Setting up a business in Switzerland is not necessarily for the faint of heart and certainly not for the light of pocket. Switzerland has a proud reputation for efficiency and exclusivity, so anybody hoping to operate an SME in the nation needs to be prepared for high fees and cost of living. This is tempered by low corporate taxation and a highly skilled local workforce, however, ensuring that a successful business model will reap the rewards.
Does Switzerland welcome overseas businesses?
Switzerland’s economy relies heavily on foreign investment, especially in the banking and finance sectors, so it remains welcoming of any overseas business bringing money into the country. However, if you don’t hold an EU or EEA passport, you’ll face a range of challenges to overcome the bureaucracy involved with gaining access to the nation.
What industries are most popular in Switzerland?
Switzerland is known as the capital of banking and finance in Europe, so these industries will always be the most popular. However, agriculture, pharmaceuticals, and consumer goods exports remain popular, while Zürich is building a reputation as an excellent city for tech careers and start-up companies.
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Is it easy to set up a business in Switzerland?
Setting up a business in Switzerland is comparatively straightforward, albeit potentially labour-intensive and expensive.
There will be plenty of administration involved, the authorities will need to accept and approve your application at various points, and you’ll also need to deposit capital to get your business up and running. Here are the steps to opening a company in Switzerland.
How to set up a business in Switzerland
- Decide which Canton of Switzerland you wish to operate from
This is an important decision as it will have multiple tax implications
- Apply for the relevant documentation that allows you to start a business in Switzerland
(if you’re not a Swiss national or married to a Swiss passport holder), or appoint a local to act as your representative. A company can only be started by a Swiss resident
- Decide on your business entity type
Public companies are Switzerland’s most popular business model, but a limited liability company requires less paperwork and potentially a lower minimum share capital. You will not be able to operate as a sole trader until you have lived in Switzerland for 10 years
- Choose a company name, check that it is available on the Central Business Name Index, and register this
Once approved, you will receive a Unique Enterprise ID Number (UID), and your company will be listed on the Business and Enterprise Register (BER)
- Register your company
Do this with the Swiss commercial register, filling in all necessary forms and paying fees
- Check with your local Canton authority
As to whether you will need a business license
- Take out business insurance
Find a policy that closely matches the operations and needs of your business
- Register for tax and social security payments
You can do this online
- Open a local bank account
You will need a domestic Swiss business bank account in order to easily trade there
Can I run a business in Switzerland while living overseas?
You can run your Swiss business overseas, but you must have a registered domicile in the country. You do not need to live in this property, but you must own or rent it. If that is not an option, appoint a local representative that lives in Switzerland.
Cultural considerations when running a business in Switzerland
If you’re doing business in Switzerland, you need to understand some of the nuances in the country. These include:
- You’ll likely find that most associates speak English, but it’s advisable to learn at least a little conversational German. French and Italian are also spoken in some parts of Switzerland
- Professional status is valued much more than academic achievements in Switzerland. It’s recommended to print business cards, but there is no need to list your degrees –focus more on your job title
- As befits a country famed for its timepieces, punctuality is very important to Swiss associates. Never keep your associates waiting
- Respect and formality are fundamental in Switzerland. Always address associates by honorifics and surnames until invited to use forenames. Do not assume you can be informal because others do so – you need to earn this right
- Deadlines are taken extremely seriously in Switzerland. Your associates will always set realistic times for turnaround, and if you miss a deadline your reputation will be damaged
What business structures are supported in Switzerland?
The most popular business structures for a new venture in Switzerland are as follows.
| Type of Swiss business entity | What is it? |
|---|---|
| Sole trader | Unless you hold an EU/EEA passport, it’s hugely unlikely that you will be approved for a visa to work as a sole trader – you need to have lived in the country for 10 years. It’s also much more tax-efficient to operate as a company. |
| Gesellschaft mit beschränkter Haftung (GmbH) | A limited liability company, and the easiest company structure to set up in Switzerland for foreigners. You’ll need an entrepreneur visa and a C permit, but your legal and financial deals linked to your business will not impact your personal status. |
| Aktiengesellschaft (AG) | A public company that sells shares. This is Switzerland’s favoured and most trusted business structure, but you’ll need to pay substantial capital investment to set up such an interest. |
Alternatively, you can open a branch of an international company by registering with the Business and Enterprise Register.
Taxation in Switzerland
If you want to do business in Switzerland, you must understand the taxation rules and regulations that will impact your bottom line.
What is the corporate tax rate in Switzerland?
Switzerland enjoys a reputation as a tax haven. The federal corporate tax rate in the country is 8.5%, but after deductions, it typically drops to around 7.83%.
