Great Firms, Outstanding Network
Doing Business in
This guide has been prepared by Baker Tilly (Switzerland) AG, an independent member
of Baker Tilly International. It is designed to provide information on a number of subjects
important to those considering investing or doing business in Switzerland.
Baker Tilly International is the world’s 8th largest accountancy and business advisory
network by combined fee income, and is represented by 138 firms in 104 countries
and over 24,000 personnel worldwide. Its members are high quality, independent
accountancy and business advisory firms, all of whom are committed to providing the
best possible service to their clients, both in their own marketplace and across the
This guide is one of a series of country profiles compiled for use by Baker Tilly
International member firms’ clients and professional staff. Copies may be obtained from
Baker Tilly (Switzerland) AG, Baker Tilly Spiess SA or any of our independent member
Doing Business in Switzerland has been designed for the information of readers. Whilst
every effort has been made to ensure accuracy, information contained in this guide may
not be comprehensive and recipients should not act upon it without seeking professional
advice. Facts and figures as presented are correct at the time of writing.
Up-to-date advice and general assistance on Swiss matters can be obtained from either
Baker Tilly (Switzerland) AG or Baker Tilly Spiess SA; contact details can be found at the
end of this guide.
1 Fact Sheet 3
2 Business Entities and Accounting 5
2.1 Companies 5
2.2 Partnerships 5
2.3 Sole Proprietorships 5
2.4 Branches 6
2.5 Audit and Accounting Requirements 6
2.6 Filing Requirements 7
3 Finance and Investment 8
3.1 Exchange Control 8
3.2 Sources of Finance 8
3.3 Investment Incentives 9
3.4 Acquisition of Swiss Real Property 9
4 Employment Regulation and Social Security 11
4.1 Work Permits 11
4.2 Trade Unions and Worker Councils 11
4.3 Social Security Contributions 12
5 Taxation 13
5.1 Companies 13
5.2 Individuals 14
5.3 Withholding Tax 15
5.4 Value Added Tax (VAT) 15
5.5 Tax Planning 16
Appendix 1 17
Appendix 2 18
Appendix 3 19
Appendix 4 20
Appendix 5 21
1 Fact Sheet
Location Centre of Western Europe
Land boundaries Germany (to the north); France (to the west); Italy (to the south);
Austria and Liechtenstein (to the east)
Coastline 0km (landlocked)
Climate Average temperatures of 1°C to 5°C in winter and 18°C to 21°C in
summer; annual average rainfall of 1200mm (Zurich area)
Terrain The Alps (60%); the Middle Land (30%) – flat areas and hilly
regions, with some lakes; Jura (10%) – hilly territory
Time zone GMT +1
Population 7.6 million; the main concentrations are in and around Zurich,
Basel, Geneva, Berne, Lausanne, Winterthur and St. Gallen
Ethnic groups German 65%, French 18%, Italian 10%, Romansch 1%, other 6%
Religion The dominant religion is Christianity (75%), although there is
freedom of worship
Language Official national languages are German (64%), French (20%), Italian
(7%) and Romansch (1%). The use of English is widespread,
particularly in business circles
Country name Swiss Confederation
Government type Multiparty federal parliamentary democratic republic
Administrative divisions The Swiss Confederation comprises 26 cantons (states)
Political situation Switzerland has a unique political system in that executive authority
is exercised by seven federal councils (ministers or heads of
department) who make up the federal council (cabinet). The Swiss
parliament is called the Federal Assembly and is made up of two
houses, the National Council, on the basis of proportional
representation, and the Council of States, in which each canton,
regardless of size, has two representatives.
Switzerland jealously guards its neutrality. It does not hold
membership of the European Union (EU)
GDP – per capita US$41,100 (2007 est.)
GDP – real growth rate 3.1% (2007 est.)
Labour force 4.2 million (June 2007)
Unemployment 2.3% (July 2008)
Currency (code) Swiss franc (CHF)
2 Business Entities and Accounting
Commercial entities are organised either as corporations with share capital (AG/SA/Ltd)
or as limited liability companies (GmbH/Sarl/LLC).
