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Establish a Subsidiary in Switzerland

Establish a Subsidiary in Switzerland

Swiss subsidiaries

Swiss subsidiaries are legal entities with capital partially or totally owned by foreign companies. The fact that the company’s capital is controlled by a foreign company is not conditioning the management of the Swiss company in matters such as the conclusion of new contracts or hiring employees. It may also issue shares and transfer them, as the Swiss subsidiary is considered a different legal entity than the parent company abroad

The foreign companies are elaborating the articles of association of the company and issue a decision of opening a subsidiary in Switzerland and these are documents that have to be provided to the Swiss authorities when registering the new legal entity in this country. Our team of specialists in company formation in Switzerland can offer in-depth assistance on the registration of a subsidiary and may offer advice on the advantages of this business form.  

Quick Facts  
Applicable legislation (home country/foreign country) Foreign country

Best used for

Most industries, such as trading, manufacturing, IT, healthcare, etc.
Minimum share capital (YES/NO) Yes, CHF20,000  (LLC) or CHF100,000 (AG)
Time frame for the incorporation (approx.)

Approx. 12 weeks

Management (Local/Foreign) Local, at least one Swiss resident director 
Legal representative required 

Yes

Local bank account 

Yes

Independence from the parent company Full independence
Liability of the parent company Liable to the extent of the capital invested in the subsidiary
Corporate tax rate 14.84% on worldwide income at federal level, cantonal taxes also apply
Possibility of hiring local staff (YES/NO) Yes
 Documents to be filed by parent company

– Articles of Association;

– information about the foreign company;

– proof of legal address;

– proof of local bank account;

– share capital deposit reference. 

 Annual accounts filing requirements

Subsidiaries must adhere to local accounting rules and file annual accounts no later than 6 months from the end of the financial year 

 Travel requirements for incorporating a subsidiary (YES/NO)

Certain formalities may require the presence of a representative of the foreign company 

 Double tax treaty access (YES/NO)  Yes, subsidiaries have access to more than 100 double tax treaties Switzerland has concluded
 Special licenses required (YES/NO)

 For industries like telecom, banking, insurance, investment, special licenses are required

 Swiss legal address required (YES/NO)

 Yes, having a legal address in Switzerland is mandatory for a subsidiary

 Activities permitted in relation to the parent company

 The subsidiary can undertake the same as well as other activities than those of the foreign business

 Employee transfer possibility (YES/NO)

 Yes, it is possible to transfer employees from the country of origin of the parent company

 Advantages of a Swiss subsidiary

–  Full independence from the parent company;

– higher adjustment possibility to the local market;

– access to the same benefits as domestic entities. 

 Incorporation services availability (YES/NO) Yes, our Swiss company formation can assist with the incorporation of a subsidiary. 

Characteristics of a Swiss subsidiary company

Foreign companies entering the Swiss market can choose between branches and subsidiaries, as these can be employed for commercial activities. Apart from them, there is also the liaison office, however, it can be used for marketing activities for a limited timeframe, followed by the creation of one of the aforementioned entities. Even if both types of structures have advantages, the subsidiary offers a higher degree of flexibility from several points of view.

Here are the main characteristics of a subsidiary in Switzerland :

  1. it can be registered as a private limited liability company or stock corporation;
  2. it is treated like a domestic company from various points of view, including taxation;
  3. it is regarded as an independent business form, with limited liability of the parent company;
  4. it can carry out various activities, including those of the parent company;
  5. it can own various assets, including real estate in Switzerland;
  6. it must have its own corporate bank account with a Swiss bank.

Often, due to the cantonal taxation system, foreign companies choose to set up subsidiaries in Switzerland. Most often, the subsidiary will be incorporated as a private limited liability company due to the lower share capital requirements compared to stock corporation.

If you want to expand your operations through a subsidiary in Switzerland, it is important to know that the parent company can be the only shareholder in the Swiss company, which is one of its greatest advantages. Another requirement for opening such an enterprise implies having a registered address in a Swiss canton.

If you want to open a company in Switzerland and need advice on choosing a legal form for it, our company formation consultants will assist you. The aspects of each business form that can be used for the formation of a subsidiary in 2023 can be discussed with our consultants in Switzerland.

The registration process for a subsidiary in Switzerland

If you choose to invest in Switzerlandin 2023 by opening a subsidiary of your foreign company in this country, you should no that no special license is required to perform activities under this business form, but the registration with the Swiss Companies Register is mandatory. Subsidiaries are formed as companies with limited liability and may be public or private and this aspect is decided depending on the business form under which the parent company abroad is registered.  

Steps in opening a subsidiary

A foreign company expanding its operations through a Switzerland-based subsidiary, it must complete several steps. These are:

  1. securing a local address (the virtual office can be a good choice to start with);
  2. drafting the Articles of Association of the subsidiary;
  3. setting up a bank account with a local financial institution;
  4. registering with the Federal Tax Authority;
  5. applying for the necessary licenses that will enable it to operate in the chosen sector of activity.

Our Swiss company formation agents can take you through the registration procedure, or they can handle it through a power of attorney.

Our team of consultants in company registration in Switzerland invite you to watch the following video regarding the Swiss subsidiary:

Gesellschaftmitbeschränkter Haftung (GmbH), the limited liability company, must be formed by at least two shareholders. They must deposit a share capital of minimum CHF 20,000 in a Swiss bank account. It’s mandatory for the director to be a resident of Switzerland, but the business form allows the registration with 100% foreign ownership.  

Aktiengesellschaft (AG) is formed by at least one founder who must provide a minimum share capital of CHF 100,000. The capital cannot be increased with more than a half at a time and half of this sum must be provided during the registration procedure. The investors may appoint both local and foreign directors, but at least one of them has to be a Swiss citizen.  

