Articles
Establish a Branch in Switzerland
Updated on Thursday 23rd March 2023 Rate this article
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There are two convenient ways in which a foreign company can establish its presence on the Swiss market. One of them is to establish a branch in Switzerland and the other is to open a subsidiary. The choice belongs to the mother company abroad and it depends on a series of factors, such as liability, taxation or company management issues.
The choice to open a company in Switzerland should be well assessed and our team of experts can help you make the right choice and, in this sense, it is necessary to mention that the branch office represents a type of legal entity that is dependent to its parent company abroad. Our team of consultants in company formation in Switzerland can assist businessmen with advice on the documents that have to be prepared when opening a Swiss branch.
| Quick Facts | |
|---|---|
| Applicable legislation | Foreign country |
| Best Used For | Highly regulated activities, such as banking, insurance, financial operations |
| Minimum share capital | No |
| Time frame for the incorporation | Appox. 11 weeks |
| Management | Local |
| Legal representative required | Yes
|
| Local bank account | Yes |
| Independence from the parent company | Fully dependent on the parent company |
| Liability of the parent company | Fully liable for the branch office' obligations |
| Corporate tax rate | 14.84% on profits obtained in Switzerland; cantonal taxes also apply |
| Possibility of hiring local staff | Yes |
Steps to open a branch office in Switzerland
Here are the main steps to consider when establishing a branch in Switzerland:
- reserving the company name (even if the name is the same as the parent company’s the reservation must be made);
- filing the documents to be prepared in accordance with this type of entity;
- obtaining the Certificate of Registration;
- applying for tax identification and VAT numbers;
- obtaining the necessary business licenses/permits.
Registering a branch office in Switzerland may take around 3 months, bank account opening included. This is why careful planning is advised. If you need a local agent to complete the procedure on your behalf, our specialists are at your service. This way, you can ensure the accuracy of the documents and a regular timeframe for obtaining the Incorporation Certificate. If you need assistance for setting up a business in BVI, for example an IBC in BVI, we can put you in contact with our partners who are experts in offshore company formation matters.
The main characteristics of a Swiss branch
When an entrepreneur wants to open a Swiss company, the choice to establish a branch depends on the degree of autonomy the new business structure needs to have in relation to the parent company. The most important particularity of the Swiss branch is its dependence to the mother company: the foreign company is fully liable for the debts and responsibilities of the Swiss branch and our team of specialists in company formation in Switzerland can advise on this matter.
A Swiss branch does not have a separate legal personality but still has to be registered with the Swiss Companies Register. Unlike a subsidiary, the branch is easier to incorporate and does not require a minimum share capital. Double taxation treaties can favor the taxation of branches in Switzerland. Our company registration experts in Switzerland can offer more information on the taxation and management of the branch.
Opening a branch in Switzerland
The branch needs to be registered at Swiss Companies Register. The parent company needs to provide a number of relevant documents in order to register the branch. The list of documents includes: identification details of the parent company and its certificate of incorporation, details regarding the share capital, the number and types of shares, the minutes of the board meeting during which it was decided to open a branch in Switzerland and the official designated individuals who will manage the Swiss branch. Other important aspects are the following:
- • provide a certified copy of the parent company’s articles of association (the main statutory documents of a legal entity);
- • a certified document attesting the parent’s company registration with the Commercial Register (if applicable);
- • a certified document which mentions the members of the board of directors, including their names, nationality and place or residence;
- • a document attesting that at least one of the company’s directors has a Swiss residency;
- • the company’s documents that will be submitted with the Swiss authorities have to be translated and notarized in the official language of the canton in which the branch office is located.
Some of the documents need to be translated into French, German or Italian. Our Swiss company incorporation specialists can help you legalize the documents and submit them with the relevant authorities. However, it is necessary to know that certain offices of the Commercial Register in Switzerland also accept official documents in English, but this can vary based on the language experience of the persons working in the respective institution.
When starting a branch office in Switzerland in 2023, the representatives of the parent company must also provide additional documents. For instance, it is necessary to add to the application a certified document that shows the parent company’s share capital, but also the parent company’s auditors.
As presented above, the company needs to provide the minutes of the meeting when the decision of opening a branch in this country was taken. This document has to be signed by the company’s board of directors and presented in original with the Swiss authorities. This document should present the following information:
- • the decision itself to register a branch office in a foreign country (in this case, Switzerland);
- • the name under which the branch office will operate in Switzerland;
- • the persons appointed to represent the branch office that will be registered in this country;
- • the signatory rights assigned to the branch office’s representatives in Switzerland;
- • the address of the Swiss branch and the purpose for which it is incorporated in this country.
What are the tax requirements for a Swiss branch in 2023?
It is necessary to register the branch office with the Federal Tax Administration in Switzerland for value added tax purposes. One of the benefits of registering a branch office in Switzerland is that it can benefit from an exemption of the payment of the withholding tax to the parent company, applicable at a rate of 35%.
In the situation in which a double tax agreement is concluded with the country in which the parent company is a tax resident, the branch office can also benefit from an exemption on the profits obtained in Switzerland. A branch in Switzerland is legally required to submit value added tax (VAT) returns, which have to be prepared on a quarterly and yearly basis.
Our accountants in Switzerland are able to organize and guarantee that all financial records are accurate and contain the proper information. We can also help with loan applications and inquiries on financial principles. Additionally, tax filing services are also available for our clients in Switzerland.
What to consider when opening a branch in Switzerland
The branch, which must use the same name as the parent company, is primarily an extension of a foreign corporation in Switzerland. Even if it does not have a legal personality itself, it must still comply with the Swiss Corporations Act. Branch offices must have a registered office in Switzerland.
