Although not a member of the European Union (EU), Switzerland is considered a great location to expand because of its business-friendly regulations for internationally owned companies. However, the expansion process is not always straightforward. You must establish a subsidiary in Switzerland or find a proper subsidiary alternative before you can begin hiring, run payroll, and develop a benefits and compensation plan. Luckily, G-P is a beneficial alternative, enabling you to begin operations quickly and compliantly — without establishing a Switzerland subsidiary.
How to establish a Switzerland subsidiary
If you decide to set up a Switzerland subsidiary, you’ll need to research and discuss several factors first. Switzerland’s various cantons can make it difficult to decide where to establish your headquarters as each state has unique laws regarding incorporation. It’s essential to research the subsidiary laws for each canton and figure out which area is best for your industry or business. You can also choose a location based on existing trade agreements or relationships.
Language is also necessary to keep in mind. Switzerland has 4 national languages — French, German, Italian, and Romansh. Most citizens speak German; however, this language is often a Swiss-German derivative of standard German. Most business procedures are conducted in German, Italian, and French instead of English, so you’ll need to hire employees who speak the language or find a translator.
You will also need to decide which business structure is best for your company. The 3 most common structures are liaison offices, branch offices, and limited liability companies.
A private limited liability company is the most popular type of subsidiary. To establish this type of subsidiary, you’ll need to:
- Check the trade name.
- Deposit paid-up capital in a bank, with a minimum capital of CHF 100,000.
- Prepare and file a Certificate of Formation.
- Appoint at least 1 director who is a resident in Switzerland.
- Submit declaration forms.
- Register at the Commercial Register.
- Select a canton for the head office.
- Pay Stamp Tax at a post office or bank after obtaining an assessment by mail.
- Register for VAT.
- Enroll employees in the social insurance system.
Switzerland subsidiary laws
Switzerland does not place any restrictions on international ownership, but every type of company requires at least 1 person to reside in Switzerland. Individuals outside of the EU who want to run the subsidiary in Switzerland or move international team members to the area will need a work permit.
Since Switzerland is not a member of the EU, rules related to EU immigration and visas will not apply. However, Switzerland is a member of the Schengen region, so there is open access between Switzerland and other countries such as Germany and France. Since you’ll need someone to live and work in Switzerland to run the subsidiary, you will also have to apply for a residence permit.
Benefits of establishing a Switzerland subsidiary
Setting up a subsidiary is the first step to conducting business in Switzerland. Incorporating as a limited liability company provides even more benefits because it protects both the subsidiary and the parent company. The subsidiary can operate independently from the parent company and utilize a business structure that fits Switzerland’s culture. If the subsidiary experiences any significant losses, the parent company would not be impacted.
However, G-P offers a beneficial alternative to establishing a Switzerland subsidiary. With us, companies can avoid the lengthy and complicated setup process and begin operations quickly. We know all of the intricacies of Switzerland’s employment laws, so you won’t have to worry about compliance.
Other important considerations
You’ll need a substantial amount of time and money to set up a Switzerland subsidiary on your own. You may need to travel back and forth to Switzerland multiple times, and certain parts of the process can require additional funds besides the initial capital. Finally, you must learn all of Switzerland’s subsidiary laws or hire an advisor who can help ensure compliance throughout the process.
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