How to Start a Business in Switzerland: A Comprehensive Guide for Foreigners

Switzerland offers a fantastic opportunity for foreign entrepreneurs looking to establish a business in the heart of Europe. With its stable economy, strategic location, and business-friendly environment, it’s no wonder many are drawn to this Alpine country.

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To start a business in Switzerland as a foreigner, you’ll need to follow certain steps. While the process may seem complex at first, it’s quite straightforward with the right guidance. 

In fact, many foreign entrepreneurs have successfully launched thriving businesses in Switzerland, from small startups to large corporations.

Whether you’re considering starting a new venture or expanding an existing company into Switzerland, this guide will walk you through the essential steps. 

We’ll cover everything from choosing the right business structure to understanding local regulations and considering your financial position. By the end, you’ll have a clear roadmap for starting your Swiss business.

Why Start A Business In Switzerland?

Switzerland offers foreign entrepreneurs a unique blend of economic stability, strategic location, and innovation-friendly policies. The country’s business environment provides distinct advantages for both domestic and foreign investors looking to establish or expand their ventures.

Stable economy

Switzerland boasts a remarkably stable economy that attracts businesses from around the world. Swiss companies benefit from excellent infrastructure and a highly skilled workforce. The country’s political neutrality and strong financial sector further enhance its appeal for businesses.

Location

Switzerland’s central European location makes it an ideal hub for international trade and expansion.

With four national languages and a diverse population, Switzerland provides access to multiple markets. This multilingual environment facilitates communication with clients and partners across Europe and beyond.

Favorable tax system

Switzerland’s tax system is designed to encourage business growth and investment. The country offers competitive corporate tax rates compared to many other European nations.

Cantons (Swiss states) have the flexibility to set their own tax rates, creating healthy competition. This can result in even more favorable conditions for businesses depending on their location.

Swiss businesses also benefit from a wide network of double taxation treaties. These agreements help prevent companies from being taxed twice on the same income in different countries.

The Swiss tax system provides various deductions and incentives for research and development activities, which supports innovation and helps businesses stay competitive in the global market.

Support for technological development and innovation

It’s no secret that Switzerland consistently ranks among the world’s most innovative countries. One of the main reasons is that the government and private sector actively support technological advancements and startups.

Swiss businesses have access to world-class research institutions and universities. These partnerships foster a culture of innovation and help companies stay at the forefront of their industries.

The country offers numerous funding opportunities and support programs for innovative projects. Startups and established companies alike can benefit from these resources to develop new products or services.

Finally, Switzerland’s strong intellectual property protection ensures that businesses can safeguard their innovations. As a result, companies have a secure environment to invest in research and development.

Eligibility And Requirements

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Starting a business in Switzerland as a foreigner involves specific criteria and permit requirements.

Criteria for foreigners starting a business

EU/EFTA citizens benefit from agreements allowing easier access to the Swiss market while non-EU/EFTA nationals face stricter regulations. They need to prove their business will benefit the Swiss economy, which often means creating jobs or bringing significant investment.

Foreign companies can establish Swiss subsidiaries where at least one board member or managing director must be a Swiss resident. This person needs the right to sign on behalf of the company.

Also, self-employed individuals from abroad face additional criteria. They must demonstrate the viability of their business plan and financial stability.

Residence and work permits

Obtaining the right permit is crucial for foreign entrepreneurs. The most common options are:

• B Residence Permit: For EU/EFTA citizens, valid for 5 years
• L Permit: Short-term permit for up to 1 year
• C Permit: Settlement permit for long-term residents

Non-EU/EFTA citizens typically need a work permit before applying for residence. The process can be complex and time-consuming because local authorities assess each application individually.

For employees of foreign companies, the company must justify why they need foreign workers. The reason is that Swiss authorities prioritize the local workforce when possible.

Business Structures

Switzerland offers various legal forms for entrepreneurs, including foreign nationals, to establish their businesses. Each structure has unique characteristics, advantages, and requirements, slightly or completely different from other legal entities.

Single-owner company

A single-owner company (also known as sole proprietorship) is the simplest form of business structure in Switzerland. It’s ideal for small-scale operations and individual entrepreneurs. 

The owner has full control over the business and bears unlimited personal liability for its debts and obligations.

This structure requires minimal formalities to set up and offers flexibility in decision-making. However, the owner’s personal assets are at risk if the business faces financial difficulties.

Registering a sole proprietorship in Switzerland is straightforward and cost-effective. The business operates under the owner’s name and doesn’t require a separate legal entity.

General partnership

A general partnership involves two or more individuals or legal entities joining forces to run a business. All partners share equal responsibility and unlimited liability for the company’s debts.

