Aktiengesellschaft / Société anonyme / Società anonima (Corporation)
Switzerland is an international trade and finance center and one of the freest economies worldwide, with liberal market policies and a low tax regime along with a long tradition of political, economic and financial stability.
Due to its limited area, its lack of natural resources and relatively low population, its economic policy is oriented towards foreign free trade, with low import duties and just a few import quotas, most aimed at the agricultural sector. In addition to having access to a market of 500 million people due to its free trade agreement with the European Union, providing duty-free trade and free movement of capital and labor.
A tier-1 developed infrastructure, an efficient capital market and strong financial system, currency stability, a liberal labor market, an efficient and reliable regulatory environment, a high-skilled and highly productive workforce, have made Switzerland the chosen location for international large firms and SMEs to establish their headquarters in Europe.
Switzerland is also one of the largest financial centers worldwide. Swiss banks offer top-notch corporate banking facilities and a broad range of banking services, investment funds, and insurance services, among others. The Swiss Franc is seen as a safe-haven against currency fluctuations and instability.
Legal *
Country code – CH
Legal Basis – Civil law (Swiss)
Legal framework – Swiss Code of Obligations
Company form – Corporation (Aktiengesellschaft, AG / Société anonyme, SA / Società anonima (SA)
Liability - The liability of the shareholders for the company is limited to the amount of their respective shareholdings.
Share capital – The minimum capital of an AG/SA is CHF 100,000.
The share capital must be fully subscribed upon incorporation, and 20% or CHF 50,000, whichever is greater must be paid in at the date of incorporation (or subsequently at the occasion of a capital increase). Share capital must be denominated in CHF.
The incorporators (or the shareholders' meeting) may choose to issue the shares at their nominal value or at a premium over their nominal value.
In the event of a contribution in cash, the amount must be paid into a blocked account of a Swiss bank prior to the incorporators' meeting (or the respective board meeting in the event of a capital increase).
The minimum par value of shares in a Swiss corporation is CHF 0.01. Shares may be issued in the form of registered or bearer shares. Registered shares may be issued if at least 20% of their nominal value has been paid in. Bearer shares must be fully paid up.
Shareholders – Corporations may be formed by one or more shareholders, who can be either natural or legal persons, residents or non-residents, without limitations. Details of shareholders are not available to the public.
Directors – The business activities of a Swiss corporation are managed by its board of directors. The board may consist of one or several members, who cannot be legal persons and need not to be shareholders of the corporation. At least 1 director should be a Swiss resident director. Details of directors are publicly disclosed.
Secretary – The company may appoint a secretary, but it is not mandatory.
Registered Address – Corporations must have a registered office in Switzerland.
General Meeting – Shareholders should have an annual general meeting within 6 months from its financial year-end. Meeting should take place in Switzerland, can only be held physically. Attendance by videoconference, teleconference, or circular letter is not permitted. Alternatively, shareholders can participate by proxy.
Electronic Signature – Permitted.
Re-domiciliation – Inward/outward re-domiciliation is allowed.
Compliance – A Swiss Company must maintain accounting records in CHF and in Switzerland. Companies are required to submit a tax return together with the relevant Cantonal Tax Authority together with the financial statements of the company for the financial year. The financial year is generally the calendar year.
The tax filing deadline varies depending on the Canton but is from 6 to 9 months for FYE. For instance, in Zurich, the tax filing deadline is 9 months from FYE (30 September). Tax is paid upon receipt of the tax assessment by the relevant Cantonal Tax Authority.
Appointment of an auditor and file audited financial statements is compulsory for all companies. An audit exemption may be available if 2 of the following 3 criteria are met: Balance sheet assets less than CHF 10million; Annual turnover less than CHF 20million; Average number of employees less than 50.
- Shareholders not disclosed *
- Directors not disclosed *
- Corporate shareholders permitted * *
- Corporate directors permitted * *
- Local director required * *
- Secretary required * *
- Local secretary required * *
- Annual general meetings required * *
- Redomiciliation permitted * *
- Electronic signature * *
- Annual return * *
- Audited accounts * *
- Audited accounts exemption * *
- Exchange controls * *
- Civil law (Swiss) Legal basis *
- 1 Minimum shareholders *
- 1 Minimum directors *
- CHF 100,000 Minimum issued capital *
- CHF 50,000 Minimum paid up capital *
- CHF Capital currency *
- Local Location of annual general meeting *
- 2018 AEOI *
Taxes *
Tax residency – Companies with their registered office in Switzerland or its place of effective management in Switzerland are deemed to be residents for tax purposes.
