Juridique – TaxFlow https://www.tax-services.ch/en Fiscalement simple. Sat, 23 Sep 2023 16:01:49 +0000 en-GB hourly 1 https://www.tax-services.ch/wp-content/uploads/2022/09/FavIcon-TaxFlow-150x150.png Juridique – TaxFlow https://www.tax-services.ch/en 32 32 Swiss stamp duty https://www.tax-services.ch/en/stamp-duty-switzerland/ Tue, 07 Feb 2023 09:06:17 +0000 https://tax-services.ch/?p=31094

Federal stamp duties are taxes levied by the Swiss Confederation on certain specific legal transactions, in particular the creation (issue) and trading of securities, as well as on insurance premiums.

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What types of stamp duty are charged in Switzerland?

The issue stamp duty relates to the creation and increases in capital of Swiss companies and cooperatives, calculated on the basis of the nominal value of the shares issued or increased.

The trading stamp duty applied to purchases and sales of Swiss and foreign securities by Swiss securities dealers. It is generally calculated according to the value of the securities bought or sold.

The stamp duty on insurance premiums applies to different types of insurance (third-party liability, fire, comprehensive and household). It is generally calculated on the basis of the amount of premiums paid. This tax is generally paid by policyholders.

Issue stamp duty

Swiss stamp duty is one of three stamp duties. It is levied on the creation or increase, whether for a consideration or free of charge, of participation rights in various forms, in particular :

  • Shares in Swiss public limited companies and limited partnerships with shares
  • Shares in Swiss limited liability companies (LLC)
  • Shares in Swiss cooperatives
  • Profit-sharing certificates issued by Swiss companies or cooperatives (rights to share in net profits or liquidation results)
  • Participation certificates issued by Swiss companies, cooperatives or commercial enterprises governed by public law

By participation rights we mean :

  • Additional payments made by shareholders, cooperative members or members to the company or cooperative without any corresponding consideration and without increasing the share capital entered in the commercial register or the amount paid on the cooperative's shares.
  • Share transfer: the transfer of the majority of the shares or corporate units of a Swiss company or cooperative that is economically liquidated or whose assets have been made liquid. Art.5 LT al.2 let. B LT
 

The issue duty amounts to: 1.0% on Swiss participation rights.

The creation of companies or an increase in capital using participation rights issued for valuable consideration benefits from a franchise of 1 million francs.

The tax liability lies with the issuing company.

Exceptions to stamp duty on issues

Shareholdings in companies

Participation rights in public limited companies, partnerships limited by shares, limited liability companies or cooperative societies which carry on their activity, without any purpose for profit, for the benefit of the poor and the sick, religious worship, education or other works of public utility, or which aim to provide low-cost housing or to guarantee, insofar as, according to the Articles of Association:

  • dividends are limited to a maximum of 6% of the paid-up share capital
  • the payment of directors' fees is excluded
  • the balance of the assets, after repayment of the paid-up share capital, is allocated to similar purposes in the event of the company being dissolved

But also participation rights issued for valuable consideration when a public limited company, a partnership limited by shares or a limited liability company is founded or its capital is increased, provided that the total amount paid in by shareholders does not exceed one million francs

Merger participation rights

Shareholding rights created or increased pursuant to decisions to merge or merge economically equivalent to mergers, transformations and demergers of public limited companies, partnerships limited by shares, limited liability companies or cooperative societies.

Cooperative shareholdings

The creation of participation rights in cooperative societies or an increase in their nominal value, as long as the members' contributions, as defined in art. 5, do not exceed a total of one million Swiss francs.

Participation rights that are created or increased by means of a cooperative bank's participation capital or social participation capital, provided that the company or cooperative proves that it has paid the issue duty on this participation capital or social participation capital.

Shareholdings in transport companies

Participation rights in transport companies, created or increased in favour of public authorities as a result of their investment contributions.

Shareholding rights increased by premiums

Participation rights created or increased by means of previous premiums and payments from shareholders or members, provided that the company can prove that it has paid the issue duty on these premiums and payments.

