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Set up a liaison office in Switzerland

Set up a liaison office in Switzerland

Foreign companies seeking to do market research or have a contact point for potential clients and/or business associates can open a liaison office in Switzerland, first. This is not a legal entity regulated by the Company Law, but it is a status acquired by an overseas entity which limits its activities to non-commercial ones.

Below, our company formation agents in Switzerland review the steps associated with setting up a liaison or representative office in this country. We also offer accounting services in Switzerland for foreign businesses seeking to conduct commercial activities here.

 Quick Facts  
 Applicable legislation  Company Law in Switzerland

 Status

The liaison office does not have a separate legal status from its parent company.

 Uses of a liaison office

The activities of a liaison office are limited to marketing and representation. 

 

 Restrictions of a representative office (if any) Yes, the Swiss representative office cannot engage in economic operations.
 Minimum share capital (YES/NO)

No, there are no share capital requirements for Swiss liaison offices.

 Local representative required (YES/NO)

Yes, having a legal representative in Switzerland is mandatory for a liaison office.

 Documents to be filed by parent company

– declaration of existence;

– details of the parent company;

– rental contract for the legal address;

– information about the appointed agent.

 Local address requirement (YES/NO) 

 Yes

 Authority to be enrolled with

 Swiss Commercial Registry, local office of the canton to operate in

 Liability of the parent company  The parent company is liable for the representative office's actions.
 Taxation of a liaison office in Switzerland No income or corporate tax

 

 Possibility of hiring local staff (YES/NO)

 Yes, it is possible to hire local workers in a representative office in Switzerland.

 Travel requirements for setting up a representative office (YES/NO) No, the registration can be completed through the local representative. 

 

 Advantages of a liaison office

– access to the particulars of the Swiss market through testing techniques;

– easy to set up and maintain;

– available to various types of foreign businesses.

 Support in opening a representative office Yes, we offer support in setting up companies and liaison offices in Switzerland.
 Special requirements related to the trading name (YES/NO) Yes, the liaison office must bear the name of the parent company. 

 Steps to open a Swiss liaison office

– documents drafting,

– filing the papers with the local Trade Register Office

 Special licensing requirements (if any)

 Yes, for foreign companies working in the financial sector.

 Authorization timeframe (where applicable)  The duration to obtain the operating license depends on a case-to-case basis.
 Employment registration requirement (YES/NO)

 Yes, registration for social security is required.

 Option to transfer employees from the headquarters (YES/NO)

Yes 

 VAT registration requirement (YES/NO)

 No, however, the parent company can register for VAT in order to claim back VAT-related payments.

 Registration timeframe (approx.)

Approx. 14 business days 

 Liability

 The parent company is liable for the Swiss representative office.

 Difference between a liaison office and a branch  The branch office can engage in commercial activities under the supervision of the parent company, unlike the liaison office which cannot complete any trading operations.
 Possibility to enter contracts on behalf of the parent company (YES/NO)

 No

Special requirements for the local representative (if any) 

 Yes, the agent must be a Swiss resident or citizen.

 Possibility to hire a specialized service provider as a local representative (YES/NO)

Yes, our company formation agents offer such a service. 

 Option to convert a liaison office into a branch (YES/NO)

 Yes, the liaison office can be converted into a branch.

Steps to create a representative office in Switzerland

Here are the steps associated with setting up a Swiss liaison office:

  1. finding a suitable place for the office;
  2. appointing a local representative;
  3. file a Declaration of Existence with the Trade Register in the canton in which its activity will take place;
  4. enroll employees for social security services (this requirement mainly applies to the representative(s)).

The procedure for establishing a liaison office is much simpler compared to when opening a company in Switzerland.

Registration requirements

The three main aspects to consider when opening a liaison office in Switzerland are as follows:

  • – having a legal address, or better said a place of business in Switzerland, just like branch offices;
  • – for the respective address to be in the canton in which the foreign company plans to operate in the future;
  • – appointing one or more local representatives or sending an employee from the company’s head office to Switzerland, case in which a work and residence permit may be required.

The main advantage of establishing a Swiss representative office is that it can be created in 7 to 14 business days.

If you plan to open such an office and need to enroll employees with the taxation and social security systems, feel free to address our accounting company in Switzerland.

Characteristics of Swiss representative offices 

A liaison office in Switzerland does not have its own legal personality, consequently, it is not separated by the parent company’s heritage, doesn’t have a distinct name or trade name or own property. When experiencing financial difficulties, the parent company will be liable for the office’s debts.

The procedure of setting up a liaison office in Switzerland is less demanding, being in a strong dependence with the company which opens it.

The representative office has no legal or economic autonomy and depends on the principal company. It does not have the power to enter into contracts and its employees do not have the authority to bind the company. Moreover, when the liaison office wants to conclude commercial activities in the country where it was opened, it must necessarily have the recourse of the main company.

There are few formalities to be followed in order to set up a liaison office in Switzerland, starting with the submitting of a declaration of existence at the center for business formalities of the chamber of commerce and industry. However, this procedure does not enter the representative office in the Commercial Register, as this form can not function as an independent company. The only restriction is provided for the representative office of a foreign bank that still needs the authorization of the Swiss Federal Banking Commission before they can operate.

