Subsidiaries are legal entities with capital that is partially or totally owned by foreign companies. However, the management of the subsidiary is not conditioned by the foreign capital, and the entity is able to handle business contracts, hire employees or issue and transfer shares.
Why should you found a subsidiary in Switzerland?
Subsidiaries follow a decentralized business model, which means that the independently managed entities are financially and operationally self – sufficient. Each business unit finances itself, manages its own risks and deals with the consequences of its own bad decisions, without affecting the foreign companies.
By founding a subsidiary, it’s easier to contain losses in the event of failure. It’s also the most common practice for those interested in forming a company in Switzerland, by simply expanding their business operations.
Certain Swiss regulation favor subsidiaries opened in this country, for instance, different tax treaties are regulating the way the withholding taxes on dividends, interests or royalties paid to the treaty country are issued. In many cases, the withholding tax is consistently minimized, or even exempt.
The corporate tax on profits is paid only in the country of origin, or if an exception is made and it’s paid in Switzerland, a refund is offered.
How to register a subsidiary in Switzerland
A subsidiary is usually registered as a GmbH or an AG. The process is similar for both types of companies. You don’t need a special license to perform activities under this form of business, however it is mandatory to register the new subsidiary with the Swiss Companies Register.
Subsidiaries in Switzerland are formed as companies with limited liability, and they may be public or private, depending on their type – GmbH or AG.
At least two shareholders, with a minimum deposit of 20,000 CHF in a Swiss bank account must form a GmbH. It’s also mandatory that the director is a Swiss resident.
In the case of an AG, this company must be formed by at least three shareholders, with a minimum share capital of 100,000 CHF. It’s important to note that the capital cannot be increased more than a half at a time, which is why you need to decide right from the start how much you’re willing to invest. Half of the sum must be provided prior to registration. The majority of the directors should also be Swiss residents.
If you want to start the registration process for an AG, the first step is depositing the required minimum share capital in the bank and receiving an extract from the bank that certifies the financial operation.
Documentation needed to register a Swiss subsidiary
After the deposit was made, the articles of association are drafted in front of a notary, who must notarize the personal and the corporate signature from the application.
The next step is depositing the notarized articles of association, the decision to incorporate the company in Switzerland and the bank certificate to the commercial registry. The process of registering a subsidiary in Switzerland should take no more than two or three weeks.
If necessary, your Swiss subsidiary should be registered for VAT and the employees need to be registered at the social insurance system.
Overall, establishing a subsidiary in Switzerland is a relatively simple process and it offers many great business opportunities for various companies looking to expand their businesses abroad.