Rights to units in collective investment schemes

Also excluded is the creation of units in collective investments within the meaning of the LPCC.

Rights to investment shares for the takeover of a farm

Shareholdings created or increased in order to take over a business or part of a business of a public limited company, a partnership limited by shares, a limited liability company or a cooperative provided that, according to the balance sheet for the last financial year, half of the capital and legal reserves of this company or cooperative are no longer covered.

In the case of sanitation

The creation of participation rights or the increase in their nominal value, in the event of an open reorganisation, up to their amount prior to the reorganisation as well as additional payments by shareholders or members in the event of a silent reorganisation, provided that:

  • existing losses are eliminated, and that
  • benefits from shareholders or associates do not exceed CHF 10 million in total

Caution: If the conditions for exemption are no longer met, the duty must be paid on the participation rights still in existence.

Trading stamp duty

Swiss trading duty is the 2nd stamp duty levied by the Swiss Confederation. Its purpose is to tax the transfer for consideration of ownership of different securities if one of the contracting parties or intermediaries is considered to be a securities trader.

Taxable items

Securities dealer

The question of who is a securities dealer needs to be addressed to determine whether the institution in question must withhold and pay stamp duty on the transactions it carries out.

The following are considered to be securities dealers :

  • Banks
  • Natural or legal persons as well as permanent establishments and branches in Switzerland of foreign companies whose activity consists exclusively or essentially of :
    • Trading in taxable documents on behalf of third parties
    • To act as an investment adviser or asset manager in the purchase and sale of taxable documents
  • Companies, occupational pension schemes and restricted pension schemes whose assets comprise taxable items of more than CHF 10 million according to the latest balance sheet.
  • The Confederation, the cantons and the political communes, including their establishments, provided that their accounts show taxable items of more than CHF 10 million.

Exceptions to trading stamp duty

There are, however, exceptions to the levying of negotiation stamp duty.

  • l’émission d’actions, de parts sociales de sociétés à responsabilité limitée et de sociétés coopératives, de bons de participation sociale de banques coopérative, de bons de participation, de bons de jouissance et de parts de placements collectifs au sens de la LPCC85, d’obligations et de papiers monétaires suisses, y compris la prise ferme par une banque ou une société de participation et la répartition des titres à l’occasion de leur émission ultérieure;
  • the contribution of securities used to pay up shares, units in limited liability companies and cooperative societies, cooperative bank participation certificates, participation certificates and units in collective investment schemes within the meaning of the LPCC, whether these shares, units or certificates are Swiss or foreign
  • trading in subscription rights
  • delivery of securities for redemption
  • l’émission d’obligations de débiteurs domiciliés à l’étranger libellées en monnaie étrangère (euro-obligations), ainsi que celle de droits de participation à des sociétés étrangères; seuls sont des euro-obligations les titres pour lesquels le versement d’intérêts aussi bien que le remboursement du capital interviennent en monnaie étrangère;
  • trading in Swiss and foreign money market paper
  • the purchase and sale of foreign bonds and the mediation of purchases and sales on behalf of the buyer or seller when it is a foreign contracting party
  • the transfer of taxable securities which, as part of a restructuring, in particular a merger, demerger or conversion, is carried out by the company being acquired, demerged or converted for the benefit of the acquiring or converted company
  • the acquisition or disposal of taxable documents in the event of restructuring within the meaning of art. 61 para. 3 and art. 64 para. 1bis of the Federal Act of 14 December 1990 on Direct Federal Taxation, as well as in the event of the transfer of holdings of at least 20% of the share capital or registered capital of other companies to a Swiss or foreign group company. Professional securities dealers within the meaning of Article 13(3)(a) and (b) no. 1 are exempt from the relevant part of the duties if they sell securities from their trading inventory or acquire securities in order to increase their trading inventory. Commercial stocks are stocks of securities made up of taxable documents resulting from the commercial activity of the professional trader, with the exception of holdings and stocks with the characteristics of an investment.

