Switzerland's political stability, vibrant economy, and clear regulations make it an attractive destination for investors and professionals looking to start a business. Recognizing this appeal, Swiss authorities have implemented regulations to support and regulate the establishment of small and medium-sized enterprises. If you're a foreigner looking to start a business in Switzerland, here's a guide to the conditions and procedures involved.
Conditions for setting up a business in Switzerland as a foreigner
For nationals of the European Union (EU) and European Free Trade Association (EFTA) countries
A five-year valid B residence permit is required to start a business in Switzerland. A C residence permit (settlement permit) is not required for self-employed foreigners.
Good to know:
Certain nationals, including those from the European Union, may face quotas for starting a business in Switzerland. This currently applies to Croatian citizens. Check the latest updates on the SME portal for details.
Additionally, foreign entrepreneurs must ensure they do not rely on any social assistance. If your business is not profitable, your residence permit could become invalid.
For third-country nationals
If you already have a C permit (settlement permit), you can work as a self-employed person in Switzerland.
If you don't have a C permit, you need to apply to the relevant cantonal authorities. You must meet the requirements set by the Federal Law on Foreign Nationals and Integration and demonstrate that your business positively and sustainably impacts the Swiss labor market. This could include creating local jobs or contributing to the diversification of the regional economy. The authorities will review these factors before issuing a permit.
To obtain authorization, you must present a business plan before starting your business in Switzerland. When applying for a work permit, you'll need to provide a business start-up certificate and proof of registration with the Commercial Register. You may also be asked about any organizational links between your business and existing companies.
If your application is approved, you'll receive either an L permit or a B residence permit. The B permit is valid for one year but can be renewed annually. The L permit is also valid for one year but can be extended for an additional 12 months in exceptional cases, making it a more temporary status.
Good to know:
If you are a third-country national and want to buy property for your business, you must have a settlement permit (C permit).
For cross-border commuters
Again, whether you're a cross-border commuter depends on your nationality. If you're from the EU/EFTA, the process is similar to what was described earlier in this article.
Cross-border commuters from EU/EFTA member states
You can start a company by submitting several documents, including a business plan, registration in the commercial register, and accounting records. Once these are reviewed, the Swiss authorities will issue a certificate of incorporation and a border permit (Livret G), which is valid for 5 years.
Cross-border commuters from non-EU/EFTA countries
Cross-border commuters from non-EU countries can obtain a border permit if they have a residence permit in a neighboring country and have lived in the border area of their home country for at least 6 months. Additionally, they must return to their home country at least once a week.
Good to know:
If you have received authorization to start your own business, you can choose your professional activity. However, certain regulated professions (at the cantonal or federal level) have restrictions. Professions in healthcare, law, and construction are examples. You can find the complete list of these regulated professions on the Confederation's SME portal.
Once you have followed the required procedures, there are generally no restrictions on the type of business you can establish. However, be aware of regulated professions. These are professions that require specific qualifications as outlined in an ordinance, such as those in the healthcare sector.
A list of regulated professions can be found on the website of the State Secretariat for Education, Research and Innovation.
Good to know:
If you want to hire a foreign employee for your company, you will need to take the necessary steps to obtain a work permit for them. The conditions are the same as those for employment with a Swiss company.
Company statutes in Switzerland
EU/EFTA nationals, cross-border commuters, and third-country nationals can establish various types of companies in Switzerland once they have obtained the necessary authorization.
For SMEs, the three most common forms are sole proprietorships, public limited companies (AG), and limited liability companies (GmbH).
In broad terms, in the case of a sole proprietorship, you will be the sole owner of the business. In the case of general and limited partnerships, several investors are involved, but they do not necessarily participate in the management of the business.
Sole proprietorship
This type of company is easy to establish. As mentioned, you are the sole owner. A significant advantage is that there is no initial capital requirement; you only need to register your business. Many liberal professions choose this status. For more information, check the following page.
