Starting a business in Switzerland

Transcription

1 Bonfina Treuhand GmbH Schaalgasse 16, CH 4500 Solothurn Phone: Information leaflet Starting a business in Switzerland Introduction There are many ways to set up a business and become an entrepreneur. Key considerations include personal situation and skills, business idea, readiness to take risks, capital needs, degree of flexibility, tax issues, just to list a few. Non-Swiss nationals must have both work and residence permits in order to conduct a business personally on a permanent basis. There are different regulations applicable for individuals from the EU/EFTA areas and persons coming from outside the EU/EFTA areas. Personal requirements Individuals from the EU/EFTA areas According to the Agreement on the Free Movement of Persons, self-employed entrepreneurs can set up their business without having a permanent residence permission (C permit). It is sufficient to have a B permit, which is valid for five years. New immigrants: At registration in Switzerland the planned self-employed activity needs to be proven. Proof can be provided for example with a valid VAT number, an entry into the professional register, the registration at the social insurance as self-employed entrepreneur, a business plan, accounting figures or the entry in the Commercial Register. For more information, contact the cantonal migration offices. Link: Federal Office for Migration: work permits for citizens of EU/EFTA states The B EC/EFTA permit for self-employed work is at first issued for 5 years and includes full geographic and professional mobility. Entrepreneurs from the EU can thus change their place of residence or work as well as their profession. They can also change from self-employed entrepreneur to employee. The future self-employed entrepreneur is free to choose in which industry to work. However, there are restrictions for some professions and businesses. Individuals from outside the EU/EFTA areas Entrepreneurs from countries outside the EU/EFTA area (third states) who want to become selfemployed in Switzerland need to meet the Swiss labour market requirements (Federal Act on Foreign Nationals (AuG), Decree on Admittance, Residence and Employment (VZAE) and the provisions of the the AuG and the VZAE). Link: Federal Office for Migration: work permits for citizens of Non-EU/EFTA states

2 Information leaflet_starting business in CH_page 2 of 8 Link: Federal Act on Foreign Nationals (FNA) Only holders of a valid C permit (settlement permit for third-country nationals), the spouse of a C permit holder or the spouse of a Swiss citizen have the legal right to establish their own business in Switzerland. All other persons have no legal right to set up their own business. They must submit an application to the respective cantonal authorities. Apart from the necessary personal requirements, it is decisive in the evaluation that the company will have a "lasting positive effect or influence on the Swiss labour market". A lasting positive effect on the Swiss labour market is considered to be given if the new self-employed person contributes to the industry-specific diversification of the regional economy, preserves or creates several jobs for local staff, makes substantial investments and generates new orders for the Swiss economy. Therefore, entrepreneurs need to have a very clear business idea already before they eventually move to Switzerland. A convincing business plan is the best foundation for a successful evaluation process. Existing organisational relationships with other companies is another requirement. And the application must include a foundation charter and/or a Commercial Register entry. If the application is accepted by the cantonal authorities, the entrepreneur is granted at least a short-term residence permit for third-country nationals (L permit) or a residence permit (B permit). Both permits are subject to the L and B permit quotas set annually by the Federal Council. The B residence permit has a period of validity limited to one year. It can normally be renewed unless there are reasons against a renewal. The short-term residence permit (L permit) is valid for a stay of up to one year. In exceptional cases, the L permit can be extended by up to 12 months. Cross-border commuters Cross-border commuters can work as self-employed persons in Switzerland. They have to prove to the Swiss authorities that their plans for self-employment are viable. This proof can be provided with significant company data such as a business plan, entry in the Commercial Register, opening of an office or workshop, establishment of the company, accounting figure etc. For more information on the required documents, contact the cantonal migration offices. Once entrepreneurs have proven that their self-employment will be successful, they will receive a crossborder commuter G EC/EFTA permit for five years. In other respects, the procedure is similar to the one for persons from EU/EFTA countries with residence in Switzerland. Most cross-border commuters who work in Switzerland are citizens of EU or EFTA countries and are therefore subject to the Agreement on the Free Movement of Persons. Third-country nationals can only be granted a cross-border commuter permit if they are holders of a permanent residence permit in a neighbouring country and have had their regular place of residence in the neighbouring country's border zone for at least six months. On the basis of the Agreement on the Free Movement of Persons, cross-border commuters must return to their main place of residence at least once a week.

