If you’re thinking of setting up a business in Switzerland, here’s what you should know about the different business types, what records you need to keep and more.
Here’s all they key information you need to know about setting up a business in Switzerland, with details on:
- Business culture in Switzerland
- Who can start a business in Switzerland?
- Legal structures for businesses in Switzerland
- Setting up a business in Switzerland as an expat
- Starting up an online business in Switzerland
- Foreign companies opening up a Swiss branch or subsidiary
- Setting up a non-profit organization in Switzerland
- Administrating your business in Switzerland
- Business banking in Switzerland
- Taxation for business in Switzerland
- Business insurances in Switzerland
- Employing staff in Switzerland
- Business support and advice in Switzerland
- Corporate social responsibility in Switzerland
- Useful resources
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Business culture in Switzerland
Switzerland is well-known for its strong economy, home to a number of big-name multinationals and a consistent high performer in sectors such as financial services and pharmaceuticals. However, it’s not just large companies that prosper. In fact, over 99% of its 330,000 businesses are small and medium enterprises (SME) with less than 250 employees. 83.9% of SMEs in Switzerland survive their first year and just under 50% are still trading after five years.
Although Switzerland has restrictions on the number of foreign workers coming in, it is a country keen to attract enterprise and innovation. If you can demonstrate that you have a business idea that could work, do your market research, and have capital to invest, then it can be a good place to set up a company. Switzerland is the top-ranking country on the 2021 Global Innovation Index, and many of its cantons offer startup support packages and fiscal incentives for entrepreneurs.
Just under 15% of the Swiss workforce is classified as self-employed, which is around the same as the EU average. According to the World Bank, Switzerland ranks 36th in the world in terms of ease of doing business. Its overall business culture is relaxed and polite, but hierarchical in structure and quite conservative in terms of values. Women are still behind in terms of business leadership, making up 13% of executive management positions in 2021.
Who can start a business in Switzerland?
Foreign residents can set up their own business in Switzerland. However, only those that meet certain requirements have a legal right to start a business.
EU/EFTA nationals can become self-employed or set up a business with relative ease. You just need to register for a permit at your local canton and show proof of your self-employed activity (for example, detailed business plan, VAT number, or entry into the commercial register).
Third country nationals need to have a valid C residence permit, unless they are married to a Swiss citizen/permanent resident. Otherwise, you will need to apply through your local cantonal authority. You will need to meet the personal requirements for a Swiss work visa. You should also demonstrate that your business will have lasting positive benefits for the Swiss labor market. For example, with a detailed business plan or evidence of strong relationships with existing Swiss companies.
Financial requirements for setting up a business in Switzerland depend on what type of business you are setting up. That includes legal structure, and whether you need any special licenses. See below for more information.
The Swiss government SME Portal has information on agencies that help with setting up a business in Switzerland.
Legal structures for businesses in Switzerland
Choosing your business structure is an important decision, so you need to investigate each option carefully. Here are the main legal business structures in Switzerland:
1. Single-owner company or sole proprietorship
This is the most common type of company after the standard corporation or ‘joint-stock’ company. It is most suitable for sole owners of a business or other professionals who work for themselves, such as freelancers, small businesses, and individual entrepreneurs. The businesses are run by one individual who must be a Swiss resident.
As the company doesn’t exist as a separate legal entity, there is unlimited liability and the owner pays taxes as an individual on business profits. Set up is fairly straightforward. You just need to enter your business into the trade register, sort out your own social security arrangements (plus make arrangements for any employees) and register for VAT if you need to. You can keep simplified accounts (details of income, expenses and assets) if your annual turnover is less than CHF 500,000.
2. General partnership
A general partnership is legally similar to a sole proprietorship. The key difference is that more than one person is involved in business ownership. Again, the company doesn’t exist as a separate legal entity, so all partners have unlimited liability. The business doesn’t pay corporation tax, but each partner pays individual tax based on their profit share.
As with sole traders, all businesses need to enter the trade register. They have the same accounting, tax and social security obligations. Businesses should draw up a partnership agreement that details obligations and entitlements of each partner.
3. Limited partnership
This is a much less common version of the general partnership. It’s an arrangement involving at least two partners, where at least one has unlimited liability (as with a general partnership) and at least one has limited liability – meaning that their personal assets beyond what they have invested in the business cannot be touched in the event of business debt or bankruptcy.
Limited partners have limited rights and responsibilities. They cannot be responsible for the general management of the business. The limited partnership model is generally used if an unlimited business (sole trader or general partnership) needs to raise additional capital.