Limited company
This model is very common in Switzerland and can be formed by one or more individuals or legal entities, each contributing a certain amount of start-up capital.
Liability and capital regulation are highly flexible. However, setting up this type of company takes longer and has higher initial costs (including notarization and the mandatory drafting and approval of articles of association). For more information, visit the SME portal.
Limited liability company (Sarl)
Also very common, this type of company is similar to a public limited company (AG) and has its own legal personality. The required start-up capital can be relatively low.
"Limited liability" means that the partners are not personally liable; only the company is. Find out more about this status here.
To sum up, when choosing the status of your company in Switzerland, you need to consider the following criteria:
Capital: how much capital do you want to invest in the company? Minimum capital requirements vary according to the legal form you choose.
Risk and liability: is the risk associated with the company's activities high? If so, we advise you to opt for a limited liability company.
The presence or absence of collaborators: do you need to work with partners or not? Choose the status of your company with this in mind.
Taxes: the income and assets of the company and the owner are not taxed in the same way, depending on the status of the company. They may be
taxed separately or together.
Social security: certain social insurances are compulsory, depending on the legal form of your company.
The different stages in setting up a company in Switzerland
Market research and business model
First, as with any business start-up, we strongly recommend conducting a local market analysis and creating a well-defined action plan. As mentioned, the authorities may ask for your business model.
If you need assistance, several institutions can help you start your business in Switzerland, particularly with administrative matters. For more information about these services, visit the EasyGov.swiss portal or the SME portal.
Choosing your company's status and registering in the Commercial Register
We've reviewed company statuses and criteria to help you choose the right one.
The Commercial Register, maintained by the various cantons, is a public database containing information about companies.
When registering your company, please note the following:
- Sole proprietorships, limited partnerships, and general partnerships can be established online and registered in the commercial register through the EasyGov portal.
- For limited liability companies and public limited companies, EasyGov offers partial assistance.
Taking out insurance
Think about the different types of insurance: social insurance for you and any employees and business insurance.
Social insurance
Depending on the legal structure you choose, some social insurances are mandatory, while others are optional.
For sole proprietors, social security is usually their own responsibility. In contrast, owners of limited companies (AGs or GmbHs) are considered both entrepreneurs and employees. For them, most social insurances are compulsory.
Company insurance
In the case of business insurance, entrepreneurs have more freedom than in the case of social insurance. In principle, they can decide for themselves which risks to cover. There are many different types of insurance, depending on the nature of your business: corporate liability, property insurance, business interruption, health insurance, machinery insurance, etc. Think about the risks involved in your business and find out more about the different types of insurance.
Intellectual property protection
To safeguard your brand, innovations, and products (such as logos, trademarks, and patents), you should apply for protection with the Swiss Federal Institute of Intellectual Property.
While registering your company name in the Commercial Register ensures its official recognition, it does not protect it as a trademark. For full protection, consider registering your business name in the Trademark Register.
Good to know:
You can open a bank account in Switzerland and carry out other activities under your company's name before it's officially registered in the Commercial Register. However, until it's registered, your company will be considered a simple entity. Therefore, it's advisable to complete the registration in the Commercial Register before proceeding with other steps.
Corporate taxation in Switzerland
Switzerland is renowned for its low corporate tax rates.
The average corporate tax rate is 14.9%. This varies from canton to canton. For example, the canton of Lucerne applies a corporate tax rate of 12.20%, while Valais has a rate of 17.12%. This may be interesting information for you to consider when deciding where in Switzerland to establish your company's headquarters.
A company in Switzerland generally pays:
Tax on profits
A portion of the profit tax, set at 8.5%, goes to the Swiss Federal Government. This rate is consistent across all cantons.
Another portion of the tax is allocated to the canton and municipality, with the percentage varying depending on the canton.
Tax on capital
Capital tax is imposed only by the cantons, and the rate varies depending on the canton.
Useful links:
State Secretariat for Migration
We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.