3 Information leaflet_starting business in CH_page 3 of 8 Corporate structures Your choice of legal form defines the legal requirements that will influence the future scope of your business. The choice you make also has financial, tax and personnel-related consequences. Accordingly, factors such as liability risks, business partners, financing, taxes and accounting constitute important decision-making criteria. Swiss law distinguishes between the following general types of business entities: partnership-type unincorporated companies (sole proprietorship, limited partnership or general partnership) and capital-based incorporated companies (stock corporation or AG, limited liability company or GmbH). The following criteria are crucial when selecting the right form of business entity: Capital: organization or incorporation expenses, capital needed and minimum capital required Risk/liability: the higher the entrepreneurial risk or financial investment, the more advisable it is to select a limited liability form of company Independence: freedom of action may be restricted depending on the corporate structure Taxes: the business income and assets of the company or owner(s) are taxed either separately or together, depending on the corporate structure Social security: certain social insurance plans are obligatory, voluntary or non-existent, depending on the legal form Requirements to set up a company The following regulations regarding nationality, residence and requirements apply to establish a Sole proprietorship A sole proprietor company is owned by one proprietor only. Therefore, labour market regulations for persons apply. A residence and work permit is always required to work in Switzerland. General and limited partnership General and limited partnerships are usually small person-oriented companies. The limited partnership can include external investors who are not actively involved in the management of the company. Accordingly, labour market regulations for persons with a valid work and residence permit apply for the individuals. Limited liability company (GmbH) The limited liability company (GmbH) as a legal entity must be represented by at least one person resident in Switzerland. This can be the manager or a director. Accordingly, this person / these persons need to have a valid residence and work permit in Switzerland. Joint-stock company (AG) A joint-stock company (AG) as a legal entity requires that at least one person entitled to represent the company must live in Switzerland and hold a valid residence and work permit for Switzerland.

4 Information leaflet_starting business in CH_page 4 of 8 Taxes & accounting In Switzerland, taxation occurs on three levels: federal, cantonal and municipal. Each canton has its own tax law and imposes taxes differently. Depending on the legal form of their company, self-employed persons pay either income and wealth tax like natural persons or capital and income taxes like a legal entity. In the case of legal persons, direct taxes are levied on the profit and equity. For natural persons and partnerships, taxes are imposed on income and assets. Levying of indirect taxes and other charges in the form of fees on sales and consumption is reserved for the federal government. Examples of indirect taxes (consumption taxes) are: customs duties, Value Added Tax VAT), or tobacco tax. Implications of legal structure on tax From a tax perspective an individual case-based assessment is, in principle, needed to determine the most suitable legal form for your company. Given that each situation is different, no general statements can be made as regards tax advantages and/or disadvantages of a particular company type or at a specific phase of a company s life. General duty to keep and retain the company books Please note the general duty to keep and retain your company s books, requiring that the company s accounting is performed in an orderly fashion. This not only enables you to fulfil your tax obligations, but also provides a management tool and an early warning system. The formal and substantive regulations regarding the keeping and retaining of the company books vary and depend on choice of legal form, company size, type of business and organisational structure. If you have any questions or need assistance please do not hesitate to contact us by backoffice@bonfina.ch or by phone: Document last revised: Dec. 2013

5 Information leaflet_starting business in CH_page 5 of 8 Sole proprietorship* *The German term for sole proprietorship is "Einzelunternehmen". Definition and main characteristics A sole proprietorship is automatically established when a natural person conducts a business activity in a commercial manner in his/her own name and own responsibility. A sole proprietor bears full responsibility and unlimited liability with his/her business and private assets. Sole proprietorships are very common in Switzerland and often a first step into a self-employed business activity. The main characteristics of a sole proprietorship are summarised below. Formation does not require any formal deed of incorporation, but some basic requirements must nonetheless be met. Recognition of self-employment by the AHV (Old Age and Survivors Insurance) is required, see below. The sole proprietor bears unlimited liability for company liabilities, including with his/her private assets. The trade name of the sole proprietorship must include the sole proprietor s family name as a main component. A sole proprietorship conducting a business activity in a commercial manner and with an annual turnover of CHF or more must be registered in the commercial register. Registration is voluntary for sole proprietorships whose annual turnover is less than CHF A sole proprietorship required to register in the commercial register must also keep company accounts. This means there needs to be a double entry bookkeeping with a balance sheet, an operating or profit and loss account and an inventory. Sole proprietorships that are not required to register in the commercial register are also advised to keep company accounts, given that they are also under the duty to keep and retain the books of account, particularly from a tax perspective A sole proprietorship can be transformed into a capital company at any time Recognition of self-employment Recognition of self-employment by the AHV (Old Age and Survivors Insurance) is necessary when establishing a sole proprietorship or in the case of participation in a partnership. From a social insurance perspective, a natural person is considered self-employed if he/she works in his/her own name and own account holds an independent position carries his/her own economic risk As a rule, recognition of self-employment resides with the cantonal social insurance office. Whether an insured person is considered self-employed or not depends on economic, not contractual, factors and needs to be clarified on a case-by-case basis by the competent compensation fund. Provision of the following documents will help expedite the clarification process: invoices offers bills of delivery contracts drawn up with customers / contracting entities rental / tenancy agreements permission / license to practice a profession other documents of relevance for a specific business activity As a rule, you should only proceed to register with the cantonal social insurance office if you have sufficient documentation - however, by no later than the third month after commencing your business activity. Should you be unable to supply the documents for the formation of a sole proprietorship, establishing a capital company (AG or GmbH) may be an alternative.