Stamp duty on insurance premiums

The right relates to the payment of insurance premiums:

  • which form part of the Swiss portfolio of an insurer subject to supervision by the Confederation or a Swiss insurer with public law status
  • that a Swiss policyholder has concluded with a foreign insurer that is not subject to supervision by the Confederation.

Exceptions to trading stamp duty

Premium payments are not subject to duty:

  • life insurance not subject to surrender and life insurance subject to surrender where premiums are paid periodically; the Federal Council shall lay down the necessary delimitations in an ordinance
  • life insurance, provided that the insurance is used for occupational pension provision within the meaning of the LPP114
  • life insurance taken out by a policyholder domiciled abroad
  • health and disability insurance
  • accident insurance
  • insurance of goods en route
  • insurance against damage to agricultural land and crops caused by the forces of nature
  • unemployment insurance
  • hail insurance
  • livestock insurance
  • reinsurance
  • hull insurance for aircraft and boats described in the ordinance, which are used mainly for the professional transport of persons and goods abroad
  • insurance against fire, theft, glass breakage, water damage, credit insurance, machinery and jewellery, if the taxpayer establishes that the insured item is abroad

FAQ - Stamp duty

In Switzerland, federal stamp duty is levied by the Federal Tax Administration.

There are three types of stamp duty in Switzerland:

  • Negotiation stamp duty.
  • Stamp duty on insurance premiums.
  • Stamp duty on equity capital.

Trading stamp duty is levied on the purchase and sale of shares, bonds, structured products, investment funds, ETFs and other securities.

Stamp duty is collected by the bank or broker.

In Switzerland, stamp duty is levied on insurance premiums such as third-party liability insurance, motor insurance, travel insurance and pet insurance.

Premiums for health insurance, accident insurance, disability insurance, unemployment insurance, livestock insurance and most life insurance are not subject to stamp duty.s

When a Swiss company issues new shares, partnership shares, cooperative society shares, dividend-right certificates or participation certificates, it must pay an issue duty to the Confederation. However, this fee is payable only if the value of the newly issued securities exceeds CHF 1 million.

]]> The limited liability company https://www.tax-services.ch/en/limited-liability-company/ https://www.tax-services.ch/en/limited-liability-company/#respond Tue, 13 Dec 2022 10:23:02 +0000 https://tax-services.ch/?p=30340

The limited liability company (LTD) is one of the most widely used legal forms in Switzerland. It can be founded by a single person with a minimum capital of CHF 50,000. An AG must have a director domiciled in Switzerland. The rules governing the SA are codified in Articles 620 et seq of the Swiss Code of Obligations. The formalities for incorporation are the same as for a limited liability company (Sàrl).

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Steps involved in setting up a limited liability company (LTD) in Switzerland

If you want to open your business and your choice has leaned towards the LTD instead of operating under a sole proprietorship (RI) or even a limited liability company (LLC). Below, we will detail the step-by-step process for creating your limited company in Switzerland.

Budgeting

It is important for any entrepreneur to track down these expenses before you even start. When setting up your limited company, it is advisable to budget for your project. To do this, you need to take the following expenses into account:

  • Capital to be paid up to create the company
  • Notary fees
  • Commercial register fees
  • Business plan creation
  • Website creation
  • Registering your trademark
  • Administrative costs

Choose the company name

The company name will be the name of your company. You are free to choose the name, but you may not use the name of an existing company, nor may you use a name that is protected or could lead to confusion.

To find out if the name you have in mind is available click here.

Breakdown of capital

If you are a group of people embarking on an entrepreneurial adventure, it is essential that the share capital is divided up.

Organisation of the LTD

As a limited liability company is a legal entity, it is managed by the following bodies:

  1. General Meeting of Shareholders: This is the supreme body of the company. It has the power to amend the Articles of Association and approve the annual accounts. It also has the power to appoint and dismiss members of the Board of Directors, the auditors, etc.
  2. Board of Directors : Senior management of the company
  3. Auditing body : This is an independent body that audits the company's accounts and draws up a report for the general meeting of shareholders.