When setting up a liaison office in Switzerland, the founders must be aware that, as long as it doesn’t conclude any sale and is not directly providing service to the clients of the foreign company, it is not subject to income tax. Moreover, as it doesn’t make any sales and works exclusively on behalf of the foreign office, it is not subject to VAT. However, the foreign company can reclaim the VAT charged on the costs of installing and finance liaison office. You can also rely on our accountant in Switzerland if you need specialized accounting support. We can offer services related to taxation or consultancy, if you want to develop your business in this country. We have a personalized approach that relies on the needs of the company and the impact it can make on the market.

liaison office in Switzerland is not engaged in activities of a professional nature and it is not subject to territorial economic contribution. However, there must be paid the property tax.

When it comes to set up a liaison office in Switzerland, the founders must be aware that, for payroll services and social duties, all staff (excluding expatriates) falls within the general scheme provided by the law. The liaison office is subject to the same obligations as social enterprises in the country in which it operates.

The liaison office is a more flexible than a branch structure. However, when it comes to exercise a commercial activity, it is treated as a permanent establishment and therefore subject to the same legal, tax and financial obligations as a branch structure.

Here is an inforgraphic about this legal entity in Switzerland:

Characteristics_of_the_Swiss_Liaison_Office.png

Filing a Declaration of Existence

The Declaration of Existence is the main document that stands at the base of forming a liaison office in Switzerland. It must be presented to the Chamber of Commerce and Industry in order for a business to open the office.

The declaration is the equivalent of the Articles of Association of a local company, however, it is simpler and faster to create. Should you need support in drafting it, you can rely on our Swiss company registration officers.

What are the documents the parent company must supply for registration?

In addition to the declaration of existence, the following papers must be submitted to the Swiss Trade Register in order to establish a representative office:

  • – certified copies of the articles of incorporation and bylaws,
  • – information on the officers in Switzerland who are the foreign company’s representatives.

The liaison office is limited to specific non-commercial activities that must be taken into account; as a result, international investors that want to operate here may choose to create a branch or a subsidiary in Switzerland for better control.

In order to operate, a liaison office in Switzerland needs to register as a taxpayer. However, the representative office is not required to have a minimum share capital, unlike other business entities, but it can have employees.

The representative agent for a Swiss liaison office

The creation of a Swiss representative office implies appointing at least one officer or agent to act as a contact point. A natural person or a business can serve as the local agent.

The person will be the representative of the foreign company in relation to the Swiss authorities. It is worth noting that the officer can be a Swiss or foreign citizen. A work permit and a residence permit are required for the latter, and the representative must also register for personal income tax. This is not the case of a corporate agent.

For this last purpose, you can rely on our Swiss accounting firm for support in taxation matters.

Can a representative office hire employees?

It is possible for a Swiss liaison office to hire staff from local or foreign source. It is also allowed to detach personnel from the main headquarters to Switzerland. Even if in small numbers, employees must be registered for various purposes, among which social security.

The Cantonal Social Security Office will send the employer an application for enrolling employees in the social insurance system, which includes:

  • – retirement and survivor’s insurance benefits;
  • – disability insurance;
  • – occupational accident insurance;
  • – retirement.

The time needed to complete the liaison office registration process in Switzerland is between 7 and 14 days. In Switzerland, a representative office is the second most popular type of company entity after a branch office.

From a taxation point of view, a representative office is exempt from the income tax as long as it does not close any sales and does not serve the foreign company’s customers directly. Additionally, it is exempt from VAT because it makes no sales and only performs services for the overseas enterprise.

Should you need assistance in setting up a Swiss representative office, our agents are at your service.

Are there any advantages linked to opening a representative office?

Most businesses that come to Switzerland usually decide to go directly for branches or subsidiaries. However, the liaison office also has its purpose and comes with several advantages. For example:

  • – it can be a good marketing tool for foreign businesses that have not dealt with the European market before;
  • – it can also be set up by other types of associations that do not engage in commercial activities at all, but need to have a presence in Switzerland;
  • – it is simple to create and does not come with liability on the parent company;
  • – it is not subject to taxation in Switzerland, but only for payroll taxes for its employees;
  • – it does not require to obtain any licenses;
  • – it is the simplest form of having a presence in Switzerland for a limited period of time.
  • – If you decide to explore this option, feel free to address our Swiss agents.

Activities that can be completed by a liaison office in Switzerland

As it has no legal status, a Swiss representative office is not permitted to engage in any business. However, it is permitted to complete some particular activities, including the following:

  • – gathering information about the Swiss market and its goods;
  • – conducting marketing initiatives;
  • – taking part in exhibits, trade shows, and fairs;
  • – serving as a point of contact between the parent firm and its local clients.

It should be noted that the parent firm must nominate a representative for the Swiss liaison office.

If you want to open a company in Switzerland, the liaison office is not the most suitable option, especially when seeking to engage in trading activities. However, if you decide on a corporate structure, you can rely on our specialists for accounting services in Switzerland

Here is also our video on the Swiss representative office:

Facts on the Swiss economy

According to the latest data:

  • – the country has the 2nd highest GDP per capita in the world, with USD 86,850 per person;
  • – nearly 74% of its economy relies on services, and 24% on industry;
  • – Switzerland has the lowest value added tax in Europe – 8%;
  • – 99% of the companies operating in Switzerland are categorized as small and medium-sized entities.

Contact our Swiss company formation specialists for further information and legal advice for setting up a liaison office in Switzerland.