A corporation is characterised by the existence of minimum capital (CHF100,000, of
which CHF50,000 must be paid-up) divided into shares with a par value of at least
CHF0.01. Shares may be paid-up either in cash or in-kind and are freely transferable.
There must be at least one shareholder; shareholders may be individuals or corporate
entities. Founders and shareholders are not subject to any nationality or residence
requirements. However, at least one member of the management board must be
resident in, but not necessarily a citizen of, Switzerland.
The corporation may issue bearer and/or registered shares. Bearer shares must be
A limited liability company must have a minimum foundation capital of CHF20,000 and,
in contrast to the corporation, the stated capital must be fully subscribed and paid-up
prior to incorporation.
A member of a LLC can hold one or more common shares, the value of which must be
CHF100 or a multiple thereof.
Founders and members are not subject to any nationality or residence requirements.
Only one member of the management board with signatory powers must be resident in,
but not necessarily a citizen of, Switzerland. However, it is more difficult to transfer
shares in a LLC than in a corporation.
Partnerships can be either unlimited partnerships, where the partners each have
unlimited liability for the debts and obligations of the firm as a whole, or limited
partnerships, where one or more of the general partners have unlimited liability and the
limited partners have liability only up to the amount of their registered contributions.
Corporate partners in a limited partnership must have limited liability.
2.3 Sole Proprietorships
Many small businesses in Switzerland operate as sole proprietorships. Foreigners,
except EU citizens, resident in Switzerland may only set up sole proprietorships if they
have a permanent residence permit (a C-permit).
The owner of a sole proprietorship has unlimited liability.
A non-Swiss company can set up a place of business in Switzerland without forming a
Swiss subsidiary company; this is known as a branch.
A branch is not a separate legal entity, but an extension of the foreign company which
is therefore responsible for the liabilities of the branch. One member of the branch’s
management with signature powers must be resident in, but not necessarily a citizen of,
2.5 Audit and Accounting Requirements
All businesses must maintain proper books of account and retain accounting records
and associated documents generally for ten years. Corporations must have their
accounts audited by professionally qualified auditors.
The law distinguishes between an ordinary audit and a limited audit. Small companies
(companies with ten employees or less) may forego an audit pursuant to an unanimous
A company is obliged to perform an ordinary audit if:
● It has outstanding bond issues
● It is listing shares on a Swiss stock exchange
● It is a significant member of a group of companies including a company in either of
the above categories
● It is required to by virtue of its size
● It is obliged to issue consolidated accounts
● The shareholders representing at least 10% of the share capital file a request
● The articles of association of the company so require.
Smaller companies are subject to a limited audit. In specific circumstances, very small
companies may forego an audit altogether.
2.6 Filing Requirements
There are no filing requirements in Switzerland for annual financial statements,
except in the case of banks, specific finance companies and insurance companies
(see Chapter 5 – Taxation).
3. Finance and Investment
3.1 Exchange Control
There are no exchange controls in Switzerland on inward or outward investment.
Foreign currencies can be bought and sold freely and there are no restrictions on the
maintenance of foreign currency bank accounts in Switzerland.
There are no limitations on the repatriation of profits from Switzerland.
3.2 Sources of Finance
The Swiss National Bank acts as banker to the government. It is responsible, inter alia,
for setting base interest rates.
Overdrafts with fluctuating interest rates are the most commonly used facility for
financing working capital or to fund seasonally affected businesses.
Banks also offer short, medium and long-term loans. The repayment terms are
negotiable and the rate of interest may be fixed or variable. To obtain bank financing
the business will normally be required to provide adequate security. Security will
typically be in the form of a fixed or floating charge over the business assets, as well
as, in certain circumstances, personal guarantees from the owners including the foreign
parent company if relevant.
In addition to these traditional services, banks offer various other financing arrangements,
either themselves or through subsidiaries or affiliates. These include instalment credit,
leasing, factoring, invoice discounting and so-called “mezzanine” finance.