Choosing a bank and opening a consignment account

To make things easier, the best thing to do is to ask your personal bank. You should ask them to open a consignment account for you in order to block the capital.

You will be given an IBAN to make the transfer, and once the transfer has been made, the bank will send a consignment certificate proving that the money has been properly consigned.

Please note:The consignment account must be opened in the name of the company. The company name must be the same as the one you have chosen.

Foundation deed and regulations drawn up by a notary

The deed of incorporation and articles of association of the company are usually drawn up and validated by the notary, who will then send them to the commercial register. The company's articles of association are the principles and rules that the company must respect, which is why it must be well drafted.

Bylaws generally contain the following information:

  • Company name
  • Registered office and purpose of the company
  • Share capital
  • Company shares
  • Partners' rights and duties
  • Organisation of the company
    • General Meeting
    • Management
    • Auditors
  • Preparation of accounts
  • Exit conditions for partners
  • Dissolution and liquidation
  • Communication and publications
  • Legal form

Foundation Meeting

The founding meeting is the first meeting of shareholders to decide on the creation of the company.

Entry in the Commercial Register

A letter of requisition must be sent to the registre du commerce with the proposed formation. It is only once the company has been entered in the commercial register that it acquires legal personality.

Release of share capital

Once the company is registered, you can go back to the bank where you deposited the money to ask them to convert your consignment account into a business current account.

If the internet publication on the zefix is not yet available, you can request the release by presenting a stamped extract from the commercial register.

Share certificate and share register

The company must keep a share register showing :

  1. Name, address and date of birth of partners
  2. Number and nominal value held by each partner
  3. Name and address of usufructuary

Every shareholder has the right to inspect the share register.

Registration with the compensation fund

Every company is required to register with a compensation fund, even if it does not employ any staff. Checks are carried out periodically.

VAT liability

Depending on the business and sales volumes, this may be worth considering, as investments are generally made at the start of the business and VAT could be reclaimed on these expenses.

How much capital is needed to set up a limited liability company (LTD)?

The mandatory minimum share capital for a limited liability company (LTD) is CHF 100,000 and the minimum paid-up capital must be CHF 50,000. If the capital is higher, the pay-up must be at least 20% of it.

Each share may have a par value of at least 0.01 centime.

What costs are involved in setting up a limited liability company (LTD)?

The capital you contribute is not the only cost you need to consider when setting up a company:

  • Capital contribution min. CHF 50,000
  • Advice on setting up between CHF 400 and CHF 1,500
  • Notary fees between CHF 500 and CHF 3,500
  • Commercial register fees CHF 600
  • Stamp duty of 1% if capital of more than 1mio

Conditions and documents required to set up a limited liability company?

There is only one condition for creating a limited company in Switzerland and that one of the administrators must be domiciled in Switzerland to represent the company. Once this condition has been met, the following documents must be produced:

  • By-laws
  • Consignment certificate
  • Auditors
  • Lex-friedrich declaration: generally for property-related activities
  • Stampa declaration: certifying the absence of a contribution in kind
  • Legalisation of signatures: for each participant
  • Entry in the commercial register
 

Advantages of a limited liability company (LTD)

The main advantages of a limited liability company are :

  • Free choice of name "LTD" mandatory
  • Shareholder liability limited to share capital
  • The identity of shareholders is anonymous
  • Shares are easy to trade
  • Fixed taxation of profits
  • Shareholders working in the company are considered to be employees and pay social security contributions on their salaries.

Disadvantages of a limited liability company (LTD)

The main disadvantages of a limited liability company are :

  • Relatively high amount of capital CHF 100,000
  • High set-up costs
  • Economic double taxation
  • Accounting in accordance with the Swiss Code of Obligations
  • High management costs (protocols)

Taxation of limited liability company (LTD)

Since the company is registered for the purpose of developing commercial activities, it becomes a tax subject in its own right.

The main tax applicable to a commercial entity in Switzerland is the profit tax, which is levied according to a three-tiersystem levels: federal, cantonal and communal.