6 Information leaflet_starting business in CH_page 6 of 8 Partnerships Definition of a partnership A partnership is an association of at least two persons (partners) pursuing a joint purpose. The partners are central to the company and liable with their business and private assets. An exception is the limited partner in a limited partnership whose liability is limited to the amount registered in the commercial register. Careful with simple partnerships! A simple partnership is a contractual relationship between two or more persons who endeavour to achieve a joint goal through joint effort and means (Art. 530 CO). A simple partnership is not a legal person and differs from commercial companies inasmuch as it cannot, and may not, use or sign under a legal name. The partners of a simple partnership are jointly and severally liable for all liabilities and obligations of the simple partnership. A simple partnership is established in situations and constellations such as the following: during the founding phase of another legal form enterprises of limited duration for an individual business activity Please note that a simple partnership exists whenever the requirements for a different company type are not met. General partnership (Kollektivgesellschaft) The general partnership is a business partnership between at least two natural persons who get together to pursue a business activity in a commercial manner under a joint trade name. They are liable for the general partnership s liabilities with their personal assets. The main characteristics of the general partnership are summarised below. The general partnership is strongly person-oriented and based on a partnership agreement wherein the partners declare their union as a general partnership and specify the modalities. Whereas the general partnership is not a legal person, it has an own trade name and can enter into agreements as well as assume rights and obligations in its own name. A general partnership conducted in a commercial manner must be registered in the commercial register There are no special requirements as regards minimum capital. The amount of capital of the general partnership is set out in the partnership agreement. Liability is on two levels; if the company assets are insufficient to cover the partnership s liabilities, all partners are jointly and severally liable with the entirety of their assets. The trade name of the general partnership must contain the family name of at least one partner followed by a supplement that clearly shows the legal form of the general partnership. A general partnership must keep company accounts, at the latest with its entry in the commercial register. This means there needs to be a double entry bookkeeping with a balance sheet, an operating or profit and loss account and an inventory. A general partnership can be transformed into a limited partnership, AG, GmbH or cooperative. Limited partnership (Kommanditgesellschaft) The limited partnership has many elements in common with the general partnership. The key difference is that one or more partners has/have limited liability to a stipulated amount. The partners with unlimited liability of a limited partnership can only be natural persons, whereas partners with limited liability can also be legal persons and commercial companies. The main characteristics of the limited partnership are summarised below. The limited partnership is based on a partnership agreement wherein the partners declare their union as a limited partnership and set out the modalities. A distinction is made between two categories of partners: partners with unlimited liability (Komplementäre) who manage the company, must be natural persons and have the same liability as the partners of a general partnership, and partners with limited liability (Kommanditäre) who are only liable to a stipulated amount, but

