Legal Structure in Switzerland

Common Legal Structures in Switzerland

1. Sole Proprietorship (Einzelfirma / Entreprise individuelle)

A sole proprietorship is the simplest form of business structure in Switzerland, ideal for small businesses with a single owner. It is relatively easy and inexpensive to set up, but it doesn’t offer personal liability protection.

• Key Features:
  • Ownership: Owned and managed by a single individual.
  • Liability: The owner has unlimited personal liability for any debts or obligations of the business.
  • Taxes: Income is taxed as personal income, and the business is not taxed separately.
  • Registration: Required only if the business generates more than CHF 100,000 in annual turnover.

2. Limited Liability Company (LLC) / Société à Responsabilité Limitée (SARL)

The Limited Liability Company (LLC), also known as SARL in French or GmbH in German, is one of the most popular business structures in Switzerland. It provides limited liability protection to its owners while being flexible enough for small and medium-sized businesses.

• Key Features:
  • Ownership: Requires at least one shareholder. Can have multiple shareholders, but it’s typically used for smaller businesses.
  • Liability: Shareholders are only liable for the capital they invest in the company, not for the company’s debts.
  • Capital Requirement: Minimum share capital of CHF 20,000, of which at least CHF 1 must be paid up at the time of incorporation.
  • Taxation: LLCs are subject to corporate tax on profits, and shareholders are taxed on any dividends or salary.
  • Registration: Must be registered with the Swiss Commercial Register.

3. Public Limited Company (Corporation) / Société Anonyme (SA)

A public limited company (SA), or Aktiengesellschaft (AG) in German, is typically used for larger companies or businesses that plan to raise capital through public shares. This is a more formal structure and is suitable for those looking to attract investors.

• Key Features:
  • Ownership: Can have multiple shareholders. The shares can be publicly traded if listed on the stock exchange.
  • Liability: Shareholders are only liable up to the value of their shareholding.
  • Capital Requirement: Minimum share capital of CHF 100,000, of which CHF 50,000 must be paid up at incorporation.
  • Taxation: Subject to corporate income tax and VAT. Shareholders pay tax on dividends received.
  • Registration: Must be registered with the Swiss Commercial Register, and financial statements must be audited.

4. Partnership (Simple Partnership / Société en Nom Collectif – SNC)

A partnership is a business structure where two or more people collaborate to run a business together. It’s common for professionals (e.g., law firms, accounting firms) to form partnerships.

• Key Features:
  • Ownership: Can have multiple partners who manage the business.
  • Liability: Partners have unlimited personal liability for the debts and obligations of the business.
  • Capital Requirement: There is no minimum capital required for a partnership.
  • Taxation: Profits are taxed as personal income for each partner.
  • Registration: Partnership agreements should be filed with the Swiss Commercial Register.

5. Cooperative (Société Coopérative)

A cooperative is a business structure that is owned and operated by its members. This structure is typically used for companies that want to promote mutual benefit among a group of individuals or businesses.

• Key Features:
  • Ownership: Members (who can be individuals or businesses) have voting rights.
  • Liability: Members are typically liable to the extent of their contribution to the cooperative’s capital.
  • Capital Requirement: Minimum capital requirement varies, but a cooperative should have at least CHF 100.
  • Taxation: Cooperatives are taxed like other companies, and members pay tax on profits distributed to them.
  • Registration: Must be registered with the Swiss Commercial Register.

6. Branch Office (Filiale)

A branch office allows a foreign company to establish a presence in Switzerland without creating a new legal entity. The branch is an extension of the parent company.

• Key Features:
  • Ownership: The parent company is the sole owner.
  • Liability: The parent company is fully liable for the branch’s obligations.
  • Capital Requirement: No minimum capital requirement. However, the branch must have sufficient capital to operate.
  • Taxation: The branch is subject to Swiss taxes on its profits, in addition to taxes in its home country.
  • Registration: Must be registered with the Swiss Commercial Register.

Choosing the Right Legal Structure

The decision on which legal structure to choose depends on various factors including:

• Size of the Business: Sole proprietorships and partnerships are suitable for small businesses, while LLCs and corporations are better for larger operations.
• Liability Protection: If limiting personal liability is a priority, an LLC or Corporation is recommended.
• Capital Requirements: Depending on your available capital, you may prefer a structure that requires less initial investment, like a sole proprietorship or partnership.
• Tax Considerations: LLCs and Corporations are subject to corporate taxes, while sole proprietors and partnerships are taxed on personal income.