At federal level, the basic tax is 8.5%, calculated on the basis of the company's net annual profits. To this tax must be added the two other levels: cantonal and communal, which vary according to the location of the company.

The company is also responsible for paying capital tax and Value Added Tax (VAT).

Entities owning real estate in Switzerland are also subject to transfer duties and real estate gains tax.

Other taxes to be taken into account include: Stamp duty, withholding tax.

Tax advice

Our Swiss accounting and tax specialists can help you with all your business management needs: accounting, taxation, tax returns, VAT, etc.

Are you thinking about taking the plunge but have more questions? Book an appointment with one of our patented specialists. A 15-minute consultation is completely free of charge.

FAQ - Limited Liability Company

The main advantages are the separation of private and commercial assets, limited shareholder liability, the negotiability of shares, the possibility of regulating commercial restrictions, a high level of good repute and the anonymity of the holder's legal status.

People who make decisions or who can influence those decisions considerably.

A limited liability company can be founded with a minimum of 1 shareholder.

The minimum capital requirement is CHF 100,000. CHF 50,000 must be paid in at the time of formation, the remainder can be paid in at a later date.

In the event of bankruptcy, the shareholders of a limited liability company lose their share capital.

This is done by transferring shares.

]]> https://www.tax-services.ch/en/limited-liability-company/feed/ 0 The simple company https://www.tax-services.ch/en/the-simple-company/ https://www.tax-services.ch/en/the-simple-company/#respond Mon, 05 Dec 2022 12:14:47 +0000 https://tax-services.ch/?p=30132

A simple partnership is a contractual relationship between two or more persons (individuals or companies, including legal entities) to pursue a common goal with common efforts or means (art. 530 para. 1 CO), but without operating a business on a commercial basis.

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How do you set up a simple company?

The société simple is not a legal entity, unlike the LLC or the LTD this means that any contract between the société simple and a third party entails the direct and joint liability of the various partners.

The simple partnership is the basic and subordinate form of company and gives way to all other forms of company and their rules under company law, provided that the conditions for these other forms of company are met (art. 530 para. 2 CO).

Setting up a simple partnership is a very straightforward process. All that is needed is for the founders to agree to pursue a goal together with common efforts or means.

There are generally no formalities to be complied with and, although strongly recommended, a written agreement between the partners is not necessary. The simple partnership cannot be registered in the commercial register and cannot sign under a legal name.

Organisation of a simple partnership

The ordinary partnership may, to a large extent, be adapted by agreement to specific needs. If the shareholders do not opt for specific rules, the provisions of Art. 530 to 551 of the Swiss Code of Obligations apply. Some of these provisions are set out below.

Distribution of profits

The profits and losses of a simple partnership are divided equally between the partners, irrespective of the size and nature of their contributions (art. 532 CO).

If the partnership agreement provides only for the sharing of profits or losses, it applies to both (art. 533 para. 1 CO).

Decision-making

Resolutions must be passed unanimously (art. 534 para. 1 CO). However, the shareholders may include other provisions in the partnership agreement, with the exception of the appointment of a general representative, the admission of new shareholders and decisions that go beyond the scope of ordinary management.
All shareholders have the right to participate in the management and to act on behalf of the company, unless management has been delegated exclusively to third parties or to several shareholders (art. 535 para. 1 CO).

Shareholders are obliged to refrain from competing with the business of the ordinary partnership in a way that would defeat or compromise the purpose of the partnership (art. 536 CO).

Liability

A société simple cannot enter into contractual relationships with third parties, assume rights or liabilities, or own property.

The individual partners jointly own the assets of the company and are jointly and severally liable for any liability or claim arising from a partner or managing director acting on behalf of the company in the ordinary course of the company's business.

Dissolution

A simple partnership entered into for an indefinite term or for the life of a partner may be terminated by any partner giving six months' notice (art. 546 para. 1 CO). In addition, a simple partnership may be terminated for good cause with immediate effect. Such termination is only possible if the continuation of the company is absolutely unacceptable to a partner. Other possible grounds for dissolution of a simple partnership are as follows:

Common uses

In the business world, single companies are often used, for example, for joint ventures, consortia in the construction sector to manage large projects, or consortia of banks.

