With over 1,200,000 businesses registered in Switzerland, it is one of the most reputable and popular jurisdictions. Among these 1.2 million businesses, GmbH in Switzerland is the most prevalent and favored company structure, especially among small and medium enterprises.
Aside from this, the country is also known for its stable economy, with the Consumer Price Index (CPI) rising by only 0.2 percent. Thus, the country boasts very low inflationary pressures, keeping the economy safe from external shocks.
With strong infrastructure, tech-driven innovation, a stable economy, and a flexible tax environment, setting up a Swiss GmbH can be an essential step toward global expansion. Our article covers the basics of this business structure and what steps you can take as a foreign national to incorporate a Swiss company.
What is a GmbH in Switzerland?
As Switzerland is a multilingual jurisdiction with three official languages, depending on the language, a limited liability company in the country is known as a Gesellschaft mit beschränkter Haftung (GmbH) in German, Société à responsabilité limitée (Sarl) in French, or Società a Garanzia Limitata (SAGL) in Italian.
Regardless of the name, a Swiss LLC is a popular hybrid structure that combines the features of a public limited company with a partnership. To put it simply, it offers a range of features, including limited liability, the ability to enter into contracts in its own name, among others.
A GmbH in Switzerland is governed by Articles 772-827 of the Swiss Code of Obligations (CO). Moreover, the canton-specific Swiss Commercial Registry oversees the incorporation.
Key Features of a GmbH in Switzerland
- Both natural and legal persons (companies) can own shares in a GmbH.
- Shareholders of the GmbH enjoy limited liability. They are liable only for the amount unpaid by them.
- The company has unlimited liability and must repay its debts through the sale of assets.
- The minimum capital requirement for setting up a GmbH in Switzerland is 20,000 CHF.
- A Sarl in Switzerland is a separate legal entity. It can enter into contracts and open a bank account in its own name.
- There must be at least one shareholder to set up a Sarl in Switzerland.
- There is no nationality or residency requirement for setting up a GmbH in Switzerland.
- At least one managing director (Geschäftsführer) with individual signing rights (or two with joint signing rights) must be a legal resident of the country.
- 5 percent of the annual profit must be allocated to the statutory retained earnings. Moreover, the carryover loss must be settled before transfer to retained earnings.
Top Benefits of Setting Up a Swiss GmbH
Setting up a GmbH offers unique advantages not found in other jurisdictions. Here are the top benefits that you can avail:
No Currency Restrictions On Capital
A GmbH in Switzerland can have capital in any currency, including USD, GBP, CHF, JPY, and Euro. However, cryptocurrencies are not permitted as cash for injecting capital in the firm. They are treated as a contribution in kind.
Having no restrictions on currency helps simplify a company’s balance sheet as it reflects actual profits and losses, instead of those incurred due to exchange rate fluctuations. Moreover, it facilitates foreign investment by helping bypass pseudo-insolvency arising from currency fluctuations.
Thus, as an owner, it is vital to have the capital in the currency in which operations take place to mitigate the impact arising from fluctuations.
Issuance of Profit Sharing Certificate
Under Article 774a, a GmbH can issue profit-sharing certificates to individuals and firms in return for investment or as remuneration for services provided. That means you can also appoint service providers, such as a company secretary, and issue profit-sharing certificates in place of salary.
Ability to Buy Back Shares
A GmbH in Switzerland can buy back its shares from existing shareholders. However, it cannot buy back more than 20 percent of the capital. These shares are written as treasury shares in the books, and a Swiss Sarl can hold these shares for a maximum of 2 years (depending on the percentage acquired).
This particular benefit allows the firm to reinvest the capital by onboarding a new investor, issuing them as employee stock options, or permanently erasing them by reducing the capital. A share buyback also allows firms to resolve disputes or allow a shareholder to leave the business.
Freedom to Interpret the Law
By default, if you own shares in a GmbH and want to sell them to a third party, you must get formal approval from the shareholder meeting. The other shareholders can simply say no and disapprove of it. Article 786 on capital assignment gives a GmbH in Switzerland the freedom to interpret the law.
Thus, a GmbH can provide in its corporate bylaws that shareholders may transfer the shares to a third party without requiring approval from other shareholders. Moreover, they can further tweak it to limit who can buy a stake in the company.
Right to Inherit the Shares
Offspring and spouse can inherit the shares of the shareholder in a Sarl. Such inheritance also gives the related powers to the inheritor, such as voting rights, managerial rights, and so on.
Raise Additional Capital
Under Article 795a, the managing directors of a GmbH in Switzerland may call for additional financial contributions if the company is unable to continue its business operations.
