Switzerland is known for political stability, economic freedom and low taxes. That is why many entrepreneurs decide to set up a company in Switzerland (GmbH or AG). But how exactly does that work for foreign entrepreneurs? In this article, you will find the most important information about founding a company in Switzerland.

The essentials in brief:

• Switzerland: Popular location thanks to political stability, economic freedom and low taxes.
• Legal forms: GmbH [limited liability company] and AG [joint stock company] are popular options, depending on a company’s size and goals.
• Founding process: requires, among other things, preparing documents, public notarization, capital contribution and entry in the commercial register.

Why start a company in Switzerland?

Switzerland is not only known for its scenic beauty, but also as an attractive business location. Its political stability, a robust economy with a strong currency and a reliable banking system as well as favorable tax conditions make the country particularly attractive for entrepreneurs.

By way of comparison, in Germany, the VAT rate is 19%, the required share capital for founding a GmbH is EUR 25,000 and the corporation tax is 15%. In addition, there are other charges such as the solidarity surcharge and withholding tax. There is also an obligation to pay VAT in Germany when your annual turnover is equal to or greater than EUR 22,000.

What legal forms are available?

There are various legal forms available to you in Switzerland – the limited liability company (GmbH) and the stock corporation (AG) are among the most popular options. Both forms have their advantages and disadvantages, which vary depending on the size and goals of your company.

• The GmbH form is especially suitable for small to medium-sized companies. It offers a limitation of liability – the shareholders are therefore only liable up to the amount of their contributions. The required minimum capital is CHF 20,000, which makes founding a GmbH financially easier. A GmbH is also low-maintenance, which makes it an attractive option for start-ups and family businesses. In addition, you can freely regulate the distribution of profits in the articles of association.
• The AG form is the preferred legal form for larger companies (or those seeking a stock exchange listing). It requires a minimum capital of CHF 100,000 – of which you must pay in at least CHF 50,000 at the time of founding. The AG offers a clear separation between ownership and management and facilitates the raising of capital, as shares can be issued and sold more easily to investors. In addition, the AG legal form gives the company a high degree of prestige and credibility.

What requirements must be met?

For either legal form, you must draw up articles of association and have them notarized. In addition, the following prerequisites apply:

Common requirements:

• Managing director or board of directors residing in Switzerland: for both a GmbH and an AG, at least one managing director (if a GmbH) or one board member (if an AG) must reside in Switzerland. If this is not possible, you can procure a mandate.
• Legal domicile (business address) in Switzerland: both forms of company must have an official business address in Switzerland.
• Commercial register entry: both the GmbH and the AG must be registered in the Swiss commercial register in order to become legally competent.

Specific requirements

Minimum capital contribution: founding of a GmbH requires a minimum share capital contribution of CHF 20,000. To found an AG, a minimum capital contribution of CHF 100,000 is required. At least 50% of this sum must be paid in by the time of the founding of the company.

How do I start a company in Switzerland?

• Step 1: Preparing the necessary documents
  First, you need to prepare all the necessary documents for starting your business. This includes the articles of association (in the case of a GmbH) or the statutes (in the case of an AG), which determine the structure and rules of your company. These documents must contain the names of the founders, the amount of the share capital, the business address and the purpose of the company.
• Step 2: Public certification
  The founding documents must be publicly certified by a notary. This confirms the legal validity of the documents. The notary also checks whether all legal requirements have been met.
• Step 3: Contributing the capital
  Before you can enter your company in the Commercial Register, you must deposit the required share capital with a Swiss bank. For a GmbH, the minimum capital is CHF 20,000. For an AG, CHF 100,000 is required – you must pay in at least CHF 50,000 at the time of founding.
• Step 4: Opening a bank account
  After notarising and paying in the capital, you can open a business bank account for your company. For this, you usually need the certified founding documents and proof of the contribution of the capital.
• Step 5: Entry in the Commercial Register
  With the certified documents and the proof of the capital contribution, you can now apply to enter your company in the Commercial Register. This step is important: only an entry in the Commercial Register will make your company become legally binding and allow it to officially commence its business activities.
• Step 6: Start of trading
  As soon as your company is entered in the Commercial Register, you can begin your business activities. You can now enter into contracts, hire employees and carry out other activities that are necessary for the operation of your company.

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A company in Switzerland and a work-site in Germany: is that possible?

Yes, you can start a company in Switzerland and perform work in Germany. You must ensure that at least one managing director or member of the board of directors resides in Switzerland and that your company has an official Swiss address. However, setting up abroad can have tax consequences in Germany, especially if the company is not active in Switzerland. If your AG or GmbH only acts as a “letterbox company” and sales come mainly from Germany, German tax law could apply. Starting a business in Switzerland makes sense if you are planning to undertake real business activity there.

Final remarks

Starting a business in Switzerland can offer many advantages – but also requires careful planning and consideration of various legal and tax aspects. With the right preparation and strategy, Switzerland can be an excellent location for your company.