Set Up Business in Switzerland

Switzerland Expansion Guide

Global Upside helps companies set up, hire, and operate in Switzerland. Set up a legal entity quickly and easily with our solutions for branch, subsidiary, and rep office. Looking for an alternative to permanent establishment? Hire and pay employees in Switzerland without a legal entity by using our PEO & employer of record services. Once your business is set up, our teams can support with recruitment and staffing, human resources, employee benefits, payroll, accounting, and tax.

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Country Overview

Switzerland is a country located at the junction of central, southern, and western Europe. Switzerland has a population of almost 8.5 million people and the highest nominal capital per adult. The two main cities in the country are Geneva and Zurich, both of which are important economic centers.

According to the CIA World Factbook, Switzerland is known to have a low unemployment rate and an extremely skilled workforce. The country ranks 2nd globally and 1st amongst all 44 European countries in terms of business friendliness.

  • Switzerland has an export-orientated economy that is led by pharmaceuticals and financial services.
  • Switzerland is globally famous for its chocolate, watches, and cheese, but most of its export products are gold, pharmaceutical goods, and electrical machinery.
  • The major import items are metals, machinery, chemicals, textiles, and agricultural products.

Options for setting up a legal entity in Switzerland include:

Stock Corporation (SA/AG)

A stock corporation (SA/AG) requires at least one business or individual to form. That business or individual must have their own listed share capital and company name. This is the most common form of legal establishment in Switzerland. The minimum share capital required is CHF 100,000. Only 50% needs to be paid upon the establishment.

Limited Liability Company (Sarl, Sagl or GmbH)

A limited liability company (Sarl, Sagl or GmbH) is an establishment that has its own legal setup. Similar to SA/AG, for this type of entity, the founders must implement an act of creation. The liability of the founding members is restricted to only their respective registered capital. The minimum share capital should amount to a minimum of CHF 20,000 and a maximum of CHF 2 million. 50% needs to be paid while forming the company.

Sole Proprietorship

A sole proprietorship is formed by one individual. There is no legal difference between the business entity and its owner. The owner provides for all the investment, making that individual liable for all debts. There is no minimum payment required to establish, and once successful, it can be transformed into a GmbH or AG.

Limited Partnership

A limited partnership is formed by a minimum of two people. One partner (general partner) is liable for all the obligations of the company. The second partner (limited partner) is only liable for the amount they have contributed.

General Partnership

A general partnership requires at least two people to form and operates as an economic business. In such a form of enterprise, both the partners are accountable for all the debts. In this kind of establishment, there is no minimum investment amount required.

It takes a minimum of 2 weeks to set up a legal establishment in Switzerland.

For most industries in Switzerland, collective bargaining agreements are applicable. Swiss employment laws apply to all workers and do not differentiate based on worker classification. It is only the self-employed and freelance workers who do not have to follow the general employment laws. To be deemed viable, employment contracts in Switzerland must mention:

  • The full name of both parties
  • Start date
  • Job title and duties
  • Employment duration (if a fixed-term agreement)
  • Probationary period (if applicable)
  • Work schedule
  • Remuneration and payroll frequency
  • Employee’s base salary
  • Fixed allowances
  • Additional incentives (e.g., bonuses)
  • Fixed deductions
  • Medical and dental insurance and benefits
  • Leave entitlements (annual, sick, maternity, child care, etc.)

Under the Holidays Act, employers are required to provide employees with paid time off for the following public holidays:

  • Jan. 1: New Year’s Day
  • Chinese New Year (two days)
  • Good Friday
  • May 1: Labor Day
  • Vesak Day (Buddha’s birthday)
  • Aug. 9: National Day
  • Hari Raya Puasa (End of Ramadan)
  • Deepavali (Hindu New Year)
  • Hari Raya Haji (Feast of Sacrifice)
  • Dec. 25: Christmas Day

The standard employee payment period is once per month, usually by the 25th of the month.

As per article 962 of the Swiss Code of Obligation, Swiss GAAP FER is a common financial reporting norm.

Corporate Tax

The overall tax rate for federal, cantonal/ communal taxes ranges from 11.9% and 21.6% depending on the location of the company.

Value Added Tax (VAT)

The standard VAT rate is 7.7%. A reduced rate of 2.5% is placed on medical items, household food items, books, and other specific products.

The principal data protection legislation followed in Switzerland is the Federal Act on Data Protection (DPA). The DPA states that any virtual transaction of employee data is prohibited if not approved by the data subjects.

Anti-Bribery & Anti-Corruption Law

According to the Swiss Criminal Code (SCC), the meaning of public officials is very broad. However, this regulation also includes employees of publicly held establishments if they exercise public roles and private employees. The penalties are explained below.

Bribery of Public Officials

For Individuals:

  • Imprisonment of at least 5 years
  • 5 year ban from their profession
  • Monetary fine of at least CHF 10 to CHF 3,000 per day (financial condition is taken into consideration)
  • Seizure of any money or assets that are a result of the crime

For Businesses:

  • Financial fine of at least CHF 5 million
  • Seizure of any money or assets that are a result of the crime

Bribery of Private Employees

For Individuals:

  • Imprisonment of at least 3 years
  • 5 year ban from their profession
  • Fiscal fine of at least CHF 10 to CHF 3,000 per day (financial condition is taken into consideration)
  • Seizure of any money or assets that are a result of the crime

For Businesses:

  • Monetary fine of at least CHF 5 million
  • Seizure of any money or assets that are a result of the crime