once it has been entered in the commercial register of the Canton where it has its domicile. The registration procedure usually takes up to one week. For more details see the following website: www.greaterzuricharea.ch.

Labour regulations

Foreigners need a residence and working permit for pursuing gainful employment in Switzerland. There are different regulations for EU citizens and persons coming from other countries. The bilateral agreements with the EU guarantee a limited free movement of persons. Well-educated workers and investors from the EU do usually get the required permits without any problems. For further details see www.imes.admin.ch/news_info.

Real estate

The purchase of real estate in Switzerland by foreigners with residence abroad, for foreigners with residence in Switzerland but without a valid residence permit and for legal entities with registered domicile abroad is basically restricted. Assets for conducting a business such as a production facility are exempted from the restriction. However, all existing restrictions for foreigners are due to be abolished in the near future.

Financial services

Switzerland is famous for its thriving private banking industry, both in German-speaking Zurich and in French-speaking Geneva. Switzerland is also home to a well-established financial community offering a wide variety of financial services. A licence from the Federal Banking Commission must be applied for in order to engage in activities in Switzerland as a bank, broker/dealer, fund or distributor of a fund. The applicant must demonstrate the viability of its business plan, capitalisation, logistics and human resources during the application process and will continue to be regulated and supervised once the application has been granted. The website of the Federal Banking Commission provides helpful information under www.ebk.admin.ch.

Wenger & Vieli

Wenger & Vieli is a well-established Swiss law firm with over 40 lawyers in Zurich and Zug. The particular strength of this fullservice law firm is in its expertise in corporate law, financial services, litigation, arbitration, mergers & acquisitions and IT/ IP law. Wenger & Vieli is the only Swiss law firm with licensed offices in Beijing, China, and Taipei, Taiwan. Our domestic and international clients benefit from our global experience, which is underscored by our membership in Meritas, a strong international network of close to 200 independent law firms worldwide.

We advise our clients in German, English, French, Italian, Spanish and Chinese. We offer competent advice and efficient services to our clients, designed to bridge the gap that often exists between legal considerations and business necessities. Our size enables us to take on major assignments, yet our firm is small enough to provide room for building personal relationships with our clients.

 

Contact details:
Dr Andreas Huenerwadel Tel: +41 (0) 44 5633333 E-mail: a.huenerwadel@wengerlaw.ch
Wenger & Vieli, Dufourstrasse 56, CH – 8008 Zurich Tel: +41 (0) 44 5633333 - Fax: +41 (0) 44 5633366 - E-mail: mail@wengerlaw.ch - Website: www.wengerlaw.ch
Offices in Zurich, Zug, Beijing, Taipei and Shanghai

All pages are copyright of © Roxby Media Ltd - European American Business is a Roxby Media publication.