Company Formations in Switzerland
Company Formations in Switzerland - Interesting facts and general conditions
Switzerland is located in Central Europe and is neither an EU nor an EFTA member state. However, Switzerland entered into negotiations with the EU between 1974 and 1999 to align its existing laws with those of the EU. As a result, EU citizens are allowed to live and work in Switzerland and vice versa.
Recently, Switzerland abolished harmful tax structures for holding companies and companies domiciled in the country. Nowadays, all companies in Switzerland are taxed equally, with no distinction between holding companies and trading companies. Interestingly, Cantons compete with each other regarding tax rates. Corporate tax rates range from approximately 14.5% to 19%. Almost all Cantons levy minimum taxes for inactive companies.
There’s another important fact to mention. Despite multiple attempts from the Government, the public in Switzerland didn’t want to amend the awkward regime for withholding taxes (WHT). A 35% withholding tax on dividends, interest, royalties, and tax additions remains in place (unless the tax office accepts costs and expenses). Due to agreements with the EU, EU companies can recover any withholding tax paid if certain conditions are met. Previously, all withholding taxes had to be paid and one could (sooner or mostly later) expect a refund. Due to massive complaints and EU pressure, Switzerland introduced a reporting procedure for WHT. However, you will need to file multiple forms in advance, and this regime does not apply to tax additions. If you own a Swiss company and have encountered tax and filing problems, you may contact us to discuss your case.
The labour market is strong, but the workforce comes at a high price.
The banking sector is stable, offering a good choice of local and international banks, so banking is not a concern.
Our international, experienced, and highly qualified lawyers, accountants, and notaries will review your company structure, existing management, or mandate contracts. We also offer a review of your contractual arrangements at home and abroad. Additionally, our tax and accounting department will be pleased to handle your bookkeeping and tax returns.
Why not appoint us – we offer company formations in Switzerland at a fixed price of 2,480.00 € net, all-inclusive. Enjoy our fast, reliable, and competent approach in your native language (German, English, French, Italian, Spanish, Czech, Slovak, and Greek).
Ideal Tax Framework for Limited companies or a holding structure
Switzerland had in the past experienced some troubles due to its special tax regime for holding and domiciled companies, as the EU, international tax laws, and OECD standards had abolished such tax structures. Hence, Switzerland introduced a new, modern tax framework. However, there have been no changes to the existing 35% withholding tax (WHT) regime. Whereas, under normal circumstances, EU companies will be able to recover the entire amount, private individuals are bound by the regulations of the Double Taxation Agreements. Swiss legislation thus fulfills all relevant EU standards, EU regulations, OECD standards, the FATF standards, and the FSF standards today.
Swiss companies are recognized throughout the European Union as EU companies with an extensive Network of Tax Treaties. This circumstance is used particularly by holding companies. Switzerland nowadays has one of the most favourable Tax Regimes in Central Europe. It competes with EU and EFTA states, such as Liechtenstein, Ireland, Malta, and Cyprus, albeit at way higher costs.
The workforce is good, but the price tag is stunning and not comparable to EU states.
It is also worth mentioning that each Canton in Switzerland has its own laws and taxation. The Cantons heavily compete with each other. Surprisingly, the Canton Zug is often the first choice. We firmly believe that there are better places to run a business in Switzerland.
Why not speak to us about the advantages of company formations in Switzerland?
What you need to consider if relocating to Switzerland
Thanks to bilateral agreements negotiated between 1974 and 1999, the free movement of EU citizens was extended to Switzerland, too. However, EU citizens need to apply for a residency permit (Ausländerbewilligung B, C). Furthermore, you must exchange your current EU driving license for a Swiss license within the first year of your stay.
Generally, a long-term stay in a country for more than 183 days will usually (and automatically lead to an unlimited tax liability for your worldwide income. Some countries go even further and already assign this tax liability if you can permanently use your own apartment (this can even be a room in your parents’ house or a regularly visited hotel) that you can access with your own keys – known as “Schlüsselgewalt” in German-speaking countries. This rule establishes or maintains an unlimited Tax liability for your worldwide income. If this subject is of interest, you may find out more on our dedicated website for Taxation. However, Switzerland takes a higher stance. If you like to work or run a business there, you will need to apply for a permit.
A person is considered to be resident in Switzerland for tax purposes if, regardless of any temporary interruptions, they: a) stay in Switzerland for at least 30 days and are gainfully employed; b) stay in Switzerland for at least 90 days and are not gainfully employed.
Especially for Digital Nomads, Switzerland might be an interesting option for staying, offering a safe environment within the EU and providing short distances to the continent. But leaving all doors open for up to six months of travel. However, one can’t stay in any other (EU-) country for more than 183 days, as this would trigger a tax residency there. There are some exceptions we will discuss in a meeting.
Setting up a company in Switzerland is a straightforward process. The real challenge lies in establishing an unassailable tax residence for both the company and its founder. Relocation may sound simple, but it is by no means as easy as moving to a new country. German-speaking countries in particular are familiar with the taxation of hidden reserves and exit taxation. When moving to any other EU member state, taxation of hidden reserves is postponed until the reserves are uncovered. However, Switzerland is not part of the EU, and therefore, the taxpayer must pay any taxes on hidden reserves immediately.
Once you have overcome these problem areas, the next hurdle awaits you: opening a bank account. You cannot imagine how many founders in Czechia, Cyprus, Malta, and Ireland are stuck with a useless company without a bank account. Please don’t listen to rumors; instead, contact us directly. We will tell you straight up whether it can work for you or not. That’s a promise.
If you have plans for company formations in Switzerland, be sure to speak with us first to avoid costly mistakes. We can help you determine if a relocation is a good fit. Our Tax Experts and corporate finance experts at TAXEDO LLP will find a sophisticated solution.
TOP Jurisdiction for a Residence in Central-Europe
Switzerland, however, offers ideal conditions for a tax residence. To obtain a tax residence, one must stay more than 183 days in Switzerland. With close links to other European countries, good flight connections, and travel times of roughly two hours into the center of Europe, this is an ideal place to conduct business of any kind.
Of course, you cannot stay in any other country for more than 183 days, which would trigger an unlimited tax liability there. This concept is, therefore, ideal for everyone who can live and work flexibly (e.g., digital nomads).
You can rely on well-founded and legally sound advice if you come to us. Together, we will find your ideal life concept.
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