The branch office has the same rights to capital and earnings repatriation as the parent business and is permitted to carry out any activity as long as it is within the same sector as the parent company’s industry. A Swiss branch will only be subject to taxation on income earned here. Also, if double tax treaties apply, reduced tax rates can be available.
Operating a bank account is one of the most crucial procedures in opening a branch in Switzerland. Whether it is a Swiss or international bank, this must be opened with a local institution.
Officers to appoint when opening a Swiss branch office
The Swiss branch office must have one or more signatories who are qualified to act on its behalf. When a foreign company opens a branch office in Switzerland, it must first register the business in the Commercial Register and declare that the authorized signatories may only act on behalf of the branch. At least one person, or two people with joint signing authority, must reside in Switzerland, and must be listed as authorized representatives of the overseas branch office in the relevant Trade Register.
It is also possible to transfer an employee from the headquarters of the parent company, however, a work permit must be obtained for them to work in Switzerland. It is important to note Switzerland’s immigration requirements in this sense.
Compliance requirements for branches in Switzerland
Branch offices operating in Switzerland must comply with the same regulations as local companies from an accounting and financial point of view. Here are the main aspects to consider in this sense:
- - the financial year stats on January 1st and ends of December 31st;
- - annual returns must be filed by March 15th or March 31st depending on the canton the business operates in;
- - companies must respect Swiss GAAP regulations which entail keeping all records for 10 years;
- - the corporate tax in Switzerland is levied on a 3-tier system, therefore one must pay attention to the legislation applicable at federal, cantonal, and local levels.
According to the Swiss generally accepted accounting standards, a financial statement (balance sheet, income statement, and annex) must be prepared annually. Swiss GAAP or IFRS are among the internationally recognized accounting standards that a company's accounting system can be based on.
In the case of branches, commercial bookkeeping requirements must be followed, including double entry accounts with balances, inventory, and income statements.
What are the other legal obligations of a Swiss branch?
Foreign investors who have decided to open a company in Switzerland as a branch office in 2023 have to respect other legal obligations, besides the ones presented up until now. For example, the branch office needs to have a corporate trading name that follows the Swiss legislation.
The basic structure of a suitable trading name for a Swiss branch office should include the following: the name of the company, the place where the company’s headquarters is located, the place where the branch office in Switzerland is incorporated, as well as the usage of the words “branch office”.
As we presented above, the Swiss branch office needs to be represented by persons who have been appointed for this particular matter. The persons who are authorized to represent the Swiss branch office have to be registered with the Commercial Register, in the sense that their names (and legal powers) have to be presented to the institution.
When assigning persons who will have the right to represent the Swiss branch, their registration with the Commercial Registry should also mention that they are only entitled to act on behalf of the branch, and not for the entire company (they do not have the right to represent the parent company abroad).
In order to be the representative of a branch office in Switzerland, the person must only comply with certain residency requirements – he or she has to be a resident of this country and it is absolutely necessary to have the respective person authorized for this action through the Commercial Register.
When opening a company in Switzerland through a branch office, it is necessary to know that the Swiss commercial legislation will apply for all company matters, and not the law of the parent company, even though the branch is subordinated to its parent company.
A branch office incorporated here can start a litigation case (and it can also be sued), following the applicable Swiss legislation, as long as the matter of conflict is related to the branch office’s activities. Foreign investors can request legal representation in a litigation case from our team of consultants in company registration in Switzerland, who can assist with legal advice on the procedures that must be followed in the case of commercial entities.
Furthermore, those who consider registering a branch office here also have the obligation of lodging the parent company’s financial statements with the Companies Registry in Switzerland. From a tax point of view, the Swiss branch has to prepare the same types of returns as the ones of the parent company (regarding the company’s employees, corporate taxation on other similar tax obligations). We also invite you to watch our video below:
Why open a branch in Switzerland in 2023?
Switzerland offers many investment opportunities to foreign investors interested in expanding their business here in 2023 through a branch office. This country has a stable economy, represents an open gateway to European markets and has a very well developed infrastructure. Furtermore, Switzerland has many cantons that offer privileged corporate tax regimes and the government offers foreign tax credits for branches. Foreign investors interested in opening a branch office in Switzerland in 2023 can receive specialized assistance from our team of Swiss company formation agents.
Rather than 2.1% in 2022, the State Secretariat for Economic Affairs (SECO) forecasts growth of 0.7% in 2019. The probability of a recession is still minimal, though, because of healthy domestic spending. The Swiss National Bank (SNB) anticipates inflation to be 2.4% in 2023 as opposed to 2.9% in 2022. While the Swiss industry umbrella organization Economiesuisse anticipates that inflation will stay high next year (2.9%), Credit Suisse economists are significantly more optimistic forecasting a 1.5% increase.
Our representatives can also help investors in opening a bank account for the branch in Switzerland. Please do not hesitate to contact our team of consultants in company registration in Switzerland for any other matter regarding the incorporation of a Swiss branch, which may be set up as a limited liability company, company limited by shares or general/limited partnership.
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Paul Gheorghiu is one of our experienced company formation agents. He will help you register your company in Switzerland as fast as possible.
Call us now at +41 41 266 0070 to set up an appointment with our experts in Zug, Switzerland. As a Sig Fiduciaire client, you will beneficiate from the expertise of our local consultants for opening a company in Switzerland.
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Being a member of BridgeWest legal network, I had the pleasure to work with colleagues at CompanyFormationSwitzerland.com. They handled successfully numerous company formation cases for my clients interested in starting businesses in Switzerland.
Mihai Cuc, Partner of MHC Law Firm
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