Before attempting to set up a business in Switzerland it is first worth assessing the range of company types and their pros and cons.

Before attempting to set up a business in Switzerland it is first worth assessing the range of company types and their pros and cons. While some require relatively little paperwork, getting set up might require hefty legal fees.

Single-owner company
The most common form of company, after the standard corporation or 'joint-stock' company, this type is most suitable for sole owners of a business, or for other professionals who work in their own name, such as freelancers. There is unlimited liability and the individual’s name has to appear in the business name (such as "John Smith Consultancy" or "Smith IT services"). Registration with the Chamber of Commerce is mandatory if annual sales are in excess of CHF 100,000 a year, and the sole trader has to be a Swiss resident.

General partnership
Used when two or more people join to operate a company. The name of one of the partners has to appear in the business name of the company (such as Smith and Co). All partners have unlimited liability and registration with the Chamber of Commerce is mandatory. All such partners have to be Swiss resident and the company needs to have a Swiss address.

Limited partnership
A much less common version of the General partnership, where some of the partners (general partners) have unlimited liability and the others (limited partners) are/may be liable up to an agreed amount. Registration with the Chamber of Commerce is mandatory.

Corporation/joint-stock company (AG/SA)
An independent legal entity and the most common form taken by businesses. Liability is limited to the value of the company's assets and the minimum amount of shareholders' equity is CHF 100,000, of which CHF 50,000 have to be "paid up". At least three original shareholders are required . The company is obliged to comply with formal incorporation procedures for which it must pay fees. These include stamp duty and legal advice. It generally takes between two and four weeks to process the registration, after which the company is a legally recognised entity.

At all times the majority of the board has to be composed of Swiss or European citizens resident in Switzerland. The board members can be personally liable for the payment of Swiss taxes and social security.

Limited liability company (GmbH/Sàrl)
Another legal entity, but with a minimum shareholders' equity of CHF 20,000, of which CHF 10,000 have to be "paid up". At least one managing director must be a Swiss resident (but not necessarily a Swiss or European citizen), and the company must have at least two original shareholders (these may be foreigners). These founders are then allowed to perform the duties of governing bodies. While these companies are cheaper to set up than a limited company, it is more difficult to transfer shares.

Subsidiary
A legally independent company, but which is affiliated to a foreign entity and therefore tends to operate more as a "Swiss" than 'branch' set-up. It can take the form of a Corporation or of a Limited liability company.

Branch
A branch is a legally dependent wing of a head office that operates outside the home country. However, on a financial level, it operates independently from this head office. Here, the foreign parent company is liable, and the branch is taxed in Switzerland as a Swiss company. One Swiss resident with "power of attorney" is required; the lawyer can be a foreigner.

Updated by Elise Krentzel with contributions from Tim Morris, partner with Deloitte & Touche, SA, Geneva. Elise Krentzel can be reached at - telephone: (+41) 022-327 3434 or fax: (+41) 022-327-3430. Tim Morris can be contacted at timorris@deloitte.com. The original document was compiled by Rob Hyde in April 2002.

[Expatica 2008]