FORMING A SWISS COMPANY

Incorporation time: 18 days

Shelf companies: No

Accounting: No

Secretary: No

Nominee Shareholder: Yes

Nominee director: Yes

History of Switzerland

With nearly eight million inhabitants, Switzerland is located in Western Europe, surrounded by France, Germany, Italy, Austria and Liechtenstein. Switzerland is a multicultural nation due to its geographical position. Switzerland’s official languages are German, French, Italian and Romansh. Switzerland is characterized by its famous political and military neutrality and comprises 26 cantons (districts).

Switzerland as an Onshore Centre

Switzerland has several cantons and each applies its own corporate tax rate. Switzerland is considered an Onshore location with low tax rates, particularly as companies registered in the canton of Obwalden will only pay a tax rate of 12.66%. Companies may also be domiciled in Lausanne, Geneva, Zug, and Zurich, but will be subject to higher tax rates.

Switzerland Summary

Switzerland has many cantons, each with a different tax system. It is one of the few countries that still allows anonymous bearer shares in form of the S.A (Société Anonyme, or public limited company), which requires a capital of 100,000 CHF. SARL companies (Société à responsabilité limitée, or limited liability companies) do not offer anonymity, except by share ownership through a trust or nominee, and require a capital of 20,000 CHF. It is recommended to form a Swiss company with a holding company in Hong Kong in order to receive the dividends, given the advantageous agreements between Switzerland and Hong Kong. In order to incorporate a company in Switzerland it must have a local Director who is either resident in Switzerland, or is a Swiss national.

Types of Swiss Companies

Setting up a company in Switzerland takes around a week and has six stages.

Role of Company Directors and Shareholders in Switzerland

The Director of a Swiss company must be a Swiss resident or national and is considered liable for the activity of the Company. It is possible to appoint a director under a mandate to carry out the administration of the company. Details of the shareholders is public for SARLs (GmBH) but is anonymous for S.A companies (public limited companies).

It is generally recommended that clients hold their shares in a Swiss company via a holding company in Hong Kong or Europe in order to avoid the 35% withholding tax.

Detailed Review of Switzerland

Switzerland is famous for its efficient economy and high standard of living as well as for its health and education systems which are among the best in Europe. Nevertheless the 2008 global crisis affected the country which experienced a sharp decline in growth before slowly recovering primarily as a result of domestic demand. The growth estimate for 2014 is 1.8%.

Switzerland’s agricultural sector only accounts for 1% of GDP which is partially due to the country’s natural landscape only 10% of which is arable. Production focuses primarily on dairy products and livestock farming, although organic farming is currently growing. Like its economy Switzerland’s industry is also famous worldwide for such industries as Basel’s chemical and pharmaceutical products.

However, state of the art manufactured goods (watches, engines, turbines, generators, etc.) are the main reason for Switzerland’s industrial reputation. Finally, service industries represent more than 70% of GDP, and represent almost as many jobs among the working population. The most dynamic service sector fields are banking, insurance and transport, as well as tourism, which is very dynamic.

International trade is extremely important for Switzerland’s economy, as the country is very open to the world. The country has a strong trade surplus, and its main trading partners are the European Union and the United States.

Switzerland’s Economic Strengths

• Good location.
• Excellent infrastructure.
• Low tax rates.
• Easy to introduce high-tech products.
• Highly skilled workforce.
• The country is very R & D focused.
• The highest capital investment fund in Europe.

Switzerland’s Economic Weaknesses

• Highly competitive market.
• Stringent business regulations.

Foreign investments are well received in Switzerland, and each canton is free to encourage such investments as it deems fit. Cantons therefore often provide a number of tax benefits (ten years without charges, for example, in some cantons).

Trade and Market Information

Switzerland is member of the WTO, the OECD and the European Free Trade Association. It is also a signatory to the Kyoto Protocol, the Washington Convention, the Basel Convention, the Montreal Protocol and the 2001 International Coffee Agreement.

Switzerland has very strict import regulations, and although licences are not mandatory for trade, some products nevertheless require a licence. Quotas are even assigned to certain categories of goods, such as biotechnological agriculture. However, trade with European Union countries is highly liberalised.

Imported products should be presented to a Customs Office within the required time frame, which is determined according to the mode of transport used to transport the goods. Many companies use freight forwarders, which act as carriers and customs officers. In Switzerland, customs duties are generally 5.5%, although this value can change depending on the goods in question.

The distribution sector is dominated by supermarket and discount store brands. Manufacturing is a dynamic sector in Switzerland, with 76,000 companies. It represents 42% of Switzerland’s exports. The mechanical, electrical and metal sectors are also very important.

Employment Legislation in Switzerland

The maximum working week varies, depending on the type of employee: 45 hours/week for technicians and researchers, 50 hours/week for all other positions. Retirement age is 65, and there is no minimum wage in the country. Protective measures have however been introduced in order to avoid distorted competition. Social security contributions amounted to 5.05% for employers and for employees.

Unions exist in Switzerland but, unlike other countries, such as France, unions are not particularly influential. Negotiation tends to be preferred to strike action. However, 25% of all employees are union members.

The Principles of Swiss Banking Secrecy

Almost as famous as Swiss chocolate, Swiss bank secrecy has a far-reaching international reputation. Bank secrecy is simple: banks (and their employees) are legally required not to disclose information on customer identity. This also applies to subsidiaries of foreign banks in Switzerland.

In 1931, when bank secrecy was informal but widely practised, Jean-Marie Musy (then Federal Councillor) said at the General Assembly of Swiss Bankers:

“Official Bank supervision is not desirable for the State or for the Banks … The intervention of official inspectors would worry … clients, who are very much attached to the importance of discretion, and who rely on this discretion. The potential capital flight from our banks that could result from imposed bank supervision, would harm our national economy, and therefore cause our entire population to suffer.”

The History of Banking Secrecy in Switzerland

The principle of bank secrecy was first enshrined in law in 1934. It was designed to protect Jewish emigrants leaving Germany from the Nazis. Heavy penalties were then imposed on banks that did not comply with secrecy requirements. The first change in legislation was made several years later in 1980. The Federal Act on International Mutual Assistance in Criminal Matters was the first step towards Switzerland’s cooperation in fighting international crime. It then became possible to override banking secrecy when extradition was in question. Nearly 20 years later, in 1998, Switzerland again improved bank secrecy transparency for money-laundering, while maintaining client anonymity. In 2005, the country signed a new treaty to further improve the fight against crime. However, Switzerland has never favoured international cooperation over bank secrecy, which remains in force.

Exceptions To Swiss Bank Secrecy

Although bank secrecy still exists in Switzerland, it is important to realise that secrecy does not protect clients from either national or international law. Bank secrecy is lifted when a Swiss bank client is involved in a criminal case and/or investigation, regardless of how serious the case or investigation may be. Bank secrecy is also lifted if a foreign judge is conducting an investigation in Switzerland.