7 Information leaflet_starting business in CH_page 7 of 8 do not participate in managing the company. Limited liability partners can also be legal persons and commercial companies. A limited partnership conducted in a commercial manner must be registered in the commercial register. The amount of a limited partner s contribution must be recorded in the commercial register. If otherwise, the limited partner is considered an unlimited partner. Whereas the limited partnership is not a legal person, it has an own trade name and can enter into agreements as well as assume rights and obligations in its own name. There are no particular requirements as regards minimum capital. The amount of capital of the limited partnership is set out in the partnership agreement. The trade name of the limited partnership must contain the family name of at least one partner with unlimited liability (unlimited partner) followed by a supplement that clearly shows the legal form of a limited partnership. The name of a limited partner may not be included. A limited partnership must keep company accounts, at the latest with its entry in the commercial register. This means there needs to be a double entry bookkeeping with a balance sheet, an operating or profit and loss account and an inventory. A limited partnership can be transformed into a general partnership, AG, GmbH or cooperative. Capital companies Note: the legal basis for corporate law in Switzerland is primarily set out in the Swiss Code of Obligations (CO) Definition of a capital company A capital company differs from partnerships inasmuch as the capital brought in to the company is more central than the individual bringing the capital (i.e. the shareholder). Capital companies are legal persons whose rights as a legal person are acquired on entry in the commercial register. The company s liabilities are covered by the company s assets only. In Switzerland, the Aktiengesellschaft (roughly equivalent to a corporation or a public limited company) and the Gesellschaft mit beschränkter Haftung (roughly equivalent to a limited liability company) belong to this legal form. Aktiengesellschaft (AG) The Aktiengesellschaft (AG) - roughly the equivalent to a corporation (corp.) or a public limited company (plc) - is a legal person with its own company name and a predetermined company capital which is divided into shares. In contrast to partnerships (general and limited partnership) the basis is not a partnership agreement, but the articles of association. Furthermore, the shareholders of an Aktiengesellschaft are not liable with their private assets. The main features of the AG are summarised below. The establishment of an Aktiengesellschaft calls for a formal, notarial incorporation process and requires at least one natural or legal person as a founder. The Aktiengesellschaft acquires its legal personality upon its mandatory registration in the commercial register. The minimum share capital for establishing an Aktiengesellschaft is CHF of which 20%, however at least CHF , must be paid in. This can be done in cash or in kind. Liability of the Aktiengesellschaft is limited to the share capital. Participation of the shareholders in the company is not required. Their contribution is limited to payment of share capital. The corporate bodies are the general meeting (Generalversammlung) as the supreme governing body, the board of directors (Verwaltungsrat) as the executive body and the auditors as the accounts-controlling body. Unless otherwise stated in the Articles of Association or the Organisational Regulations, each member of the board of directors has power of representation. The board of directors can delegate the representation to individual board members (delegates) or to third parties (officers). At least one member of the board of directors must have the right of representation. The company must be represented by a person domiciled in Switzerland.

8 Information leaflet_starting business in CH_page 8 of 8 The articles of association of the Aktiengesellschaft must contain at the very least specifications about the company name and seat, purpose, share capital amount and the contributions paid in, number, nominal value and type of shares, calling to general meeting and shareholder voting rights, administrative and auditing bodies and form in which outbound notifications will be made. Provided the general principles of name-giving are met, the name of the Aktiengesellschaft can be freely chosen. However, the legal form (AG) must be displayed in the company name. An Aktiengesellschaft must keep company accounts. This means there needs to be a double entry bookkeeping with a balance sheet, an operating or profit and loss account and an inventory. If an Aktiengesellschaft exceeds two of the three following thresholds in two consecutive years, an ordinary audit is required by law: - balance sheet total of over CHF 10 million - revenues of over CHF 20 million - more than 50 full-time employment positions on annual average. A limited statutory audit applies to all other cases, unless a company has an annual average of less than 10 full-time positions and all of the shareholders consent to dispense with an audit Gesellschaft mit beschränkter Haftung (GmbH) The Gesellschaft mit beschränkter Haftung (GmbH) - roughly equivalent to a limited liability company (L.L.C) - is a legal person and a mixture between a person- and a capital-oriented company. The company capital is fixed in advance and divided into capital shares secured by the founders. Liability is limited to the company capital. In contrast to the Aktiengesellschaft, the shareholders have the right to manage and represent the company. The person-oriented nature of the GmbH is also reflected in the mandatory registration of the shareholders in the commercial register. The main features of the GmbH are summarised below: The establishment of a GmbH calls for a formal, notarial incorporation process and requires at least one natural or legal person as a founder. The GmbH acquires its legal personality upon its mandatory registration in the commercial register. The GmbH can be established and operated with one person. The minimum company capital for establishing a GmbH is CHF which must be fully paid in, either in cash or in kind. Liability is limited to the company capital. The GmbH must be represented by a person domiciled in Switzerland, but who does not have to be a shareholder. The corporate bodies of the GmbH are: shareholder s meeting (Gesellschafterversammlung) as the supreme governing body, the management board (Geschäftsführer) as the executive body and the auditors as the accounts-controlling body. Each management board member is entitled to represent the company. Whereas the Articles of Association can stipulate representation otherwise, at least one member of the management board must have the right of representation. The company must be represented by a person domiciled in Switzerland The articles of association of the GmbH must contain at the very least specifications about the company name and seat, purpose, company capital amount, capital share amount of each shareholder and form in which outbound notifications will be made. Provided the general principles of name-giving are met, the name of the GmbH can be freely chosen. However, the legal form (GmbH) must be displayed in the company name. A GmbH must keep company accounts. This means there needs to be a double entry bookkeeping with a balance sheet, an operating or profit and loss account and an inventory. If a GmbH exceeds two of the three following thresholds in two consecutive years, an ordinary audit is required by law: balance sheet total of over CHF 10 million revenues of over CHF 20 million more than 50 full-time employment positions on annual average A limited statutory audit applies to all other cases, unless a company has an annual average of less than 10 full-time positions and all of the shareholders consent to dispense with an audit.