Shareholders who organise the exercise of voting rights and the management of a company by virtue of a shareholders' agreement are deemed to be simple companies, as are the founders of a company until such time as it is duly incorporated.

]]> https://www.tax-services.ch/en/the-simple-company/feed/ 0 Sole proprietorship https://www.tax-services.ch/en/the-individual-reason/ https://www.tax-services.ch/en/the-individual-reason/#respond Tue, 29 Nov 2022 07:30:20 +0000 https://tax-services.ch/?p=29988

The sole proprietorship is a legal form where the individual carries on business in his own name and is personally liable in an unlimited manner. The owner may also be described as self-employed.

Simple to set up, it does not require any equity capital or formal creation. However, once gross annual sales of CHF 100,000 are exceeded, registration with the registre du commerce and VAT becomes compulsory.

This structure is ideal for entrepreneurs wishing to start up a small business or self-employed activity.

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Opening a sole proprietorship

A sole proprietorship may be described as a natural person who carries on business in his or her own name and under his or her own responsibility.

The individual is personally and illimitatively liable for all his property and assets.

It is very simple to set up, as there is no formal act of incorporation; the sole proprietorship begins as soon as commercial operations are launched.

There are no capital requirements and no need to create a formal company or commercial contract.

Any individual can act as a self-employed person and set up an IR.

On the other hand, as soon as the sole trader achieves gross annual turnover of at least CHF100,000, he must register his sole trader in the Commercial Register (art. 36 para. 1 ORC).

How do you open a sole proprietorship?

Register with a compensation fund

The sole trader must be registered as a self-employed person with a compensation fund.

The compensation fund will check that the sole trader is self-employed and not employed by someone else.

A self-employed person may be employed by someone else for another activity, but not for the activity for which they wish to develop their self-employed activity.

On the one hand, the social costs paid by a self-employed person are completely different from those paid by an employee.

In addition, the compensation fund will ensure that an employer does not require an employee to register as self-employed in order to avoid paying social security contributions.

Registration with the Registre du Commerce

Entrepreneurs do not need to register in the Commercial Register as long as their annual sales do not reach CHF 100,000.
Below this amount, registration is optional but adds credibility.

If you run a business as a sole trader, you must include your surname, with or without your first name, in your company name (art. 945 para. 1 CO). No additions
suggesting a corporate link may not be added to the company name (art. 945 para. 3 CO).

The company name is protected by entry in the Commercial Register (art. 946 CO).

Domicile of the sole proprietorship

The registered office of the sole proprietorship does not necessarily have to be the same as the domicile of the sole proprietor.

Obligation to keep accounts

As a self-employed person, you will have to keep simplified accounts. However, if your turnover exceeds CHF 500,000, you will have to keep accounts in accordance with the Swiss Code of Obligations (art. 957 al. 1 CO).

VAT for sole traders

Sole traders are no exception in terms of VAT. Any natural or legal person whose annual turnover exceeds CHF 100,000 is obliged to withhold and remit VAT.

For further information: Swiss VAT: the essentials

Liability

On the one hand, the self-employed person has unlimited liability for all his private assets and his business assets, unlike the SA or the LLC.

On the other hand, with entry in the commercial register, the self-employed person is subject to bankruptcy proceedings (art. 39 para. 1 par. 1 of the Federal Law on Debt Collection and Bankruptcy).

Sole proprietorship Swiss cross-border commuter

If you are a cross-border commuter living in neighbouring France, you can create a sole proprietorship under the following conditions:

Close a sole proprietorship

If you cease trading or transfer your business to another natural or legal person, you must apply to have the sole proprietorship deleted from the Commercial Register (Art. 39 para. 1 CRO).

If the proprietor dies, his heirs must apply for the sole proprietorship to be deregistered.

If the business continues, the new owner must apply to register the sole proprietorship (art. 39 para. 1 ORC).
Sole proprietorship (art. 39 par. 2 ORC).