This structure is suitable for small to medium-sized businesses where partners trust each other and want to share control. It offers simplicity in formation and operation but comes with higher personal risk. Partners contribute capital, skills, or labor and share profits according to their agreement. 

The partnership must register with the commercial register if its annual turnover exceeds CHF 100,000.

Limited partnership

This structure combines elements of general partnerships and limited liability companies. 

It consists of at least one general partner with unlimited liability and one or more limited partners with liability restricted to their investment. General partners manage the company, while limited partners typically act as investors.

This structure is beneficial for businesses seeking additional capital without giving up control.

Limited partnerships must register with the commercial register regardless of turnover. They offer a balance between personal liability and investment opportunities.

Limited liability company (GmbH/Sàrl)

A limited liability company (GmbH in German, Sàrl in French) is a popular choice for small to medium-sized businesses. It combines elements of partnerships and corporations, offering limited liability protection to its members.

Key features of a GmbH/Sàrl include:

• Minimum share capital of CHF 20,000
• At least one managing director required
• Members’ liability limited to their capital contribution
• Flexible internal structure
• Suitable for businesses with few shareholders

GmbH/Sàrl formation requires registration in the commercial register and notarized articles of association. This structure balances personal asset protection with relatively simple administration.

Corporation/Joint-stock company (AG/SA)

A corporation or joint-stock company (AG in German, SA in French) is ideal for larger businesses and those planning significant growth or public listing. It offers the highest level of credibility and limited liability protection.

These are the key aspects of an AG/SA:

• Minimum share capital of CHF 100,000 (20% paid up)
• Board of directors required
• Stricter regulatory requirements
• Suitable for raising capital through share issuance
• Enhanced privacy for shareholders

Forming an AG/SA involves more complex procedures and higher costs. However, it provides a clear separation between ownership and management, making it attractive to investors.

Subsidiary

A subsidiary is a separate legal entity established by a foreign company in Switzerland. It operates as an independent Swiss company but is controlled by the parent company.

Benefits of establishing a subsidiary include:

• Limited liability protection
• Access to Swiss markets and business environment
• Ability to conduct full business activities
• Separate legal identity from the parent company

Subsidiaries can be structured as GmbH/Sàrl or AG/SA, depending on the business needs and objectives. They must comply with Swiss corporate law and tax regulations.

Branch office

Finally, a branch office is an extension of a foreign company operating in Switzerland. It’s not a separate legal entity but rather a part of the parent company.

Characteristics of a branch office include:

• No independent legal status
• Parent company bears full liability
• Simpler and less costly to establish than a subsidiary
• Limited scope of activities allowed
• Subject to Swiss regulations and taxes on Swiss-sourced income

Branch offices must register with the commercial register and appoint a local representative. They’re suitable for companies looking to test the Swiss market before fully committing to a subsidiary.

Pre-startup Considerations

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Before diving into the Swiss business world, foreign entrepreneurs must carefully evaluate several key factors. These considerations will lay the groundwork for a successful venture and ensure compliance with Swiss regulations.

Market research and feasibility analysis

Just like in any other country, conducting thorough market research is crucial for any new business in Switzerland. 

Entrepreneurs should analyze the local market, identify potential customers, and assess competition. Swiss consumers value quality and precision, so understanding their preferences is essential.

A feasibility study helps determine if the business idea is viable in the Swiss market. This should include:

• Projected costs and revenues
• Potential risks and challenges
• Target market size and demographics
• Unique selling propositions

Foreign business owners must also consider cultural differences and language barriers. For example, Switzerland has four national languages, and the dominant language varies by region.

Selecting the canton for the head office

Choosing the right canton for the company’s head office is crucial, as regulations and tax rates vary across Switzerland’s 26 cantons. Factors to consider include:

• Local tax rates and incentives
• Availability of skilled workforce
• Proximity to target markets
• Infrastructure and transportation links
• Cost of living and office space

Popular cantons for foreign businesses include Zug, Zurich, and Geneva, but many also consider alternatives. Each canton offers unique advantages, such as lower tax rates or access to international markets.

Entrepreneurs should visit potential locations and consult with local business associations before making a decision. The choice of canton can significantly impact the company’s future success and operational costs.

Company name and business plan

Selecting an appropriate and unique name for the business is a critical step. The chosen name must not be already registered by another company in Switzerland.

To ensure uniqueness, you can:

• Check the Swiss Commercial Register
• Search online databases
• Consult with a local lawyer or business advisor

Bonus tip: It’s wise to consider how the name translates in German, French, and Italian.

A convincing business plan is another vital aspect of starting a business in Switzerland. It serves as a roadmap for the company and is often required when seeking financing or permits.

