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.
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
Local, at least one Swiss resident director
Legal representative required
Local bank account
Independence from the parent company
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)
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 :
it can be registered as a private limited liability company or stock corporation;
it is treated like a domestic company from various points of view, including taxation;
it is regarded as an independent business form, with limited liability of the parent company;
it can carry out various activities, including those of the parent company;
it can own various assets, including real estate in Switzerland;
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 registration process for a subsidiary in Switzerland
If you choose to invest in Switzerlandin 2021 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:
securing a local address (the virtual office can be a good choice to start with);
drafting the Articles of Association of the subsidiary;
setting up a bank account with a local financial institution;
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.
Documents needed to register a Swiss subsidiary in 2021
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. Thecorporate 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.
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 2021 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 thecanton where it is registered;
•the subsidiary can operate in Switzerland under a different company name than the one of the parent company.
A 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.
Establishing a Subsidiary in Switzerland in 2021
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 2021, 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 2021.
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.
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.
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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