Why set up a limited liability company in Switzerland?
Switzerland is renowned for its attractive tax system, making it an attractive choice for setting up a business. Tax rates are relatively low compared with countries in the same geographical area and in the EU.
Switzerland also enjoys excellent economic and political stability. What's more, the country offers a solid legal framework for doing business. This stability is appreciated when it comes to ensuring a company's sustainability and growth. What's more, the Swiss banking system is renowned for its reliability and discretion (Swiss banking secrecy).
Advantages of a limited liability company in Switzerland
Setting up a limited liability company (GmbH) in Switzerland offers a number of advantages, both in terms of taxation and economics.
Reduced minimum capital
The main advantage of the Sàrl in Switzerland is that the minimum capital required to set up a company is relatively low compared with other legal forms such as the "Sàrl" or "Sàrl". SAThe share capital of a limited liability company can be increased or reduced. The share capital of a limited liability company may be increased or reduced (art. 781-782 of the Swiss Code of Obligations), but may not be less than CHF 20,000 (art. 773 and 782 para. 2 of the Swiss Code of Obligations).
Limited liability
Another advantage of the Sàrl is that partners' liability is limited to the amount of their contribution. This means they cannot be held liable on their personal assets. This differs from the sole proprietorship, for example, where the entrepreneur's liability for the company's debts is unlimited.
Freedom to choose your name
When you set up a limited liability company, you are free to choose the name of your business. You can choose a name that reflects your activity or that will distinguish you in the marketplace. The only constraint is that the abbreviation "Sàrl" must appear at the end of the company name.
Easier start-up for sole traders
Unlike some legal forms where several partners are required, it is possible to set up a limited liability company in Switzerland on your own. This facilitates the process of setting up a company, making it easier for sole traders to get started, while limiting the risks faced by sole traders.
Capital gains exemption
One of the main tax advantages of the LLC in Switzerland is the capital gains exemption. This means that if you decide to sell your company in the future, the profits from the sale will not be subject to income tax.
Possibility of conversion into a public limited company
Another advantageous feature of the Sàrl in Switzerland is the possibility of converting this legal form into a public limited company (SA). Converting a GmbH into an AG also offers greater credibility.
Disadvantages of a limited liability company in Switzerland
There are a number of disadvantages to setting up a limited liability company (GmbH) in Switzerland, and it's important to bear these in mind before taking the plunge.
Double taxation
One of the major disadvantages of setting up a limited liability company in Switzerland is double taxation. As manager of a limited liability company, you will be subject to personal income tax, but also to corporate income tax. This means that your income will be taxed twice, which can considerably reduce your company's profitability.
Obligation to keep accounts
Another constraint linked to the creation of a limited liability company in Switzerland is the obligation to keep accounts. You'll need to set up a proper accounting system and comply with Swiss financial reporting standards. This can be a complex task, and you'll need to call on a professional or a fiduciary to help you.
Higher administration costs
The administrative costs associated with setting up a limited liability company are generally higher than those of a sole proprietorship. What's more, the costs of managing the company will also be higher, as the Sàrl has to meet much stricter legal requirements.
Mandatory auditors for 10 or more full-time employees
If your GmbH has 10 or more full-time employees, you will be obliged to appoint an external auditor. This involves additional costs for an external auditor to examine your annual accounts.
No anonymity
Unlike public limited companies (SA), shareholders of a limited liability company are not anonymous. Your name and position will be recorded in the commercial register and will therefore be accessible to the public. If you prefer to keep your identity confidential, a limited liability company may not be the best option for you.
How does the process of setting up a limited liability company work in Switzerland?
Find out more about the steps involved in setting up a limited liability company in Switzerland.
1. Determining the company name
The first step in setting up a limited liability company in Switzerland is to choose a name for your business. This name must be unique and not already used by another registered company. You can check its availability by carrying out a search in the swiss commercial register.
2. Set the share capital
Once you've decided on the name of your company, you'll need to determine the capital contribution. This should be a minimum of CHF 20,000, but depending on the company's needs, it may be higher. Next, you'll need to choose a bank to open your consignment account to deposit the chosen contribution.
