The business entities in Switzerland are governed by the Civil Code in this country. At Federal Level, businesses are domiciled in a particular canton. Each canton maintains a Commercial Register (Registre de Commerce), and the mandatory entries in the Register of subscribers, directors, capital structure etc have strict legal force. The Register is a public document.
The forms of business entity which may be formed are
- Stock Corporation and its variants,
- the Limited Liability Company (Societe a Responsabilite Limite), and
the Limited Partnership (Societe en Commandite).
These last two are not much used by foreign investors. General Partnerships (Societe en Nom Collectif) and Sole Proprietorships (Raison de Commerce) are also possible.
THE STOCK CORPORATION
The Stock Corporation ("Societe Anonyme" or "Aktiengesellschaft") is the form almost universally used by foreign investors and has the following characteristics:
- The minimum number of subscribers is 3;
- Nominee shareholders and nominee subscribers are permitted;
- The minimum authorized share capital is 100,000 Swiss Francs of which either 20% or 50,000 Swiss Francs (which ever is the greater) must be paid up by way of a deposit of funds in a bank account; the bank will not relinquish control over these funds until the company registration certificate has been issued;
- Share capital cannot be increased by more than 50% of the authorized capital at any one time;
- Shares can be ordinary shares, preference shares, voting shares or non voting shares and can be issued at a premium; bearer shares are permitted;
- A majority of directors must be Swiss nationals and must be domiciled in the country;
- All directors must be shareholders whether they are the beneficial owners of those shares or hold as nominees (the holding of one share as a nominee is sufficient to meet this requirement);
- The company must have an auditor and a registered office;
- A person whose name appears in the articles of association signs on behalf of the company.
- A company must have an auditor, and accounts must be filed each year with the Companies Registration Office.
Small companies can prepare abbreviated accounts which do not have to include the level of turnover.
THE DOMICILIARY COMPANY
- Domiciliary Companies are Stock Corporations that are both foreign-controlled and managed from abroad, have a registered office in Switzerland; but have neither a physical presence nor staff in Switzerland.
- They must carry out most if not all of their business abroad and receive only foreign source of income.
The use of domiciliary companies can result in savings in corporate income tax levied on income and capital gains and net worth tax.
THE AUXILIARY COMPANY
- An Auxiliary Company is also a Domiciliary Company, which in addition may carry out a certain proportion of its business in Switzerland.
- Auxiliary Companies are possible in only seven cantons, and do not benefit at federal level.
Treatment varies according to canton, but in most cases an auxiliary company may have Swiss offices and staff and be in receipt of Swiss income.
THE SERVICE COMPANY
- Service Companies are Stock Corporations whose sole activity is the provision of
- financial and
administrative assistance to foreign companies which are part of a group of which the service company is a member.
Service companies may not in general derive income from companies outside their corporate group.
THE MIXED COMPANY
- Mixed Companies are Stock Corporations which have the characteristics of both domiciliary companies and holding companies but which do not qualify as either.
- There is no benefit at federal level, but at cantonal and municipal level there are corporate income tax benefits if the mixed company meets the following conditions:
- the company is foreign controlled;
- a minimum of 80% of its total income comes from foreign sources;
- the company has close relationships to foreign entities.