Home Working in Switzerland Self-Employment Offshore companies in Switzerland
Last update on November 05, 2019

A guide to setting up an offshore company in Switzerland, including the advantages and disadvantages for companies looking to incorporate offshore.

Consider the benefits of setting up an offshore company in Switzerland, which is any business that has been registered, established or incorporated outside the country of residence.

Offshore incorporation is a straightforward process in all of the popular offshore financial centres and tax havens and can provide a wide range of benefits to the company and company principal(s). Offshore company registration is undertaken by individuals primarily for the following reasons:

  • Privacy
  • Asset protection
  • Reduced tax liability
  • Protection against lawsuits
  • Flexible business laws
  • Ease of operation
  • Confidentiality

Note the term ‘offshore’ is not used in Swiss legislation.

Advantages of offshore companies

Overseas company formation can provide a wealth of benefits: offshore asset protection, confidentiality, enhanced privacy, tax savings or simply growing your business outside of the EU.

Conducting business and undertaking banking transactions in the name of a legal entity, such as an offshore corporation, provide significant privacy and confidentiality benefits. Most offshore financial centres will not divulge the responsible individuals within the offshore corporations to a third party or foreign government. However, exceptions will be made in the event that an act of terrorism or a criminal atrocity has taken place and is being investigated.

Asset protection

The placing of assets into offshore corporations and overseas legal structures can provide a strong layer of protection from future liabilities. By having trusts, investments or bank accounts and other assets owned by your offshore corporation, it makes tracking them down via an asset search difficult. Offshore companies provide highly effective asset protection and effectively screen your finances from public view.

Legal protection through incorporating offshore

If a legal opponent is pursuing a legal action against you, it typically involves an asset search to make sure there will be money to pay out in the event a judgment be awarded against you. Forming offshore companies and having assets held by the overseas company means they are no longer associated with your name. Therefore your assets can be effectively shielded from legal opponents, judges and court rulings simply by incorporating offshore.

An additional benefit is simplicity and ease of operation. Most overseas jurisdictions make it simple for anyone who is interested in offshore incorporation. The statutory obligations in the running of the offshore entity have also been simplified.

Disadvantages of offshore companies

One of the main drawbacks is in the area of remittance and distribution of the assets and income of the offshore company. Once monies are transferred to the resident country, they become subject to taxation, which can negate the benefits of the initial tax-free environment.

Due to the absence of detailed, publicly maintained registers, proving ownership of a company registered offshore can be difficult. While anonymity can be an advantage for overseas companies, if an owner decides to become the beneficial shareholder at a later point, this might be a difficult exercise.

Risks related to an offshore company

Some offshore jurisdictions are more stable than others, whether from a political or economic perspective. Physical distance, lack of knowledge of local customers, government and social attributes can increase the risks of financial loss occurring in some countries.

Additional risks for offshore corporations are similar to those for onshore corporations e.g. risks associated with the market, interest rates and credit. A further consideration is that of reputational risk.

There are large tax risks associated with administering non-Swiss corporations from outside of Switzerland. According to Swiss law, a company has its tax residence where effective administration and control of the entity is carried out. Effective administration and control is where the day-to-day operations of the entity are carried out. Holding directors’ meetings in Liechtenstein twice a year or signing off resolutions on a remote island may not help to establish a non-Swiss place of administration and control from a Swiss tax viewpoint.

Renowned offshore locations

The following locations are well-known offshore locations:

  • Belize
  • The Caribbean
  • Nevis
  • Bahamas
  • The British Virgin Islands

Switzerland is not offshore but is considered as one of the most convenient jurisdictions for offshore corporation formation because of the low taxation enabled by peculiar local tax laws. Furthermore, the attraction for company formation is increased by the high international prestige and authority of Switzerland.