Swiss authorities and potential investors appreciate detailed, well-researched plans. As an entrepreneur, make sure to focus on realistic goals and clear strategies for achieving them.

Administrative Steps

Starting a business in Switzerland involves several key administrative steps.

Opening a consignment account

To begin the business formation process, entrepreneurs need to open a consignment account with a Swiss bank, which holds the initial capital for the company. The bank will issue a confirmation letter, which is crucial for the registration process.

Once the company is registered, the consignment account transforms into the company’s current account for regular business operations.

Preparing constitutive documents

Legal documents for company incorporation typically include:

• Articles of association
• Founders’ meeting minutes
• Declaration of acceptance by board members
• Signature specimens

A notary must authenticate these documents. It’s advisable to seek professional help to ensure all paperwork is correctly prepared and complies with Swiss regulations.

The documents should clearly state the company’s purpose, structure, and governance. This step is crucial for a smooth registration process.

Registering with the commercial register

The registration process involves:

1. Submitting the authenticated legal documents
2. Providing proof of capital deposit
3. Paying registration fees

After successful registration, the company receives a unique identification number (UID). The commercial register entry officially brings the company into existence.

Processing times can vary, but typically take 2-3 weeks. Once registered, the company can start its operations legally.

It’s important to note that each canton has its own commercial register office.

Registering for VAT

Value added tax registration is necessary for most businesses in Switzerland. Companies must register if their annual turnover exceeds 100,000 CHF.

The process involves:

1. Applying online or by post to the Federal Tax Administration
2. Providing details about the business and expected turnover
3. Receiving a VAT number

Once registered, the company must collect VAT on sales and file regular VAT returns. The standard VAT rate in Switzerland is 8.1%, with reduced rates for certain goods and services.

Proper VAT management is essential for compliance and avoiding penalties. Many businesses opt to use accounting software or hire professionals to handle VAT-related tasks.

Costs and Financing

Starting a business in Switzerland as a foreigner involves various expenses and financial considerations.

Initial setup costs

For certain business structures, launching a business in Switzerland requires a minimum share capital (e.g. at least CHF 20,000 for an LLC). Additional costs include legal fees, notary charges, and business registration expenses.

Moreover, you should budget for office space, equipment, and initial inventory if applicable. Logically, these costs can vary widely depending on the location and nature of the business.

Professional services such as accounting and legal advice also have their own fees. These experts can help navigate Swiss regulations and ensure compliance from the start.

Bank fees and commercial register costs

Opening a business bank account in Switzerland may include account opening charges, monthly maintenance fees, and transaction costs. It’s advisable to compare offers from different banks to find the best rates.

Commercial register costs are another important expense. Registering a company name and obtaining necessary licenses can range from a few hundred to several thousand Swiss francs.

Timeline for Business Setup

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Setting up a business in Switzerland involves several key steps and timeframes. The process can be completed efficiently with proper planning and understanding of the requirements.

How long does the registration process last?

The registration process for a business in Switzerland typically takes 2-4 weeks. This timeline includes gathering necessary documents, securing capital, and completing administrative procedures.

• Initial preparation, such as choosing a business structure and name, can take 1-2 weeks.
• Opening a bank account and depositing the required capital usually takes 3-5 business days.
• The commercial register submission and review process generally takes 5-7 business days.
• Obtaining necessary permits and licenses may add another 1-2 weeks, depending on the business type and location.

Steps to expedite the process

To speed up the business setup process, you can take several proactive steps:

• Thorough preparation is key, including gathering all required documents in advance.
• Engaging a local legal expert or business consultant can significantly streamline the process. They can help navigate Swiss regulations and ensure all paperwork is correctly filled out.
• Utilizing online registration platforms, when available, can reduce processing times. 
• Some cantons offer expedited services for an additional fee.

Prompt responses to any inquiries from authorities and timely submission of additional information can prevent delays. Coordinating with relevant agencies simultaneously, rather than sequentially, can also save time.

Post-creation Formalities

After establishing your own business in Switzerland, several essential administrative tasks await. These formalities ensure your own company complies with Swiss regulations and protects both you and your employees.

Registering with OASI (AHV/AVS) and pension funds

As a new business owner in Switzerland, you must register with the Old Age and Survivors’ Insurance (OASI) system, known as AHV/AVS. This step is crucial for social security contributions. 

Companies should contact their cantonal compensation office to initiate this process.

Registration with OASI is mandatory for all businesses and self-employed individuals. It covers retirement benefits and provides financial support to survivors in case of death.

Additionally, employers must enroll in an occupational pension fund if they have employees earning above a certain threshold. This fund, known as the second pillar, complements the state pension system.

