Switzerland is a Central European landlocked country surrounded by Germany, Austria, Liechtenstein, Italy, and France. Switzerland is known for its stunning landscapes, serene beauty, picturesque cities, quality of living, banking sector, watchmaking, and chocolate.
The government system of Switzerland is decentralized and constituted of 26 cantons (states) that are represented in the federal council. The banking sector of the country is the largest in the world; having a bank account for probably every powerful individual and country on the planet.
Switzerland has four official languages; German, French, Italian, and Romansh. This diversity is reflected in Swiss cuisine, culture, and other areas of society too.
Types of business structures in Switzerland
In Switzerland, there are a number of business structures available to investors – foreign and local alike – to choose from as per their needs and goals.
The most popular business formats are presented in the table below:
| S# | Type of business structure | Local name | Min. required paid-up capital |
| 1. | Sole Proprietorship | Einzelunternehmen | No minimum capital is required |
| 2. | Partnership | Kollektivgesellschaft | No minimum capital is required |
| 3. | Limited Liability Company | Gesellschaft mit beschränkter Haftung or GmbH | €20,000 |
| 4. | Public Limited Company | Aktiengesellschaft or AG | €100,000 |
Sole Proprietorship
A sole proprietary business is owned and operated by a single person. It is the simplest and easiest format of business in Switzerland and is mostly favored by talented individuals, skillful artisans, retailers, etc. The capital requirement is officially none, however, it may take some costs such as rentals, etc. to set up the business.
Partnership
A partnership business is where two or more natural persons team up to attain a commercial objective. Though registered by the state, there are very few regulations to adhere to as compared to other more complex business formats.
Limited Liability Company
An LLC is a complex business format preferred by small and medium enterprises. The company is recognized as a legal person; assuming all liabilities and obligations in case of debt and loss. The owners of the company can not be held responsible for any obligations arising from the business.
Public Limited Company
A public limited company is the most complex business structure. It has a board of directors, legal representatives, and chairman, and is bound to follow a ton of regulations. However, for large organizations, or capital-intensive businesses, PLC allows the opportunity to amass huge funds through public offerings in a small amount of time. Instead of investing personal equity, a PLC operates on public equity and bank loans.
Cost of registering a company in Switzerland
The cost incurred during the company registration and incorporation process is influenced by various factors such as the type of business, nature, industry, location, etc.
Some of the major costs that are most likely to be incurred are as follows:
Company formation fees
These vary depending on the canton but typically range from €200 to €1,000.
Notary fees
If you are registering a limited liability company (GmbH) or a joint-stock company (AG), you will need a notary to certify your company documents. Notary fees can range from €1,000 to €5,000.
Legal fees
If you choose to work with a lawyer to register your company, you will need to pay their fees. These can range from €2,000 to €10,000, depending on the complexity of your company formation.
Company formation agent fees
If you choose to work with a company formation agent, you will need to pay their fees. These can range from CHF 1,000 to CHF 5,000.
General expenses to operate a company in Switzerland
Operational expenses incurred by a company are subject to its size, number of employees, nature of business, location, and other such factors. While some expenditures are manageable, others are inevitable; utilities, logistics, employee welfare tax, etc.
Here are some expenses that almost every format of the company will incur during the course of business normally.
Labor costs
Switzerland is known for having a high cost of living and high wages, which translates into higher labor costs. According to data from the Federal Statistical Office, the average hourly wage in Switzerland was €61.5 in 2020.
Office rent
Renting office space in Switzerland can also be expensive, especially in major cities like Zurich and Geneva. The rent for a typical office space can range from €1,000 to €2,000 per square meter per year.
Taxes
Switzerland has a relatively low corporate tax rate, but the overall tax burden can still be high, depending on the canton and municipality. The combined federal, cantonal, and municipal tax rate can range from 12% to 24% of profits, depending on the location and other factors.
Social security contributions
Employers are required to pay social security contributions on behalf of their employees, which can add up to around 10% to 15% of the employee’s salary, depending on the canton.
Other costs
Other costs associated with doing business in Switzerland can include insurance premiums, utilities, transportation, and marketing expenses.
Overall, Switzerland is known for its high quality of life and well-educated workforce, but this comes at a price. It’s important to carefully consider all the costs associated with doing business in Switzerland before making any decisions.
Business environment in Switzerland
Among other things, Switzerland is known for having a favorable business environment that is characterized by stability, innovation, and a high level of competitiveness.
Here are some of the key factors that contribute to Switzerland’s business-friendly environment:
Political stability
Switzerland has a stable and predictable political environment, which provides a conducive environment for business.
Strong economy
Switzerland has a strong and diversified economy that is built on a foundation of innovation, technology, and research. This provides a fertile ground for entrepreneurship and business growth.
Skilled workforce
Switzerland has a highly skilled and educated workforce, which is a key factor for the success of many industries, including finance, technology, and healthcare.
Low corruption
Switzerland has a low level of corruption, which creates a level playing field for businesses and ensures that contracts are honored.
Favorable tax system
Switzerland has a favorable tax system that encourages business growth and investment. The corporate tax rate is relatively low compared to other European countries, and there are many tax incentives available for businesses.
Efficient infrastructure
Switzerland has a well-developed infrastructure that includes a world-class transportation system, modern communication networks, and reliable energy supplies.
Holistically speaking, Switzerland offers a stable and innovative environment that is conducive to progress, growth, and success. This, combined with its strong economy, skilled workforce, and favorable tax system, makes it an attractive destination for both local and foreign investors.