Branches or subsidiaries of foreign banks in Switzerland will frequently arrange suitable
finance for businesses from their own countries wishing to trade in Switzerland.
3.2.2 Stock exchanges and trading facilities
Thanks to the stable economy and liberal economic system, Switzerland is widely
recognised as an important financial marketplace. Indeed, it occupies one of the leading
positions worldwide as a centre for financial transactions and securities trading.
The Swiss Stock Exchange (SWX) operates a fully integrated trading and clearing
system for stocks, bonds, warrants, investment funds, ETF and SWX Eurobonds.
3.2.3 Venture capital companies
For businesses that are not large enough to consider stock exchange entry but which
require equity or mezzanine finance, venture capital companies can provide equity for
start-ups, for development or for management buy-outs.
Venture capital companies may also be a source of finance for a business that does not
have sufficient security to borrow from a bank. However, they may require a higher
return than a traditional bank.
3.3 Investment Incentives
Switzerland offers attractive grants and incentive packages at both federal and cantonal
levels to encourage industrial investment from abroad and create jobs in economically
troubled regions. Cantons may grant tax incentives to new ventures that are of
economic interest to the canton. In all cantons the maximum period of incentives is ten
Both Swiss and foreign businesses are eligible for the benefits available through these
In addition to tax incentives, municipalities often have land available for sale or rent at
below market rates for development projects. Local authorities may also assist with
3.4 Acquisition of Swiss Real Property
At the present time, the purchase of real property by foreigners is subject to prior
authorisation (see below regarding EU citizens), as is the purchase of shares in real
property corporations or partnerships. Real estate transactions made without such prior
authorisation are null and void.
No authorisation is necessary, however, for the acquisition by foreigners of business
premises if the premises are wholly or mainly used as a manufacturing facility, as
offices, for retailing or for some other commercial purpose.
Foreigners resident in Switzerland need no prior authorisation if the property serves as
9 the primary residence of the applicant or their family. Property must be registered in
the name of the purchaser. Foreigners holding a C-permit may acquire real property
Based on the bilateral agreement between Switzerland and the EU, EU and EFTA
citizens resident in Switzerland have the right to acquire a primary residence or vacation
apartment and to invest and trade in real property without restriction. However,
non-resident EU and EFTA citizens still need prior authorisation for the acquisition of real
property which is not their primary residence.
4 Employment Regulation and Social
4.1 Work Permits
Switzerland imposes strict regulations on immigration. Each year the federal authorities
review the number of work permits issued to foreigners. This number has been
reducing over recent years. However, following the conclusion of bilateral agreements
between Switzerland and the EU, entry stipulations for EU and EFTA citizens have been
liberalised. Citizens from the EU15 states do not require a work permit, only a
residence permit. For stays up to 90 days, cross-border commutes, short-term
residence and for freelancers, EU residents benefit from a simplified registration
Anyone who works during their stay in Switzerland or whose stay exceeds three months
requires a residence permit. The following permits are available:
● Short-term permits (up to one year, L-permit)
● Residence permits (up to ten years, B-permit)
● Permanent residence permits (open-ended, C-permit).
4.2 Trade Unions and Worker Councils
There is no legal requirement for employers to recognise any trade union. Agreements
between employers and trade unions over pay and conditions are binding for the
contracting parties and in the case of so-called “declarations of general acceptance”,
for all persons and employers in that specific field.
There is no legal requirement for employees to be represented on a company’s board
of directors. However, companies with at least 50 employees are required to set up a
body which represents the employees if the employees vote by secret ballot to have
such a body. The employer is then required to inform the body extensively and in a
timely manner of all matters necessary for the conduct of the employees’ duties and, at
least annually, on the effect of business trends on the employees and on employment
generally. In addition, the law grants such a body the right to be consulted on issues
regarding workplace health and safety, the transfer of all or part of the business to a
third party and mass dismissals. In companies without a representative body,
employees have individual rights to information and consultation.
4.3 Social Security Contributions
All employers are liable for social security contributions with regard to their employees.
Rates of contributions are set out in Appendix 5.