Accident and loss-of-earnings insurance

Swiss law requires employers to obtain accident insurance for their employees. This coverage protects workers in case of work-related accidents or occupational illnesses.

Business owners should also consider:

• Business interruption insurance
• Public liability insurance
• Property insurance

Support and Resources

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Switzerland offers various support systems and resources for foreign entrepreneurs.

Government and private support organizations

• The Swiss federal government provides extensive support for new businesses, like guidance on legal requirements, taxation, and work permits.
• Switzerland Global Enterprise (S-GE) is a key organization that assists foreign companies in establishing operations in Switzerland. They provide market information and connect entrepreneurs with local experts.
• Cantonal economic development agencies offer tailored support for businesses in specific regions. They can help with location selection and introductions to local networks.
• Private organizations like chambers of commerce also play a crucial role, offering networking opportunities, training programs, and advice on local business practices.

Tools and platforms for business setup

• Digital platforms have simplified the process of starting a business in Switzerland. The EasyGov.swiss portal allows entrepreneurs to complete many administrative tasks online.
• Business registration can be done through the Swiss Commercial Registry website. This platform provides step-by-step guidance for different business structures.
• Swisscom’s StartUp Portal offers free tools for business planning, financial projections, and marketing strategies. It’s particularly helpful for tech startups.
• For intellectual property protection, the Swiss Federal Institute of Intellectual Property provides online services for trademark and patent registration.
• FInally, networking platforms like LinkedIn and Xing are valuable for connecting with Swiss business professionals and potential partners.

FAQ

What should I consider for budgeting in Switzerland?

High wages and real estate costs must be factored into the budget. The high cost of living may allow for higher pricing of products and services, potentially balancing increased operating costs.

Which sectors thrive in Switzerland?

Key sectors include technology, pharmaceuticals, biotechnology, science, and finance. The country is known for innovation, especially in areas like blockchain, with Zug being a hub for crypto companies.

How do I choose the best city for my business in Switzerland?

Consider factors like costs, competition, target audience, and workforce availability. Cities like Geneva, Zurich, and Basel each offer unique advantages depending on your business needs and international connections.

Do I need a VAT registration in Switzerland?

Businesses with an annual turnover of more than CHF 100,000 must register for VAT. This is not automatic, so you must ensure to register with the Federal Tax Administration.

What tax deductions are available to companies in Switzerland?

Companies in Switzerland can benefit from several tax deductions, including:

• Research and development expenses
• Depreciation of assets
• Losses carried forward for up to 7 years

Additionally, Switzerland has agreements with many countries to prevent double taxation, reducing the tax burden for international businesses.

What are the accounting requirements for businesses in Switzerland?

Swiss businesses must maintain proper accounting records, which include:

• Bookkeeping in Swiss francs or the company’s functional currency
• Annual financial statements, including a balance sheet, income statement, and notes
• Retention of accounting records for 10 years
• Small businesses may use simplified accounting methods, while larger companies must adhere to Swiss GAAP FER or international standards like IFRS.

What are the auditing requirements for companies in Switzerland?

Audit requirements in Switzerland depend on the size and type of the company. A full audit is mandatory for companies that meet any of the following criteria:

• A balance sheet total exceeding CHF 20 million
• Annual revenue over CHF 40 million
• More than 250 full-time employees

Smaller companies may opt for a limited audit or be exempt from audits entirely.

Switzerland: One of the Best Countries to Start a Business

Starting a business in Switzerland as a foreigner offers exciting opportunities. The country’s stable economy, strategic location, and skilled workforce make it an attractive destination for entrepreneurs.

However, as you can see, careful planning and preparation are essential. Choosing a business structure, understanding legal requirements, navigating Swiss bureaucracy, building strong local networks, and embracing Swiss business ethics are key to success.

While the process may seem daunting, many resources are available to help. Government agencies, business associations, and specialized consultancies offer guidance and support.

With determination and the right approach, foreign entrepreneurs can thrive in Switzerland’s dynamic business landscape. The journey may be demanding, but the potential rewards make it a worthwhile endeavor for those ready to embrace the challenge.

If you’re actively looking to start a business in Verbier and Canton Valais, the Schraner team will be happy to help you. We offer relocation consultation services to make this process for you easier and as straightforward as possible.

Verbier is a top choice for those wanting to combine a thriving business environment with breathtaking alpine views. Whether you’re looking to buy real estate in Verbier or rent it, on our website you can explore the exceptional real estate opportunities in Verbier.

Contact us and let’s talk about your moving to Switzerland and starting a new chapter in your life in this beautiful country.