Business Formation in Switzerland

Corporate Structures, Tax Planning & US Implications

Expat Guides » Switzerland » Business
US Tax Complexity: American owners of Swiss corporations face complex US tax rules including CFC (Controlled Foreign Corporation), GILTI (Global Intangible Low-Taxed Income), and Subpart F income provisions. You may owe US taxes on Swiss corporate profits even if not distributed. Consult a cross-border tax specialist BEFORE forming a Swiss entity.

Business Environment Overview

Switzerland offers a business-friendly environment with political stability, skilled workforce, and moderate corporate taxation. Key advantages:

Corporate Structures

AG

Aktiengesellschaft (Stock Corporation)

Swiss equivalent of a corporation (Inc./Corp). Most common structure for larger businesses and holding companies.

  • Minimum capital: CHF 100,000 (~$112,000 USD) (at least CHF 50,000 / ~$56,000 USD paid in)
  • Shareholders: One or more, can be anonymous via bearer shares (restricted)
  • Directors: At least one director must be Swiss resident
  • Liability: Limited to share capital
  • Suitable for: Larger businesses, holding companies, public companies
GmbH

Gesellschaft mit beschränkter Haftung (LLC)

Limited liability company similar to German GmbH. More suitable for smaller businesses.

  • Minimum capital: CHF 20,000 (~$22,400 USD) (fully paid in)
  • Members: One or more, registered by name
  • Management: At least one manager must be Swiss resident
  • Liability: Limited to capital contribution
  • Suitable for: SMEs, family businesses, subsidiaries
Branch

Zweigniederlassung (Branch Office)

Extension of foreign parent company. Not a separate legal entity.

  • Minimum capital: None required (parent company liable)
  • Registration: Must register in Commercial Register
  • Management: Swiss-resident representative required
  • Liability: Parent company fully liable
  • Suitable for: Testing market, limited Swiss operations
Sole Prop

Einzelunternehmen (Sole Proprietorship)

Simplest structure for individuals. Requires B or C permit with self-employment authorization.

  • Minimum capital: None
  • Registration: Required if revenue exceeds CHF 100,000 (~$112,000 USD)
  • Liability: Unlimited personal liability
  • Taxation: Personal income tax rates apply
  • Suitable for: Freelancers, consultants, small operations

Comparison: AG vs GmbH

Feature AG GmbH
Minimum capital CHF 100,000 (~$112,000 USD) CHF 20,000 (~$22,400 USD)
Capital paid at formation CHF 50,000 (~$56,000 USD) (50%) CHF 20,000 (~$22,400 USD) (100%)
Shareholder anonymity Limited (registered shares common) None (all members public)
Transfer of ownership Easy (share transfer) Requires public deed
Audit requirement Opt-out available for small AGs Opt-out available for small GmbHs
Perception More prestigious Increasingly accepted
Typical use Larger companies, holding structures SMEs, subsidiaries

Formation Process

Steps to Incorporate

  1. Name reservation: Check availability with Commercial Register
  2. Draft articles: Articles of incorporation (Statuten)
  3. Capital deposit: Open capital deposit account at Swiss bank
  4. Notarization: Public deed before Swiss notary
  5. Registration: Submit to Commercial Register (Handelsregister)
  6. Tax registration: Register with federal and cantonal tax authorities
  7. VAT registration: If revenue exceeds CHF 100,000 (~$112,000 USD)
  8. Social insurance: Register for AHV/AVS contributions

Timeline

Costs

Item AG GmbH
Notary fees CHF 2,000-5,000 (~$2,240-5,600 USD) CHF 1,500-3,000 (~$1,680-3,360 USD)
Commercial Register CHF 600-800 (~$672-896 USD) CHF 400-600 (~$448-672 USD)
Legal/advisory fees CHF 3,000-10,000 (~$3,360-11,200 USD) CHF 2,000-5,000 (~$2,240-5,600 USD)
Stamp duty 1% over CHF 1M (~$1.12M USD) capital 1% over CHF 1M (~$1.12M USD) capital
Swiss Director Requirement: Both AG and GmbH require at least one person with Swiss residence authorized to represent the company. This can be a director, manager, or authorized signatory. Without this, formation is not possible.

Corporate Taxation

Tax Structure

Tax Rate Notes
Federal corporate income tax 8.5% ~7.8% effective after deduction
Cantonal/municipal income tax 4-19% Varies dramatically by canton
Combined effective rate 12-22% Zug lowest, Geneva highest
Capital tax 0.001-0.5% On equity capital
Withholding tax (dividends) 35% Refundable to qualifying recipients
VAT 8.1% Standard rate (reduced rates exist)

Low-Tax Cantons

US Tax Implications

American owners of Swiss companies face significant US tax complexity:

CFC Rules (Controlled Foreign Corporation)

If US persons own more than 50% of a Swiss company, it's a CFC. US shareholders owning 10%+ must report their share of the company's Subpart F income (passive income, certain related-party transactions) and GILTI regardless of whether profits are distributed.

GILTI (Global Intangible Low-Taxed Income)

US shareholders of CFCs must include their share of GILTI in US taxable income. This effectively imposes a minimum US tax on active foreign business income, significantly reducing the benefit of Swiss low tax rates.

Practical Impact

Holding Company Structures

Switzerland is a popular holding company jurisdiction due to:

Participation Exemption

Dividends received from subsidiaries are effectively tax-free if the parent holds at least 10% of the subsidiary or the participation is worth at least CHF 1 million (~$1.12 million USD).

Employment and Social Insurance

Employing staff triggers Swiss social insurance obligations:

Total employer social costs typically add 15-20% to salary costs.

Work Permits: Hiring non-EU/EFTA employees requires work permit sponsorship with labor market testing. This is separate from your own permit status. See our Residency guide for details.
Disclaimer: This information is for educational purposes only and does not constitute legal, tax, or business advice. Swiss corporate and US tax laws are complex and interact in complicated ways. Consult with qualified Swiss and US legal and tax professionals before making business formation decisions. Information current as of January 2026.