4. Limited company/joint-stock company (SA/AG)
This is the most common form for businesses, where the corporation is an independent legal entity. The SA/AG needs to have at least one director and one shareholder who is a Swiss resident. The business pays separate corporate tax and each owner of the business is legally classed as an employee.
Liability is limited to the value of the company’s assets, and the minimum amount of share capital (cash or assets) to start up is CHF 100,000, with 20% paid upfront (this amount must be at least CHF 50,000). The company must comply with formal incorporation and registration procedures. That includes writing up articles of association and setting up a separate business bank account.
5. Limited liability company (GmbH/Sàrl)
This is another common company form in Switzerland. It is similar to the SA/AG, in that it is a separate legal entity and needs at least one director and shareholder who is a Swiss resident. However, it is more of a public rather than private liability company, and its shareholders are listed in the commercial register.
The GmbH/Sàrl has a lower startup threshold than the SA/AG. Minimum initial share capital is CHF 20,000 (cash or assets). All shareholders are jointly liable for company debts up to the registered capital amount. There are no restrictions on number of shareholders, but each one must contribute at least the equivalent of CHF 100.
6. Cooperative company
This is a more social company model that prioritizes co-decision-making and transparency. Cooperative businesses are still geared towards profit-making, but they need to have a minimum of seven partners/board members, each with an equal say in how the business is run.
Cooperatives don’t have minimum capital requirements, but they need to enter into the trade register. The legal company name must include the words société coopérative.
How to start a business in Switzerland as an expat
If you want to set up a business in Switzerland as an expat, you will need to do the following as a minimum.
Write a viable business plan
First and foremost, you will need to write a convincing business plan. This will show that your business idea is sensible, which not only proves to the Swiss authorities that you are serious about your self-employment, but will also be needed if you apply for any capital to get things started.
The government SME Portal has tips on how to write an impressive business plan.
Sort out your Swiss visa requirements
You’ll need to be a Swiss resident to set up your own business. For EU/EFTA nationals, this means getting a B residence permit (valid for up to five years) from your local cantonal authority if you don’t already have a B or C permit.
Non-EU/EFTA nationals can only set up a business if they have a C settlement permit, if they are the spouse of a Swiss citizen/C permit holder, or if they are an entrepreneur willing to make a lump sum tax investment payment of CHF 150,000.
If you are from outside the EU/EFTA and don’t meet the above requirements, you will have to apply through the local cantonal authority where you want to set up your company, and convince them of the benefits of your business to the local economy and labor market. If you are successful, you will be able to apply for a B residence permit. In certain cases, you may get a short-term L permit although this usually has a maximum of two years’ validity.
Decide on your business legal structure
Next, you’ll need to decide which of the legal structures in the above section best meets your business requirements.
Comply with Swiss business registration requirements
All businesses in Switzerland must register their company name. You can do this via the EasyGov online platform. Business names must be unique, but you can check existing business names in the Central Business Name Index. Sole trader business names must include the founder’s name, and partnership names must contain the name of at least one partner. Registration automatically enters you into the Swiss Business and Enterprise Register (BER) and assigns you a Unique Enterprise ID Number (UID).
All Swiss businesses, other than sole traders with a turnover of below CHF 100,000, also need to enter into the commercial register. Exact registration requirements depend on the business legal structure, but you will generally need to provide company name, formation year, business address, names of board members who are account signatories, and the legal structure for the business.
The cost for registering on the commercial register is:
- Sole traders/proprietorships – CHF 120
- Partnerships – CHF 240
- Cooperatives – CHF 400
- Limited/incorporated companies – CHF 600
Incorporated companies also have additional requirements, such as writing articles of association, setting up an escrow account to hold shared capital, and appointing a notary to verify legal documents.
Businesses in Switzerland also need to register for tax and social security, as well as take out necessary business insurance (more details in the below sections). Businesses in certain sectors also need licenses or permits to operate. For example, financial companies need a license from the Swiss Financial Market Supervisory Authority (FINMA), and businesses selling alcohol need a permit from the Swiss Alcohol Board.
Starting up an online business in Switzerland
Setting up an online business is an alternative to opening up one with a physical address, something that is becoming increasingly popular in the digital age. One big advantage of doing this is that you eliminate overheads such as rent and utilities costs.