Key Documents to Prepare for Swiss GmbH Formation
The paperwork for your firm must be in one of the official languages of Switzerland (German, French or Italian). While going forward with company formation in Switzerland, you must prepare the following set of documents:
- Application form for the commercial register signed by the designated managing director.
- Proof of registered office
- Articles of Association with details about corporate purpose, share capital breakdown, etc.
- Public deed of incorporation to formally establish the company.
- Capital deposit confirmation to be deposited in a consignment bank account.
- Declaration of ultimate beneficial ownership
- Stampa declaration confirming that the firm is not taking over any hidden liabilities or unrecorded assets.
- Lex Friedrich declaration to ensure that the firm does not violate Swiss restrictions on foreign real estate ownership.
Which Canton to Choose for Swiss SARL formation?
Switzerland has 26 cantons. Each canton has distinct official languages and legal frameworks. The cost of forming a Swiss SARL can vary depending on the chosen canton. Here are the few things that you must keep in mind before selecting a canton:
Cantonal Group | Tax Rate (Approx.) | Administrative Setup Cost | Best Known For |
Low-Tax Hubs (e.g., Zug, Lucerne, Schwyz) | 11.6% to 14% | CHF 1,000 to CHF 2,500 | Saving on taxes; ideal for remote owners, tech, and crypto startups. |
International Hubs (e.g., Geneva, Vaud/Lausanne) | 13.9% to14.7% | CHF 1,800 to CHF 3,500 due to higher notary fees | Operating in French; ideal for luxury goods, biotech, and NGOs. |
Economic Heavyweights (e.g., Zurich, Bern) | 19.4% to 20.5% | CHF 1,200 to CHF 2,500 | Immediate access to Switzerland's largest financial markets and talent pools. |
How to Set Up a GmbH in Switzerland as a Foreigner?
Switzerland has different requirements for company setup depending on the entrepreneur’s nationality. Here is a quick overview of the general business formation process in Switzerland for registering a GmbH.
Step 1: Choose a Canton
You can choose a canton based on language, taxation, and overall operational costs. Cantons such as Zug offer a more cost-effective option, whereas Bern may not be budget- and tax-friendly for entrepreneurs. Research extensively before choosing the same.
Step 2: Establish a Swiss Presence
If you aren't moving to Switzerland, you must appoint a managing director who is a legal resident of the country and provide a physical corporate address.
Step 3: Choose and Clear Your Business Name
The name must include the corporate structure as a suffix. Moreover, you must also clear the name through the nationwide Zefix portal (Swiss Commercial Register) to ensure no identical company exists.
Step 4: Open a Blocked Corporate Setup Account
Open a blocked corporate setup account and transfer the minimum share capital. As a foreign national, the KYC can take weeks. Once the cash arrives, the bank issues an official capital deposit confirmation certificate.
Step 5: Draft and Notarize the Documents
As mentioned earlier, the documents must be in any of the three official languages of Switzerland. To set up a GmnH, you must draft Articles of Association, the Stampa declaration, and other documents as mentioned above.
Step 6: File with Cantonal Commercial Registry
Submit the signed documents to the registry via your legal representative at the Swiss Commercial Registry of your chosen canton. Once approved, the registry publishes your company in the Swiss Official Gazette of the Commerce (SOGC).
Step 7: Unlock Funds and Register for Tax
The tax registration and bank account setup must be done within 10 days of incorporation. To proceed, you must show the fresh Commercial Register extract to your bank. They will release the funds and convert the consignment bank account to the regular bank account. Simultaneously, you must register for your Corporate Tax ID (UID) and apply for VAT registration if your projected annual revenue exceeds CHF 100,000.
Key Things to Keep in Mind
- A Sarl is subject to double taxation. Both the company’s and the individual’s income are taxed.
- A consignment (locked) bank account is mandatory to inject initial capital in the business.
- The cost of setting up a GmbH in Switzerland can vary by the Canton.
- The overall tax rates can also vary by the canton. The corporate tax rate can range from 8% to 21%.
- EU and EFTA nationals enjoy the right to free movement. They can obtain a 5-year B resident permit by simply submitting company documents to the local canton migration office.
- Third-country nationals (US, UK, Canada, etc) must submit a comprehensive business plan. Moreover, they must also create a particular economic interest, such as generating local jobs or bringing innovation in Switzerland, to meet the residency permit requirements.
- Switzerland is among the top crypto-friendly countries, with Zug as a haven for crypto startups.
How Can Business Setup Worldwide (BSW) Help?
Setting up a GmbH in Switzerland is the most business-forward choice an entrepreneur can make. With the country’s global reputation and a top-notch, innovation-friendly environment, it is an ideal destination for tech and crypto-related startups, among others. Regardless, navigating the formalities can be tedious due to the multi-language approach and various documentation requirements. That’s where experts at BSW can be of assistance. Contact us now to begin!
