If you want to start a company, you have to make many decisions. One of the most important is about the location. Both Switzerland and Germany offer attractive conditions for companies – but how can you make the right choice for founding your company? We offer you an overview here.

The most important facts, in short:

• The choice of location for founding a company depends on various factors, including the type of business, the target markets, tax considerations and the availability of specialists.
• In Switzerland, founding a company is relatively easy and fast, with low tax rates and various tax breaks. However, the start-up costs are slightly higher than in Germany.
• Germany offers a larger internal market and lower founding costs, but higher taxes and a more complex bureaucratic process. The labour legislation is more comprehensive and offers stronger protection for employees.
• Both countries offer attractive conditions for companies, but entrepreneurs should carefully weigh the advantages and disadvantages to make the best decision for their company.

1. Legal framework

In Switzerland, founding a company is relatively manageable and fast – even for Germans and people from other countries. This is especially true if you commission a service provider such as the domicile agency to help found the company. You can register a sole proprietorship within one day, while a limited liability company (GmbH) or a stock corporation (AG) is often registered within two to three weeks. In Germany, founding a GmbH or an entrepreneurial company (UG) often takes longer, because the bureaucratic effort involved is greater.

2. Tax aspects

A significant difference between the two countries lies in the tax system.

• Switzerland is known for low tax rates and a favorable tax system for companies. Business tax rates vary depending on the canton, but are generally significantly below those in Germany.
• Cantons such as Zug, Lucerne or Schwyz in particular offer low tax rates. This makes Switzerland an attractive location for international companies and holdings. Switzerland also offers various additional tax breaks – for example, flat-rate taxation for certain companies or tax incentives for research and development.
• In contrast, tax rates in Germany are higher. The corporation tax is 15% – in addition, there is the trade tax (varies depending on the municipality) and the solidarity surcharge. Overall, the tax burden for companies in Germany can be significantly higher than in Switzerland.
• In addition, tax laws in Germany are more complex and the administrative burden is greater. This can be a challenge, especially for smaller companies.

3. Founding process and costs

The process of founding a company in Switzerland or Germany differs depending on the company form chosen. The essential steps for founding a GmbH or an AG include:

• Drafting of statutes or articles of association
• Notarial certification of the founding documents
• Deposit of the share capital in a blocked account
• Registration in the commercial register

Start-up costs in Switzerland tend to be slightly higher than in Germany. This is due, among other things, to the higher notary fees and the minimum capital requirements for founding a GmbH or AG. In Germany, the founding costs are lower – especially when founding a UG, which requires only a small share capital.

4. Market access and growth potential

As Europe’s largest economy, Germany offers a large internal market and good opportunities for expansion. The central location in Europe is advantageous for trade and logistics. Switzerland, on the other hand, has a smaller internal market, but benefits from its political and economic stability as well as from the free trade agreements with the EU and other countries.

5. Labour market and skilled workers

Both countries have a highly qualified labour force. In Switzerland, wages are higher on average than in Germany, which increases the labour costs for companies. On the other hand, Switzerland is considered an attractive place to work, which makes it easier to recruit talent. In Germany, the labour market is larger, which can also make recruitment easier. However, competition for skilled workers is also more intense there.

6. Employee rights and labour legislation

• Compared to German labour law, labour legislation in Switzerland is generally less strict. Working hours are more adaptable – and there are fewer requirements with regard to notice periods and occupational safety. This flexibility can be advantageous for companies, as it allows greater freedom in shaping your workforce.
• Labour law in Germany is more comprehensive and offers stronger protection for employees than Swiss labour law. There are stricter rules regarding working hours, protection against dismissal and employees’ codetermination rights. These provisions can be challenging for companies.

Final remarks

The choice between Switzerland and Germany for founding a company depends on various factors – including the type of business, the target markets, the tax considerations and the availability of specialists. Switzerland offers a simple start-up process, low taxes and an attractive labour market – but at a slightly higher cost. Germany offers a larger market and lower founding costs, but higher taxes and a more complex bureaucratic process. Entrepreneurs should carefully weigh these factors to make the best decision for their company.