The procedure of registration of such company begins with depositing the minimum share capital and receiving an extract from the bank regarding the financial operation and our team of representatives in company registration in Switzerland can offer in-depth assistance on this procedure. Our representatives may represent foreign investors in this specific matter, as well as in other registration steps through the power of attorney, which can be granted for specific activities. 

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Documents needed to register a Swiss subsidiary in 2023

Next, the articles of association are drafted in front of a notary, who will notarize the corporate and personal signature on the application. The notarized articles of association, the decision of incorporating the company in Switzerland and the certificate issued by the bank must be deposited with the Commercial Registry. The process takes approximately 7 days and has as a result the issuance of the registration certificate. There is also a stamp tax paid at a post office or a bank, after receiving the certificate.

The next step is registering for value added tax (VAT), if necessary, and the registration of the employees with the social insurance system. Certain regulations are in favor of the subsidiaries opened in Switzerland. For example, the vast network of double tax treaties is regulating the way the withholding taxes on dividends, interests and royalties paid to the treaty country are issued.

In most cases, the withholding tax is minimized or even exempt. The corporate tax on profits is paid only in the country of origin, not in Switzerland, or if an exception is made and it is paid here, a refund is offered.

Switzerland has complex taxation regulations, based on a multi-level imposition system.  This is why, business owners here choose to work with a specialized accounting company in Switzerland in order to make sure they comply with all the requirements imposed at federal and cantonal levels, and which are quite different.

A higher degree of independence from the parent company

One of the main reasons to open a subsidiary in Switzerland is that it is completely independent from the parent company. From the same point of view, the mother company will have full decision rights as an owner, however, its liability will be limited to the capital injected in the Swiss entity.

Foreign companies setting up subsidiaries will ensure their independence by appointing a local management team and filing separate annual financial statements. However, in terms of accounting requirements, it should be noted that the Swiss legislation must be respected.

If you want to open a Swiss company and need information on the requirements for the creation of  a subsidiary, you can rely on our local company registration consultants.

Accounting requirements for Swiss subsidiaries

From an accounting point of view and given their status of independent enterprises, subsidiaries must comply with the Swiss accounting standards. The Company Act requires them to file the same financial documents as local companies. Subsidiaries must also meet the same audit requirements as domestic entities.

The subsidiary must hold an annual general meeting (AGM) of shareholders. One month after the AGM, the subsidiary must file an annual declaration to the tax office. 

Should you need accounting services for your subsidiary company, our accountant in Switzerland can provide tailored assistance. 

What are the main advantages of the Swiss subsidiary?  

Foreign companies wishing to expand their business activities in Switzerland in 2023 can benefit from specific advantages when operating through a subsidiary, which are different than in the case of the branch office, another option available for foreign businesses. Some of the most important advantages are given by the following:

  • • the Swiss subsidiary is considered a different legal entity than the parent company;
  • • the parent company will not be held accountable for the liabilities incurred by the Swiss subsidiary;
  • • a foreign company operating as a subsidiary will be treated just like a local company from a tax point of view, being entitled to various tax exemptions available in the canton where it is registered;
  • • the subsidiary can operate in Switzerland under a different company name than the one of the parent company

We are also at your service if you want to create a subsidiary under the form of a Swiss stock corporation (SA). Our company formation experts can clarify the taxation of Swiss subsidiaries in 2023.

Taxation of subsidiaries in Switzerland

Swiss subsidiary will be liable for the same tax regulations that apply to all domestic enterprises. However, the main concern when it comes to the corporate tax is that it is levied at federal and cantonal levels, which can result in important differences in the effective tax rates.

Here are the main aspects to consider about the Swiss corporate tax: 

  • – the federal income tax ranges between 7.8% and 8.5%;
  • – at a cantonal level, the tax ranges between 11.95% (Zug) and 19.70% (Zurich)
  • – the value-added tax (VAT) is imposed at the standard rate of 7.7%;
  • – the capital gains tax ranges between 0% and 8.5%.

It should also be noted that Swiss subsidiaries can be subordinated to holding companies, which make the former quite appealing as tax minimization vehicles

If you have any questions on the creation of a subsidiary in Switzerland in 2023, you can direct them to our consultants.

Establishing a Subsidiary in Switzerland in 2023

Switzerland is renowned for its stable economy and many investors choose to expand their businesses here due to its taxation system, geographic and political position, low inflation and highly skilled workforce. Foreign businessmen who want to open a subsidiary in Switzerland in 2023, should know that this country still offers several tax incentives and government grants. Our team of company formation agents can give you more details about these incentives and can handle the entire process of setting up a subsidiary in Switzerland in 2023.

Businessmen are invited to contact our team of specialists for in-depth assistance on the registration procedure available in this case. Our consultants are prepared to offer full services that are associated with the incorporation of a business and can provide advice on any corporate matter than can be of interest of foreign businessmen. They can also help you with professional accounting services, so if you need an accountant in Switzerland, you can rely on our team.Please note that foreign companies carrying out import activities here must use the EORI number in Switzerland.

According to Switzerland Tourism, the national organization that represents the industry, overnight hotel stays should increase to 95% of their 2019 level in 2023. Swiss visitors will make 8% more reservations than they did prior to the Covid-19 issue, which has severely impacted the business over the previous three years. The lack of foreign visitors will still be felt despite the rise in domestic tourism. Therefore, it is not expected that tourism will fully recover until 2026. While it may take some time for tourists from far-off markets to return to Switzerland in the same numbers, by 2025, it is anticipated that European tourists will have reached 2019 levels.

Our service is a part of aninternational legal network, specialized in company formation. We have numerous partners across Europe, who are experts in forming companies. In case you are interested in starting a business in one of the countries situated in Central Europe, we recommend an experienced team of company formation agents from Poland