Resident companies are subject to federal, cantonal and communal corporate income
tax on their worldwide income, with the exception of income from a business,
permanent establishment or immovable property located abroad.
5.1.2 Corporate income tax
Corporate income tax is established on the basis of a company’s financial statements.
Federal corporate income tax is levied at the rate of 8.5% of the net income, which is
equivalent to a pre-tax rate of 7.83% (taxes are deductible in Switzerland). Cantonal and
communal tax rates depend on the canton and commune in which the company is
located. The combined federal and cantonal/communal pre-tax rate ranges between
12% and 25%.
5.1.3 Taxes on capital
No tax on capital is levied at federal level. The taxable base for the capital tax on
cantonal/communal level is the equity (paid-up capital plus open reserves and hidden
reserves that have been taxed as profits). The capital tax amounts to approximately
Losses may be carried forward up to seven years. Generally no carry-back is allowed.
5.1.5 Participation relief
Qualified dividend income and capital gains on the sale of qualified participations are
virtually excluded from taxable income for federal and cantonal/communal tax purposes.
5.1.6 Tax privileged corporations
Special rules apply to certain types of corporation at a cantonal/communal level, such as
13 holding companies, domiciliary and mixed companies, service and principal companies and
finance branches. At the federal level there are no privileged corporations.
As a result, tax privileged companies enjoy a very attractive effective overall pre-tax rate
that may be as low as 8%.
5.2.1 Income taxation
Resident individuals are subject to federal and cantonal/communal tax on their
worldwide income. However, exposure to Swiss taxation does not extend to assets
invested in and income derived from businesses, permanent establishment or real
estate located abroad. Such income is only relevant for determining the tax rates.
There is a church tax in most cantons imposed on individuals belonging to one of
the three recognised churches – Roman Catholic, Christ Catholic and Swiss
Capital gains realised upon the disposal of movable property are generally tax exempt
(if the taxpayer is not engaged in trade or business). Capital gains of real property are
generally subject to a separate real property gains tax.
There are significant differences in tax burdens for individuals depending on the
canton/commune of residence. Detailed advice is recommended for the maximum
benefit to be obtained.
5.2.2 Wealth tax
Net wealth tax is levied only at the cantonal/communal level (0.2% – 0.5%).
5.2.3 Inheritance and gift tax
There are no federal inheritance or gift taxes. However, most of the cantons levy
inheritance and gift taxes. These taxes are imposed on the estates of deceased
residents and on Swiss real property. In most cantons, transfers to a spouse or
descendants are tax exempt. Otherwise, the rates depend on the amount and on the
relationship between the deceased and the heirs or between the donor and the recipient
Tax burden varies significantly between cantons and communes and detailed advice is
5.2.4 Lump sum taxation
Resident aliens who are not engaged in any gainful activity in Switzerland may be
eligible for lump sum taxation based on deemed taxable income which, in turn, is a
function of the living expenses the taxpayer incurs in Switzerland.
The tax due is, in principle, the higher of:
● The tax calculated on certain specific items of actual income, such as income from
Swiss real property, Swiss source investment income, pensions and annuities
● The tax due on five times the rental expense or the deemed rental income of the tax
● A negotiated amount on a deemed income.
Lump sum taxation must be requested by the taxpayer and a special tax return filed.
5.3 Withholding Tax
Federal withholding tax is levied at source on interest on deposits with Swiss banks
derived from bonds and similar negotiable debt instruments issued by Swiss resident
borrowers and on profit distributions (such as dividends, hidden profit distributions etc).
No withholding tax is levied on royalties and on intercompany interest.
Generally, the payer of the income is required to withhold 35%, irrespective of whether
the recipient is entitled to a full or partial refund (in accordance with the respective
double tax treaty, if any).
However, according to the EU Savings Taxation Agreement there is no withholding tax
on dividends paid by Swiss subsidiaries to their qualifying EU parent company.
5.4 Value Added Tax (VAT)
Switzerland imposes VAT on the consumption of goods and services. In general terms,
businesses do not themselves suffer VAT as it is a tax payable by the ultimate
consumer, but businesses are responsible for its administration and collection.