3. Carry out the deed of foundation
The next step is to draw up the deed of foundation with a Swiss notary. This deed establishes the company's articles of incorporation, and contains information such as the names of the partners, the distribution of share capital, and the articles of association.
4. Define bodies, management and partners
Once the deed of incorporation has been drawn up, it's time to define the company's governing bodies and management. The limited liability company must have at least one managing director, who will be responsible for the day-to-day running of the business. The partners must also be designated, and their share in the company's capital must be specified.
Writing the bodies of a limited liability company are as follows:
- General Meeting of Shareholders (Art. 804-808c CO)
- Board of Directors (art. 809-817 CO)
- Auditors (art. 818 CO)
The General Meeting is thesupreme organ of the limited liability company and elects the other two bodies. The Articles of Association may provide for other bodies. They may not, however, exercise the non-delegable powers assigned to the three aforementioned bodies.
5. Entry in the Commercial Register
The next step is to register the limited liability company in the Swiss Commercial Register. This registration is compulsory and formalizes the company's existence. It requires submission of the requisite documents, such as the company's Articles of Association and proof of deposit of share capital.
6. Social insurance registration
Once registered in the Commercial Register, a limited liability company must register for social insurance. This includes old age and survivors' insurance (AVS), disability insurance (AI) and unemployment insurance (AC). Social insurance registration ensures that the company complies with its legal obligations in terms of social security for its employees.
7. VAT registration
Finally, if your company plans to carry out commercial activities subject to value-added tax (VAT), you must register with the Federal Tax Administration to obtain a VAT identification number.
8. Liquidation
The shareholders' meeting can request dissolution of the GmbH with at least 2/3 of the votes. The company will then enter the liquidation phase. In general, an official liquidator must be elected. Otherwise, one or more members of the management team domiciled in Switzerland may be appointed. Liquidators must be entered in the Commercial Register.
The grounds for dissolution of a limited liability company are set out in art. 821 CO. As regards the consequences of dissolution, the provisions of company law apply by analogy (art. 821a in conjunction with art. 738 CO).
Frequently Asked Questions
What's the difference between a Sàrl and a SA?
A limited liability company (Sàrl) is generally better suited to small and medium-sized businesses. It offers limited liability to the partners, meaning that they are not personally liable for the company's debts. What's more, the minimum share capital required to set up a Sàrl is lower than for a SA.
On the other hand, an AG is more suitable for larger companies. Unlike the Sàrl, it allows anonymous shares to be issued, making it suitable for start-ups with investors.
How many partners are needed to set up a SARL?
To set up a limited liability company in Switzerland, you need at least one partner. However, it is possible to have several partners in this legal form. The maximum number of partners in a GmbH depends on the applicable cantonal legislation.
It should also be noted that partners may be natural or legal persons. It is therefore entirely possible for a company to be set up as a limited liability company with several partners who are natural persons, or with a mixture of natural persons and legal entities.
Is it possible to change the name of an SARL after it has been created?
Yes, it is possible to change the name of a SARL after it has been created.
To change the name of a SARL, the partners must pass a resolution at an Extraordinary General Meeting. This resolution must be registered with the relevant commercial register. It is also important to check whether the proposed new name is already used by another company, to avoid any conflicts.
It should also be borne in mind that changing a name may require updating certain official documents, such as the company's articles of association or commercial contracts relating to the business.
How much does it cost to set up a limited liability company in Switzerland?
To set up a limited liability company (Sàrl), you need to draw up articles of association that define the rules and operation of the business. These must be drawn up by a notary. The fees charged by the notary generally vary according to the share capital provided when the company is set up. They can represent around 1% of the minimum share capital required.
What is the minimum capital required?
The minimum capital required to set up a limited liability company (GmbH) in Switzerland is CHF 20,000. This is the minimum amount that the company's founders must contribute when the company is incorporated.
Can I make in-kind contributions to replace cash?
Yes, it is possible to make in-kind contributions to replace cash when setting up your limited liability company. However, contributions in kind must be valued by an expert to guarantee their true value. This will add extra costs to the creation of your company.
Can I set up a limited liability company on my own?
Yes, it's perfectly possible to set up a limited liability company on your own, but it may be a good idea to consider teaming up with someone who shares your field of activity.