Frequent use of the sole proprietorship

Benefits

The sole proprietorship is the second most common type of business.

The latter enjoys economic freedom, with a rapid decision-making process and no formal restrictions.

The sole proprietorship is often used to start up a small business or self-employed activity.

Disadvantages

One of the main disadvantages of sole proprietorship, apart from the fact that it is often difficult to find the means to finance and sell the business, is that it is difficult to obtain finance.

What's more, it is often difficult to find the means to finance the business and pass it on to a successor.

The IR will have to be dissolved, as it is entirely linked to its manager, who has unlimited liability for all its private property and professional assets.

Finally, the name of the company cannot be chosen freely, unlike in the case of a limited company.

Conclusion

Sole proprietorship is an attractive option for starting up a business, but it carries with it specific obligations. Faced with these challenges, expertise is essential.

Our fiduciary Fidulex is here for you. We'll guide you through all the steps involved in becoming self-employed and take care of the accounting management of your business. Navigate the entrepreneurial world with confidence and ensure lasting success.

FAQ - Sole proprietorship

The name must include the founder's surname (with or without a first name).

Supplements may be added, but they must be truthful and not misleading.

There is no minimum capital requirement for setting up a sole proprietorship.

They are taxable on both their professional and private income and wealth.

Fees vary between CHF 0 and 1,000 for advice on setting up a business, and CHF 120 for entry in the commercial register.

It cannot be transferred as such. It must be closed. The person who takes over the business in turn opens a new sole proprietorship if he or she so wishes.

]]> https://www.tax-services.ch/en/the-individual-reason/feed/ 0 Limited liability company https://www.tax-services.ch/en/swiss-limited-liability-company/ https://www.tax-services.ch/en/swiss-limited-liability-company/#respond Mon, 17 Oct 2022 12:51:20 +0000 https://tax-services.ch/?p=29557

Setting up a limited liability company (LLC) in Switzerland is not complicated. The simplicity of the incorporation requirements and the low share capital make it an appropriate vehicle for a variety of activities.

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What is a limited liability company?

In Switzerland, a LLC is a limited liability company. This type of company is not as popular as a corporation in Switzerland, but the registration and administration of a LLC in Switzerland is quite simple.

Choice of company name

Every Swiss company must choose a corporate name. As a general rule, entrepreneurs are free to choose a company name, as long as it complies with the specific rules.

In the case of companies operating as branches, there is an exemption in this respect, as the Swiss branch must have the same business name as the parent company.

First, a Swiss LLC must include the abbreviation "LLC" in its business name

Second, the company name must be unique nationally.

For check availability of the name, you can visit the official website Zefix.ch and confirm the availability of the name you want.

The company name can be formed in any language using the Latin alphabet.

Minimum share capital Sàrl in Switzerland

The minimum capital required to open a limited liability company in Switzerland or a Ltd is 20,000 CHF. This capital is divided into "Company Shares".

Each share has a par value, which may not be less than CHF 1.

The share capital may be deposited by a single shareholder, in which case the founder will have full ownership of the company, or by several shareholders.

How many people are needed to set up a limited liability company?

The registration of a limited liability company in Switzerland can be done by one person (which can be a natural or legal person).

The founder must be registered in the commercial register. The advantages of this type of company are that the liability is limited to the company's share capital. 

Management structure of a limited liability company

The management structure of a limited liability company in Switzerland is rather simple and does not require high costs.

No board of directors is required for a limited liability company in Switzerland, but the main decision-maker is the manager who has full responsibility for the company.

The supreme body of a limited liability company in Switzerland is the shareholders' meeting.

The assembly of associates must be held annually and must take place within a maximum period of six months after the close of the fiscal year.

Information to be provided

When opening a company in Switzerland in the form of a limited liability company, its founders must provide information on many aspects of the newly created company.

When entering the commercial register, the shareholders of a Swiss limited liability company must provide the following information:

- the company's headquarters in Switzerland

- the business purpose of the company

- Personal data on the company's shareholders (nationality, place of residence and names)

- the proportion of shares held by each of the company's founders

- information on the persons designated as managers of the company (residence, nationality and names) 

What should be included in the articles of incorporation of the LLC?

