Important Note about Company Registration Switzerland
Type of Business Entity in Switzerland
In the corporation the most commonly utilized company forms are as mentioned below:
- The Aktiengesellschaft (AG)/société anonyme (SA).
- The limited liability organization in Swiss —the Gesellschaft mit beschränkter Haftung (GmbH)/ société à responsabilité limitée (SARL)
In the past was utilized very less as a vehicle for performing international business; on the other hand, its use has drastically augmented in global business, mainly for the reason that, not like the AG,/ SA the SARL can be ignored for purposes of US tax below the rules in check-the-box.
At the district level, a lot of tax privileges are available, for instance, there are systems for holding mixed organizations and companies. This kind of companies stay exposed to regular taxation, at the federal tax level. At the federal level, incentives consist of the principal company tax holidays as well as tax regime.
Holding company: To a Swiss company (or a permanent organization of a foreign company) whose chief purpose is to hold considerable investments in the capital of other corporations, and whose revenue fundamentally includes of investment income, the holding company category is provided at the district/communal level.
In order to be eligible as a holding company, the following necessities should be fulfilled:
- Minimum 2/3rd of the organization’s entire income should have resulted from qualifying investments or, on the other hand, minimum 2/3rd of the holding company’s total assets should contain significant investments in subsidiaries, and
- In Switzerland, the organization might not involve in a business or active trade (even though activities like operating the company as well as its investments can be executed).
An organization profiting from the holding company regime is free from the district and communal revenue taxes. The effectual federal rate of income tax on revenue excluding from eligibility participation is 7.83%.
Mixed Company: The mixed organization tax regime exists for organizations with mainly for foreign business activities. In Switzerland, a mixed company is permitted to perform subordinate business activities and to set up its own office and in Switzerland. The key prerequisite for mixed company status, which is approved through a verdict, is that minimum eighty percent of company’s total gross revenue should be earned from foreign sources as well as minimum eighty percent of its everyday expenditure should be about counterparties that are non-Swiss. An organization that meets the criteria for mixed company status can ask for the following treatment of tax:
At a joint effective rate of normally between eight percent and eleven percent (counting federal tax), foreign-source revenue is taxed.
- Swiss-sourced revenue is taxed at normal rates for district/communal and federal revenue tax functions.
- Eligible revenue (for example- capital gains, dividends) from participation is free from tax.
Principal Company: The principal company representation in Swiss is one way to form international companies on a local basis and enhance efficiencies by rearranging some procurement, delivery and sales activities surrounding a “Swiss principal” company, which turns into the counterparty to the organization’s customers and vendors.
Regulation of SA/AG company in Switzerland
The least amount capital is CHF 100,000 and the least amount nominal value of an AG/ SA share is CHF 0.01. Minimum twenty percent of the nominal value of each share (or CHF 50,000, whichever is high) must be paid in by the time of the primary shareholders’ meeting. Significant additions in form, such as additions in real property, patents, machinery, and proficiency, are feasible. The founders must create a comprehensive report, which should be permitted by the auditors, in the case of contributions.
Prior to distributing dividends, five percent of the yearly net profits should be deposited in an official reserve until the reserve accumulates twenty percent of capital paid-in. Subsequently, ten percent of any distributed sum that goes beyond five percent of capital paid-in also should be saved in the reserve fund. These sums should be apportioned until the reserve is equal to fifty percent of approved and issued capital (this extra reserve allocation need does not be relevant to holding companies).
There should be minimum one founding shareholder, who should be a citizen or resident of Swiss. The law of Swiss needs that the shareholders fulfill minimum once yearly to organize the normal meeting of the shareholders.
At the shareholders’ meeting, the executive body that is the board of directors is selected (and sacked). There are no specific requirements concerning the nationality of board members, however minimum one Swiss executive director or resident board member is necessary.
No legal necessity is there that the board of director meeting should be organized in Switzerland, even though the articles of incorporation might need that meeting to be held in the territory of Swiss.
Types of shares
Bearer shares and registered shares are acceptable; although a share should be completely paid up hence it can be renewed from a bearer share to registered share.
Essential decision (e.g. altering the rationale of the company, issuing new endorsed shares, raising funds and limiting shareholder acceptance rights) need endorsement by more than 2/3rd of the votes and fifty-one percent of the funds present at the yearly broad conference (a “dual majority”).
Switzerland is encompassed of the central state and 26 districts, which are associate states of the central state. The administrative and political powers are split between the urban, cantonal and federal levels of administration. Every district has its chamber of parliament, personal establishment, and policy of social procedure. Central lawmaking control is vested in the Federal Committee and the 2 cells of the Federal Assembly of Switzerland. The need to put up strong popular support for lawmaking has guided to a united constitutional method and numerous nationwide referendums are held each year. The effect is a steady and trustworthy political atmosphere.
Although it is not an EU representative, Switzerland is situated at the middle of Europe and has secured economic ties with the EU and largely matches to the economic practices of the EU. In the World Trade Organization (WTO), the European Free Trade Association OECD Switzerland is a member. It has a liberated trade contract with the EU.
Four official languages are followed in Switzerland: Romansh (0.5%) in the south-eastern trilingual district of Graubünden; Italian (8.1%) in the southern Italian area (Svizzera Italiana); French (22.5%) in the western French part (la Romandie); and mainly German (63.5% overall population share) in the northern, eastern, and middle German region (Deutschschweiz). The central government is gratified to speak in the official languages, and in the central parliament instantaneous translation is provided from and into Italian, French and German.
Direct investment from foreign countries is welcomed by Switzerland. Moderate rules, need of controls above the reinstatement of capital and income, and federal and state incentives for fresh shareholders indicate that Switzerland is a smart and admired investment place for a variety of ventures and multinationals. The country commonly is used as a place for a global head office, trading organizations and other organizations managing worldwide functions and trades (shared services, major companies, and logistics hubs, research and development services, etc.).
No controls exist for foreign exchange in Switzerland. There are no limitations on borrowing from abroad, and no differences among resident and non-resident financial records. Similarly, provincial borrowing by overseas-controlled firms from banks and associated (or non-associated) organizations is generously allowed. For those who engage in money laundering activities or that do not undertake sufficient diligence in financial transactions, the financing of terrorism, the AML act implements punishments (including fines and prison). Under the AML (anti-money laundering) act, mediators in financial dealings (for example financial institutions, lawyers, banks and accountants) are subject to detailed investigation of a business and necessary information requirements.
Swiss organizations are enrolled in a specific district. Commercial Register is maintained in every district which keeps shareholders, director, entries, investment structure and listed office. Twenty-six districts are comprised in Switzerland.