Switzerland is an ideal location to start and run a business thanks to the business-friendly registration procedure, government's pro-business initiatives, and an efficient banking and finance industry. Businessmen who are interested in the Swiss business environment can enter the local market through a representative office (also referred to as a liaison office), which is a type of entity set up for non-commercial purposes. There are businesses who want to widen their outreach to different markets just to do research and they can do so by setting up a representative office in that particular country.
In Switzerland, a representative office, or liaison office, does not have its own legal status or a distinct trade name, and neither does it own property. The liaison office has a special status under the Swiss law. It is important to know that a representative office does not possess a legal entity and is governed by the rules and regulations imposed under the domicile legislation. Office of trade representative can be set up by both foreign legal entities and non-governmental organizations.
A representative office is more flexible than the branch office in Switzerland. However, unlike the branch office, a representative office is not allowed to engage in activities of a professional nature and is also not subject to territorial economic contribution. The representative office has no legal or economic autonomy and depends on the principal company. It does not have the power to enter into contracts and its employees do not have the authority to bind the company. However, it appears to be able to employ staff and normal payroll services and social duties will apply to all staff excluding expatriates.
A representative office does not require performing the standard procedure applicable for other business entities set up in Switzerland. The minimum requirements are as follows:
A representative office exists on appointment and establishment of one or more representatives. The representatives must also register to the personal income tax, and a work permit and a residence permit is also mandatory. If at a later date the activities of the representative office change into a branch, the appropriate registration/amendment of registration in the trade register will have to be made. At the same time, the new entity must register for corporate tax, VAT, etc.
If a business wants to establish its representative office in Switzerland, a ‘Declaration of Existence’ must be submitted to the authorities at the Chamber of Commerce and Industry. Also note that, this procedure does not enter the representative office in the Commercial Register, as this form cannot function as an independent company.
After the company has registered with the Commercial Registry, the Cantonal Social Security Office (Ausgleichskasse) will send the employer an application for registering employees in the social insurance system, which includes retirement and survivor’s insurance benefits, disability insurance, occupational accident insurance, and retirement pension.
It requires around 7-14 days for completing the process of business registration in Switzerland. After the branch office, a representative office is the most preferred business entities in Switzerland. As long as a liaison office doesn’t conclude any sale and is not directly providing service to the clients of the foreign company, it is not subject to income tax. Moreover, as it doesn’t make any sales and works exclusively on behalf of the foreign office, it is not subject to VAT. However, the foreign company can reclaim the VAT charged on the costs of installing and finance liaison office.
Business Setup Worldwide is a platform to help you start a business in Switzerland. Our services include business formation, registration, accounting and bookkeeping, corporate secretarial services, visa and tax services. If you are looking to establish a representative office in Switzerland then we are here to guide you through the steps. Our advisors in Switzerland have years of experience in this field and will efficiently manage all your requirements and fulfill them in a cost-effective manner. Contact us today- we’d be glad to help.