A limited liability company in Switzerland is founded on the basis of its articles of association. 

The articles of association are a document that provides information about the details of the company, such as:

- The name of the company
- The type of company
- The company "s address
- The main activities carried out by the company
- The share capital
- The shareholders
- Its management structure
- The rights and obligations of shareholders
- Procedures at general meetings
- And others.

Do I need a license to start a business?

Another important step in the registration of a Swiss LLC is the business permits and licenses that may be required for a specific field of activity.

In general, most businesses do not need to obtain prior approval to begin operations, but some specific areas of business require permits and licenses.

In Switzerland, the LLC will need an authorization if it develops its activities in one of the following sectors

  • banks and insurance companies
  • catering and hotel industry
  • health-related businesses
  • employment agencies
  • other

Audit obligation for limited liability companies

Restricted control

According to Swiss law, the restricted audit applies when the conditions of the ordinary audit are not met.

It is possible to make what is called an "opting-out", i.e. to give up the limited control of the company. This is possible when the company has less than 10 full time employees. 

The scope of the audit in a limited audit remains sketchy.

Ordinary control

The company may be subject to ordinary audit if it meets two of the following three criteria for two consecutive years:

  • +40 million in revenues
  • +20 million in the balance sheet
  • +250 full time jobs

 

The audit in a limited audit is broader and more comprehensive than in a limited audit.

The audited accounts serve as a basis and must be accepted by the shareholders' meeting. They must also be used as a basis for the preparation of the corporate tax return, dividend payment or any other official act. 

Taxation of LLCs

Since the company is registered for the purpose of developing commercial activities, it becomes a tax subject in its own right.

The main tax applicable to a commercial entity in Switzerland is the Tax on profits, which is levied according to a three-tier system: federal, cantonal and communal.

At federal level, basic corporation tax is levied at a rate of 8.5%, calculated on the basis of the company's net annual profits. To this tax must be added the other two levels, which vary according to canton and municipality.

The corporation is also responsible for the payment of capital tax and the Value Added Tax (VAT).

Entities that own real estate in Switzerland are also subject to the transfer rights and thereal estate gains tax.

Other taxes are also to be taken into account: Stamp duty, withholding tax.

The LLC as a subsidiary in Switzerland

If a foreign LLC operates in Switzerland through a permanent establishment (such as a branch office or other type of place of management), the income it generates in Switzerland will be subject to Swiss taxes.

This type of company is also entitled to the provisions provided for in this regard by the double taxation agreements which have been signed by Switzerland.

What are the advantages of the Sàrl in Switzerland?

  • Relatively small capital contribution of CHF 20,000
  • Liability limited to the share capital
  • Can be created by a single person/company
  • Free choice of name (mention " Sàrl " obligatory)
  • Possibility to change from Sàrl to SA
  • The managers can be employees of the company
  • Possible to increase the share capital

What are the disadvantages of the Sàrl in Switzerland?

  • Economic double taxation
  • Set-up costs between 1'500 and 3'500 CHF
  • Name of the managing directors/partners is public in the commercial register
  • Higher management costs than for an individual reason because accounting according to CO
  • No right to unemployment benefits for managers unless they leave the company permanently

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FAQ - LLC

The limited liability company (Sàrl) is a cross between a public limited company and a general partnership. The Sàrl is a commercial company with its own legal personality, particularly suited to SMEs and family businesses.

The minimum share capital required to open a limited liability company is CHF 20,000.

It must be 100% free.

The company is fully liable for its debts. The personal liability of each partner is not engaged, except in the case of an obligation to make additional payments or to provide ancillary services as set out in the Articles of Association.

Limited liability companies must keep accounts and submit financial statements in accordance with the law. Code of Obligations.They are subject to ordinary or restricted control depending on certain thresholds, such as balance sheet total, turnover and number of employees.

The assignment must be in writing and requires the approval of the shareholders' meeting.

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