Businesses with an annual turnover in excess of the registration limit, currently
CHF75,000, are generally required to register for VAT. For most categories of goods
and services VAT must be added at the standard rate, currently 7.6%. Special rates of
3.6% and 2.4% apply to specific categories of goods and services. Some categories
are zero-rated (nil rate of tax charged, but the refund of the VAT on related purchases is
allowed) and some services are exempt (no VAT to be charged, but no refund of the
15 VAT on related purchases – Appendix 4).
5.5 Tax Planning
Individuals intending to move to Switzerland and international groups intending to set up
operations in Switzerland should give early consideration to tax issues. Switzerland
offers tax privileges for specific operations and a very constructive relationship between
taxpayers and the tax authorities. It is also possible to obtain advance tax rulings in
order to minimise future tax risks.
Withholding Taxes on Interest Payments by Swiss Banks and on Swiss Bonds
and Notes (Net Treaty Rates, 2008)
Generally, there is no Swiss withholding tax imposed on interest payments by Swiss
resident non-bank borrowers, eg on inter-company loans and advances, except on
bonds, notes and similar negotiable debt instruments.
State % State %
Australia 10 Japan 10
Austria 0 Luxembourg 10
Belgium 10 The Netherlands 5
Canada 10 New Zealand 10
China 10 Norway 0
Denmark 0 Pakistan 351)
France 0 Portugal 10
Germany 0 South Africa 252)
Greece 10 Spain 10
India 10 UK 0
Ireland 0 USA 0
1) 15% for companies.
2) As long as not taxed in South Africa.
Withholding Taxes on Dividend Payments by Swiss Resident Companies (Net
Treaty Rates, 2008)
State (%) (%)
Australia 15 15
Austria 15 0
Belgium 15 10
Canada 15 5
China 10 10
Denmark 0 0
France 15 0
Germany 15 0
Greece 15 5
India 10 10
Ireland 15 10
Italy 15 15
Japan 15 10
Luxembourg 15 0
The Netherlands 15 0
New Zealand 15 15
Norway 15 5
Pakistan 35 15
Portugal 15 10
South Africa 7.5 7.5
Spain 15 10
UK 15 5
US 15 5
* No withholding tax to EU companies.
Effective Rates of Corporation Tax (Ordinarily Taxed Including Federal,
Cantonal and Communal Taxes)
Total tax rate on profit before tax
Canton Tax (%)
Appenzell Ausserrhoden 15.5
Appenzell Innerrhoden 12.7
VAT: Zero-Rating and Exemptions
The principle categories of goods and services classed as zero-rated or exempt are as
Exports of goods Postal services
Exports of services Rent
Work on movable goods for a foreign Banking
person, provided the goods are Insurance
exported Medical, hospital
Most educational services
Welfare, cultural services
Social Security Contributions
Social security contributions (old age, disability and unemployment) amount to 12.1% of
gross salary up to CHF126,000, and to 10.1% without ceiling for gross salaries
exceeding CHF126,000. Contributions are borne equally by employer and employee.
In addition, employed persons have mandatory private pension fund insurance (BVG)
with rates of 10% to 24% (of which at least half is borne by the employer). Mandatory
accident and family allowance insurance is borne by the employer alone (2% to 3%).
Member Firm Contact Details
German speaking part of Switzerland:
Contact: Fabian Petrus
Baker Tilly (Switzerland) AG
8005 Zürich, Switzerland
T. +41 (0)44 278 45 46
F. +41 (0)44 278 47 12
Offices in: Berikon, Brugg, Buchs, Heerbrugg, Rapperswil, Schaffhausen, Schwyz, St.
Gallen and Weinfelden
French speaking part of Switzerland:
Contact: Dominik Spiess
Baker Tilly Spiess SA
47, rue du 31-Décembre
P.O. Box 6388
1211 Geneva 6, Switzerland
T. +41 (0)22 718 41 41
F. +41 (0)22 718 41 40
Office in: Lausanne
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