Brief Review

Entrepreneurship in Switzerland

The Swiss make every effort to streamline the process of starting a business. According to Location Promotion Switzerland’s Business Handbook, “As a general rule, the freedom of trade and industry, which is guaranteed by the Federal Constitution, allows everyone, including foreign nationals, to operate a business in Switzerland, to establish a company or to have an interest in one. In principle, no approval from the authorities, nor a membership of chambers of commerce or professional associations or an annual submission of operating expenses is required to establish a business.”

A work and residence permit is required in order to conduct business personally on a permanent basis. EU/EFTA nationals wishing to start a business in Switzerland can apply for a five-year B EU/EFTA permit with the respective cantonal authorities. Non-EU/EFTA nationals can obtain a work and residence permit provided the desired market is not saturated and can create job opportunities for Swiss nationals. Foreigners without residence permits can still own an interest in a business operated by a Swiss national, regardless of the percentage of equity. Some sectors may require licenses or permits (such as banking, insurance, hotel and restaurants, medical and law), depending on the canton.

The more clear and concrete the business plan, the more quickly it is possible to move from the planning stage to implementation. Once the decision to locate your business in Switzerland has been taken, the economic development agency of the selected canton can help in setting up your business from start to finish. Banks, consulting firms and fiduciaries, as well as specialized attorneys, are at hand to answer any questions you may have. The time it takes to set up a company is between two and four weeks, beginning from the submission of the first documents until the company becomes a legally recognised entity. Generally speaking, most foreign relocations to Switzerland take the form of a joint-stock company. However, should the Swiss branch be founded as a single owner business, as a general partnership or as a limited share partnership, this can be initiated completely online via the new electronic system, KMUadmin.

The most common types of companies are the joint stock company or corporation (AG), and the Limited Liability Company (GmbH).

Foreign companies often choose the corporation (AG) as their Swiss subsidiary. What makes this popular as a corporate form is the fact that the shareholder’s liability is limited to his or her share capital. Securities are easily transferable, and the low capital required to form a corporation caters to both publicly held and small to medium-sized corporations.

The corporation is the ideal corporate form to exclude personal liability by its shareholders since only the corporate assets, including the share capital, are subject to collection of the corporation’s debts. To set up and maintain a corporation there are certain rules involving founders, structure, capital and officers. The minimum capital required is generally 100.000 CHF.

A Limited Liability Company (GmbH) is a legal entity in which two or more persons or companies come together to form a new company. The company’s liability is limited to the amount of registered capital, which is a minimum of 20.000 CHF (50% of which must be deposited at the moment of registration). At least one director is required, and all the owners of the company are entered in the commercial registry. The GmbH is gaining popularity among small and medium-sized companies. The advantages of a GmbH include a low minimum capital and no restrictions as to the nationality of its managing directors. Only two founders are required, and auditors are optional.

Small and medium size businesses (SMEs) are the backbone of the Swiss economy, accounting for 99.7 percent of all companies. SMEs consist of fewer than 250 employees, numbering just under 300.000 in total. Nearly 88 percent have a staff of fewer than 10 people, and four out of five offer apprenticeships to young people, crucial to the training of the Swiss workforce. Because of this, there are tax breaks offered to encourage investment in new companies that will create more jobs.

According to the Swiss Labour Force survey, in 2007 the number of self-employed persons was 568.000, about 14 percent of the working population. However, it is only possible for Swiss and EU/EFTA nationals to be self-employed in Switzerland. Non-EU/EFTA nationals must either work for an employer or start a business that employs at least one person, Swiss or not, with a full-time salary (even if that person is yourself).