Be aware that your business will also need to pay a local Canton tax, which varies according to the territory that your business trades within.
Switzerland and the UK enjoy a double taxation treaty, so you will not be charged twice for any profits generated in Switzerland.
What are the employee income tax brackets in Switzerland?
All employees in Switzerland must pay income tax on their salary. Income tax brackets in Switzerland are complicated, as they depend upon your marital status. Moreover, Swiss employees pay two forms of income tax – federal and Cantonal.
Federal income tax for unmarried employees with no dependent children breaks down as follows.
| Annual salary (CHF) | Income tax rate |
|---|---|
| ₣17,799 or lower | Nil |
| ₣17,800 – ₣31,599 | 0.77% of income |
| ₣31,600 – ₣41,399 | ₣131.65, plus 0.88% of income |
| ₣41,400 – ₣55,199 | ₣217.90, plus 2.64% of income |
| ₣55,200 – ₣72,499 | ₣582.20, plus 2.97% of income |
| ₣72,500 – ₣78,099 | ₣ 1,096, plus 5.94% of income |
| ₣78,100 – ₣103,599 | ₣1,428.60, plus 6.6% of income |
| ₣103,600 – ₣134,599 | ₣3,111.60, plus 8.8% of income |
| ₣134,600 – ₣175,999 | ₣5,839.60, plus 11% of income |
| ₣176,000 – ₣755,199 | ₣10,393.60, plus 13.2% of income |
| ₣755,200 or higher | ₣86,848, plus 11.5% of income |
Federal income tax for married employees, or unmarried employees with dependent children, breaks down as follows.
| 50% of combined annual salary (CHF) | Income tax rate |
|---|---|
| ₣30,799 or lower | Nil |
| ₣30,800 – ₣50,899 | 1% of income |
| ₣50,900 – ₣58,399 | ₣226, plus 2% of income |
| ₣58,400 – ₣75,299 | ₣376, plus 3% of income |
| ₣75,300 – ₣90,299 | ₣883, plus 4% of income |
| ₣90,300 – ₣103,399 | ₣1,483, plus 5% of income |
| ₣103,400 – ₣114,699 | ₣2,138, plus 6% of income |
| ₣114,700 – ₣124,199 | ₣2,816, plus 7% of income |
| ₣124,200 – ₣131,699 | ₣3,481, plus 8% of income |
| ₣131,700 – ₣137,299 | ₣4,081, plus 9% of income |
| ₣137,300 – ₣141,199 | ₣4,585, plus 10% of income |
| ₣141,200 – ₣143,099 | ₣4,975, plus 11% of income |
| ₣143,100 – ₣144,999 | ₣5,184, plus 12% of income |
| ₣145,000 – ₣895,899 | ₣5,412, plus 13% of income |
| ₣895,900 or higher | ₣103,40, plus 11.5% of income |
Cantonal income tax depends on where the company is registered and will need to be assessed on a case-by-case basis.
Income taxes must be withheld from a monthly payroll, along with social security contributions. These break down as follows:
- 4.35% of salary to the Alters- und Hinterlassenenversicherung (AHV/AVS, or Old Age and Survivor’s Insurance) fund
- 0.70% of salary to the Invalidity Insurance fund
- 0.25% of salary to the Earnings Compensation fund
How are taxes paid in Switzerland?
Switzerland’s fiscal year runs from the 1st of January to the 31st of December. All federal, cantonal and municipal taxes must be paid and filed no later than the 31st of March the following year.
Payroll and hiring employees in Switzerland
Hiring the right talent can make or break your Swiss business. Ensure you bring in the best possible employees for your company.
Does Switzerland welcome overseas talent?
Not everybody wants to live and work in Switzerland. While corporate taxation is low, personal income taxes and the cost of living are higher than in many other European countries.
The Swiss authorities will welcome highly skilled employees from overseas if you can prove that you cannot fill a vacancy using the local labour force. Existing employers, alas, have been historically reluctant to take on new hires from non-domestic backgrounds.
Who needs a visa or work permit to work in Switzerland?
Unless you or your spouse hold a Swiss, EU or EEA passport, you will need a visa and work permit to reside and work in Switzerland.
If you are going to start a business, apply for an Entrepreneur visa and a C permit. This will allow you the freedom of Switzerland. A C permit is usually valid for one year. It can be renewed annually, and after 10 years you can apply for permanent residency. Be warned, you may only be eligible for these documents if you can invest ₣150,000 in your business at the point of incorporation.