Basis – Corporate income tax is levied on worldwide profits. However, profits derived from foreign branches or permanent establishments, foreign real properties and profits undistributed by foreign subsidiaries may not be subject to taxation.
Corporate Tax rate – Corporate income tax is imposed at both federal, communal and cantonal levels.
The Federal effective tax rate is 7.83% (8.3% but tax paid is deductible for tax purposes, leaving an effective tax rate of around 7.83%).
Each canton and commune has its own tax legislation and levies cantonal and communal income and capital taxes at different rates.
In the Canton and commune of Zurich the combined corporate tax rate is 19.7%. When it comes to canton capitals, the lowest tax rates can be found in the city of Zug (11.8% corporate tax, 0.07% capital tax), and in the city of Luzern (12.1% corporate tax, 0.18% capital tax).
Capital Tax - Capital taxes are levied by the cantons and communes only on the equity of companies - nominal capital, paid in surplus, retained earnings, and other equity reserves.
Capital gains – At the federal level, capital gains are treated as ordinary income and taxed at the standard rate.
A participation relief is available, whether from the disposal of shares of resident or nonresident when shares have been held for at least 1 year and constitutes 10% of the share capital or the participation has a value of CHF 1,000,000.
Such participation relief is available for federal, cantonal and communal taxes.
Dividends – Dividends received are usually taxable but a participation relief may apply (tax abatement)
Participation relief may be granted if the recipient holds at least 10% of the share capital or 10% of profits and reserves of the underlying subsidiary or the residual participation’s market value at the beginning of the year amounted to at least CHF 1,000,000.
Such participation relief is available for federal, cantonal and communal taxes.
Interests – Interests are subject to corporate income tax.
Royalties – Royalties are generally taxable at both federal, communal and cantonal levels. However, some cantons have introduced a patent box regime, where royalties may be tax-exempt or taxed at reduced rates.
Foreign-source income – Foreign-source income is taxable at at federal, cantonal and communal levels. However, profits derived from foreign branches or permanent establishments, foreign real properties as well as undistributed profits held in local and foreign subsidiaries may not be subject to taxation.
Withholding tax paid to treaty countries may be creditable, taxes paid on non-treaty countries may not be creditable but may be deductible.
Withholding taxes – Dividends paid to non-residents are subject to withholding tax at a 35% tax rate.
Under the EU-Switzerland savings agreement, dividends paid to EU residents may be exempt from withholding tax if the capital participation is at least 25% and other criteria are met.
Withholding tax rates may be reduced due to a tax treaty.
Interests and royalties are not subject to withholding tax. However, interests derived from deposits with Swiss banks, bonds, and bond-like loans may be subject to a 35% withholding tax, which can be reduced to payments to treaty-countries.
Losses – Losses arising from taxable income may be carried forward for 7 years. Carryback of losses is not allowed.
Inventory - Inventory may be valued at the lower of acquisition/production costs or market value. To determine costs are allowed First in first out (FIFO), Last in first out (LIFO), Highest in first out (HIFO) methods.
Anti-avoidance rules – Switzerland has not formally introduced transfer pricing regulations or documentation requirements, but transactions must be carried out on arm’s length terms.
Thin capitalization rules apply, requiring a minimum equity ratio for each asset class
Switzerland has not enacted controlled foreign company regulations, hence undistributed income from foreign subsidiaries may not be taxable.
Labor taxes – Employers and employees are required to make a contribution to several social security insurance funds. If an employee is subject to the Swiss Security, both the employer and employee have to contribute a total of 8.02%-23.35% and 12.23%-15.23%, respectively. Each contribution may be capped to certain amounts.
Tax credits and incentives – Withholding tax paid to treaty countries may be creditable, taxes paid on non-treaty countries may not be creditable but may be deductible.
A patent box on income from qualifying patents is available for cantonal and communal taxes. A maximum of 90% tax exemption may apply to the proportion of income from patents and similar rights to the extent it is based on qualifying R&D expenses in Switzerland.
Compliance – On average, a company in Switzerland may require 19 payments and 63 hours per year to prepare, file and pay corporate income tax, value-added tax, and labor taxes, including payroll taxes and social contributions.
Personal income tax – An individual is deemed to be tax resident in Switzerland, if he or she is domiciled in Switzerland, or is physically present in Switzerland for at least 30 days to carry out a professional activity or is physically present in Switzerland for 90 days.
Resident individuals are taxed on a worldwide basis, while non-residents pay taxes on income accrued within the borders of Switzerland.
The federal tax rate is progressive at rates ranging from 0% to 11.5%. Cantonal and communal taxes also apply. Top marginal effective tax rates are between 25% to 51% depending on the canton and commune.