The number of e-businesses in Switzerland is growing fast. In retail, for example, e-commerce accounted for 14.2% of trade in 2021. The process for setting up as an online business is largely similar to setting up a physical business in terms of things such as visa and registration requirements. The key difference is that, rather than having to find a suitable premises or office space, you’ll need to sort out a website or online presence, and register using your domain name. If you set up as an incorporated company, you’ll still need to give a physical address when registering.
Unless you are skilled at building websites, it’s advisable to hire a web designer for this. If you’re an online retailer, you can also use platforms such as eBay (in German) or Ricardo (in German, French and Italian).
You can also find virtual office providers in Switzerland. These provide you with an official business address, plus additional services such as taking phone calls or answering emails.
Foreign companies opening up a branch or subsidiary in Switzerland
Foreign companies can choose to expand into Switzerland by opening up a branch or subsidiary. A branch is a financially independent arm that is legally dependent on the parent company based outside Switzerland. This means that, although it has separate accounts, it trades under the same name, and the parent firm is ultimately responsible for finances and liable for any debts.
In contrast, a subsidiary operates as a legally independent company (either a Sàrl or SA/AG). The foreign parent company owns some of the capital and retains some decision-making control, typically through board membership. However, its liability is limited to the amount it invests in the subsidiary.
Both branches and subsidiaries have to register as businesses with the Swiss authorities and they need at least one representative from the parent company who is a Swiss resident. They have to operate the same as Swiss businesses, keep accounts and pay Swiss taxes, although they can benefit from certain exemptions and double taxation agreements.
Subsidiaries also need separate articles of association, and heed the same minimum share capital requirements as domestic businesses. Branches can use certified copies of the parent company articles of association. They also need to provide evidence of the decision to open up a branch in Switzerland, for example minutes of the meeting where the decision was taken.
Starting up a non-profit company in Switzerland
If you want to set up a non-profit organization in Switzerland, you should set up an association. Associations are run similar to business in Switzerland, but they are not for profit. They can engage in commercial activities, but this should be invested back into the association or towards activities that meet its objectives.
An association in Switzerland needs at least two founder members (either individuals or organizations) and should enter into the Swiss trade register. It only needs to enter in the commercial register if it engages in commercial activities and has both CHF 10 million of assets and CHF 20 million of turnover in two consecutive years. Associations need articles of association detailing the key objectives, a governing board with at least one member, an appointed auditor, and an annual general assembly.
Another type of charitable organization in Switzerland is a foundation. Foundations can engage in commercial activities and be linked to an existing company, however they need to be run in agreement with the founder’s wishes. They often form part of wills in Switzerland. Foundations are regulated by the Federal Foundation Supervisory Authority in Switzerland (link in German, French and Italian). They need to enter the trade register and have a minimum share capital of CHF 50,000.
Administrating your business in Switzerland
All business in Switzerland should keep records of their accounts for ten years. However, the level of record-keeping depends on company size.
The following should keep full accounts and prepare financial reports:
- Sole traders and partnerships that generated sales revenues of at least CHF 500,000 in the last financial year
- Legal entities (companies, associations and foundations)
The following only have to keep accounts on their receipts and disbursements (cash method of accounting) and their financial position:
- Sole traders and partnerships with less than CHF 500,000 in the last financial year
- Associations and foundations that don’t have to enter the commercial register
- Foundations exempt from auditing requirements according to Article 83b.2 of the Swiss Civil Code
All Swiss organizations that are legal entities must have an annual audit, unless they have fewer than ten employees and owners unanimously consent to forego it. Most smaller companies only need to have a limited audit. Your business will need an ordinary (full) audit if it exceeds two of the following thresholds in two consecutive financial years:
- Balance sheet total of CHF 20 million
- Revenue of CHF 40 million
- 250 full-time employees
Business invoicing in Switzerland
Swiss business invoices should contain the following information:
- Company name and address
- Invoice date
- Unique invoice number
- Description of goods and services, together with rate charged
- Business VAT number, if applicable
- Total amount including VAT, with details if VAT applied to each item
Business banking in Switzerland
If you set up a limited company, cooperative, association or foundation I Switzerland, you’ll need to open up a separate business bank account to manage your finances. Sole traders and partnerships don’t have to have separate business accounts, although this is recommended to make it easier to keep track of finances.
You’ll need to provide company name, registration information, plus details of account signatories to open an account. All share capital will need to be deposited into the account once the business starts up. Most banks offer a range of business services such as business loans, insurance and investment products.