If you can afford it, an alternative is the Swiss Golden visa. This grants non-EU/EEA passport holders immediate permanent residence in Switzerland in exchange for an investment of ₣1,000,000 into an existing Swiss business, or taxable profit of this sum after setting up a business in Switzerland that employs local talent. If you turn a seven-figure profit in your first year or two of trading, you can upgrade your Entrepreneur visa and C permit to a Golden visa.
If you are importing employees to Switzerland, they should apply for an L permit. This will only be valid while the employee holds a role with your business, but it offers comparative freedom to roam the country or come and go as necessary.
What employee benefits are compulsory in Switzerland?
Employees of a Swiss business are entitled to the following benefits by law.
- No less than 20 days of personal holiday
- No less than 15 days of sick leave on full pay
- Contribution of 4.35% of employee’s salary to the Alters- und Hinterlassenenversicherung (AHV/AVS, or Old Age and Survivor’s Insurance) fund
- Contribution of 0.70% of employee’s salary to the Invalidity Insurance fund
- Contribution of 0.25% of employee’s salary to the Earnings Compensation fund
- No less than 14 weeks of maternity leave, payable at 80% of salary
- No less than 10 days of paternity leave, payable at 80% of salary
The vast majority of companies also offer a 13th month of salary, payable as a double wage in December.
Employment law considerations in Switzerland
The minimum wage in Switzerland varies according to Canton, though Jura, Neuchâtel, and Ticino have no minimum wage.
Under the Labour Act, employees in Switzerland cannot be asked to work more than 45 or 50 hours per week (depending on the industry) without overtime pay or a legal waiver.
Cultural considerations when hiring employees in Switzerland
Like all countries, Switzerland has a handful of cultural nuances that should be acknowledged when hiring local employees. These include:
- The gender pay gap is a hot topic in Switzerland. While more women are being invited to take on senior positions, females in the country typically earn 20% less than their male counterparts. Be cautious of falling into this trap
- Your employees are likely to be responsible, hard-working, and serious. Do not expect a workplace filled with laughter, and you’ll be expected to set the tone
- Swiss employees work hard but value their time off. Try not to bother your employees out of hours or while they are on holiday
- You’ll see a lot of croissants in the office in Switzerland – it’s traditional for any employee to bring in these pastries on their birthday
FAQs about setting up a business in Switzerland
Still have questions or are seeking a swift answer to a basic query? Here are some of the most frequently asked questions about establishing a business in Switzerland.
Setting up a subsidiary company in Switzerland is comparatively simple, but as business dealings are heavily regulated in the country, it may take a few weeks before you are fully approved to start trading and making hires.
You will not be able to work as a sole trader in Switzerland unless you have lived in the country for 10 years or more. Consequently, it’s best to set up a limited liability company (GmbH), a public company (AG), or to open a branch of your international business.
Once you have made social security and benefit contributions to an employee in Switzerland, you’ll likely be paying around 1.5 times an annual salary.
If you’re looking to start a limited liability company in Switzerland, the minimum capital is ₣20,000 (around £17,500.) This can be paid as a cash sum or as contributions in kind. A public company needs capital of ₣100,00 (£875,000), and no less than 20% of this must be paid up-front during the incorporation process.
Yes, you’ll need a local bank account if you plan to trade in Switzerland. Check on the regulations of your bank of choice – many have a minimum deposit sum before they will accept your business.
The standard working week in Switzerland is 42 hours spread over Monday to Friday, though some businesses and industries operate a 45- or even 50-hour week.
To attract the best talent to your company in Switzerland, subsidise the national pension with a private policy. Many companies also pay a 13th month of salary in December.
Technically, yes. While it does not refer to termination as “at will,” Swiss employment law allows employers, “freedom of dismissal.” Unless your employer has a reasonable argument that you discriminated against them based on a protected characteristic, you can usually end employment without difficulty if you inform the employee in writing. Severance pay may still be necessary, depending on the circumstances.
If you or your spouse do not hold a Swiss, EU or EEA passport, apply for an Entrepreneur visa alongside a C permit. This will allow you to live and work in Switzerland for up to a year, though it can be renewed annually. Without an Entrepreneur visa, you can only apply for a C permit as a self-employed person if you have already lived in the country for 10 years. Employees imported to work for your company should apply for an L permit.
Swiss employees are entitled to a minimum of 20 days of personal holiday.
Yes, if you already run a business with some degree of international renown you will be welcome to set up a branch in the country.
If you hire employees in Switzerland, you can pay them from your UK company if you are running a branch, outsource payroll and tax responsibilities to a third-party Swiss business, or hire a payroll clerk in your Swiss business and run your payroll in-house.