Capital gains on movable assets are tax-exempt, provided that taxpayer is not a professional securities dealer. Capital gains on immovable assets are subject to cantonal capital gains tax, with rates that vary depending on the canton and holding period.
Dividend, rental and interest income are usually taxed at applicable personal income tax rates.
Other taxes – The sale and import of goods and services are subject to V.A.T. at a standard rate of 8.1%. Reduced rates and exemptions may apply.
A stamp tax is levied on the transfer of securities, tax rate is 0.15% if security is issued by a Swiss tax resident and 0.3% if is issued by nonresident.
A capital duty of 1% is levied on the issuance and increase of the equity of Swiss corporations. However, the first CHF 1,000,000 of capital is exempt from capital duty.
Several cantons and communes levy real estate property and transfer taxes. They also levy net wealth taxes at progressive rates up from 0% to 1.3% (4.5% in the case of Geneva).
- Offshore Income Tax Exemption * *
- Offshore capital gains tax exemption * *
- Offshore dividends tax exemption * *
- CFC Rules * *
- Thin Capitalisation Rules * *
- Patent Box * *
- Tax Incentives & Credits * *
- Property Tax * *
- Wealth tax * *
- Estate inheritance tax * *
- Transfer tax * *
- Capital duties * *
- 11.8% Offshore Income Tax Rate *
- 11.8% Corporate Tax Rate *
- 7.83% Capital Gains Tax Rate *
- 0% Dividends Received *
- 35% Dividends Withholding Tax Rate *
- 35% Interests Withholding Tax Rate *
- 0% Royalties Withholding Tax Rate *
- 0 Losses carryback (years) *
- 7 Losses carryforward (years) *
- FIFOLIFOAverage cost Inventory methods permitted *
- 63 Tax time (hours) *
- 19 Tax payments per year *
- 5.13% Social Security Employee *
- 5.13% Social Security Employer *
- 39% Personal Income Tax Rate *
- 8.1% VAT Rate *
- 109 Tax Treaties *
Country details *
The Swiss Confederation is a landlocked country located in Central Europe and member of the EFTA. It borders to the north with Germany, to the west with France, to the south with Italy and to the east with Austria and Liechtenstein. Switzerland is a confederate republic of 26 states, called cantons.
Bern is the seat of the federal authorities, while the country’s financial centers are located in the cities of Zurich, Basel, Geneva, and Lugano. It is inhabited by more than 8 million people. Switzerland is one of the most culturally diverse European countries, home to a larger number of immigrants. It is also multilingual confederation with four official languages: German, French, Italian and Romansh. Its official currency is the Swiss Franc (CHF).
Swiss citizens are subject to three legal jurisdictions: the commune, the canton, and the confederation. The Swiss Confederation consists of 26 cantons
There are three main governing bodies at the federal level: the bicameral parliament, the Federal Council and the Swiss Federal Supreme Court. The function of the Federal Supreme Court is to hear appeals against the cantonal or federal courts. Judges or magistrates are elected by the Federal Assembly for a period of six years.
The Swiss Parliament consists of two chambers: the Council of States, which has 46 representatives (two from each canton and one from each half-canton), who are elected by each canton under its own system; And the National Council, which consists of 200 members elected through a system of proportional representation, depending on the population of each canton. The members of the two chambers are elected every four years.
The Federal Council constitutes the federal government, directs the Federal Administration and acts as head of state.
Despite its lack of natural resources, Switzerland is one of the most stable, developed and prosperous countries worldwide, with a highly skilled labor force, and home to some of the most important multinational corporations. Its GDP per capita is the second highest in Europe, only surpassed by Luxembourg, and the ninth worldwide.
Its most important economic activities in Switzerland are the chemical industry, medical technology, the pharmaceutical industry, the manufacture of musical and measuring instruments, real estate, financial services, and tourism. The country’s main exports are medicaments, glycosides and vaccines, watches, orthopedic appliances, precious jewelry, chemicals, and electronic machinery, which are renowned for their quality and innovation, ranking the first country in the Global Innovation Index (2016). Switzerland is also a large exporter of arms, ammunition and small calibers. And also known for its cheese, wine and chocolate and a mountain tourist destination.
Switzerland is also one of the largest financial centers worldwide. Swiss banks offer a wide range of offshore banking services to corporations and individuals. Historically, its policy of neutrality, without participating in any international conflict, its political and economic stability and its banking secrecy guaranteed by law, attracted foreign capital into Swiss banks. Currently, Switzerland still is one of the global leaders in Asset Management worldwide.