Another good solution is to use online banks that have business banking options. They usually facilitate international transactions, and their apps are available in several languages. For example:
Taxation for businesses in Switzerland
All businesses that exist as a separate legal entity, such as limited companies, need to pay corporate tax in Switzerland. Sole traders and general partnerships don’t pay corporate tax. Instead, the business owners pay income tax on their individual profit share. Businesses based in Switzerland are taxed on worldwide income. Foreign businesses with Swiss branches or subsidiaries pay tax on income made in Switzerland. However, Switzerland has agreements with a number of countries to avoid double taxation.
Corporate taxes in Switzerland are levied at federal and cantonal level. There are a range of exemptions, deductions and credits available, which vary across cantons. When you register your business with the Swiss authorities, this will register you for corporate tax.
Businesses with a turnover of more than CHF 100,000 also need to register for VAT. The 2021 general VAT rate in Switzerland is 7.7%, although it is reduced on certain goods such as food and books. Businesses with a lower turnover can register for VAT voluntarily if they wish. Other taxes for certain businesses, for example withholding tax or stamp duty, may also apply.
Business insurances in Switzerland
There are a variety of different business insurances in Switzerland. Some are compulsory, some are optional. The main types are:
- Social insurance – these is mandatory for all companies. With sole traders and partnerships, owners need to register for at least a basic Swiss pension (Old-Age and Survivor’s Insurance – OASI) and disability insurance for themselves. Businesses with employees, including limited companies employing their owners as directors, also need to register all employees for unemployment insurance (UV) and accident insurance.
- Public liability insurance – covers accidents and injuries to third parties, as well as damage to their property caused by your business products, services, operations or premises. Compulsory for most businesses.
- Property insurance – sometimes split into two types (building and contents), covers damage to or loss of business property. Usually compulsory to at least building coverage.
- Operating loss insurance – sometimes called business interruption insurance, a voluntary insurance covering costs if you have to stop trading for a period of time due to circumstances beyond your control.
- Cyber insurance – optional insurance covering the likes of data loss and cyber attacks.
- Professional liability insurance – optional insurance covering financial losses to third parties due to your business operations, for example mistakes made.
Employing staff when starting a business in Switzerland
No matter what type of business you set up in Switzerland, you’ll need to follow certain rules and procedures if you employ staff. For a start, you’ll need to make sure that any employees have the legal right to work in Switzerland, which may mean sorting out work visas and permits.
Foreign workers without a C permit and not married to a Swiss citizen/permanent resident also have to pay their income tax through pay as you earn (PAYE), so you’ll need to deduct this from wages and pay to the Swiss tax authorities.
You’ll also need to follow employer health and safety guidelines and Swiss labor laws, including those on working hours and pay. There is no national minimum wage in Switzerland, however many of the cantons have passed their own minimum wage laws.
You’ll need to register all workers for social insurance and make contributions towards social security payments. This is currently 12.45% of salary for pension, disability and unemployment insurance for all salaries below CHF 148,200. You can deduct half of this from the employee’s gross salary. If you have any employees with an annual salary of above CHF 21,330, you also need to register them for an occupational pension fund.
You can find staff through various methods, such as advertising on websites or hiring recruitment consultants. There are numerous job websites and platforms where jobseekers look for jobs in Switzerland.
The Swiss government SME Portal has a section for employers containing detailed information on all the key topics relating to staff recruitment.
Support and advice when starting up a business in Switzerland
The Swiss government SME Portal is the best starting point for business support and advice. You can find information on all aspects of business start up and development, including an overview of the key characteristics of the four main business types and a link to cantonal economic development agencies.
Other support available includes:
- Innosuisse – the Swiss Innovation Agency providing support and coaching for entrepreneurs
- Venturelab – support for Swiss startups
- Genilem – a non-proft association helping entrepreneurs start successful businesses (in French)
- Eureka Eurostars – Europe-wide project with funding opportunities for SMEs
- Female Founders – support for women entrepreneurs
Corporate social responsibility in Switzerland
Switzerland is a liberal economy with a minimal level of state regulation on business. When it comes to corporate social responsibility (CSR), there are fewer statutory requirements than in many European countries and it is largely up to businesses to develop their own CSR strategies and activities. Switzerland ranks 23rd out of 49 European countries on CSR Hub ratings, with a score of 52/100.
The federal government has a CSR section on its website with information on how businesses can meet global standards and improve their performance in areas such as human rights, working conditions, environmental sustainability, anti-corruption, transparency, consumer interests and gender equality. This includes a link to the 2020-23 CSR Action Plan, useful tools for implementing CSR for your business, and support available for specific sectors.
- SME Portal – Swiss government website for small and medium-sized enterprises (SME)