Branch of a foreign company in Switzerland: structure and taxation

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Your international business partners will feel comfortable and safe if they can start their new business activities with you through a Swiss company. This is the reason why many entrepreneurs choose Switzerland for their company, branch or representation office. The stable political and economical environment are a further argument for incorporating a company in Switzerland.

 

Interis AG provides its clients with a comprehensive service in the process of setting up, incorporating and administering companies in Switzerland. Our support is not limited to the incorporation phase of the company. Our specialists are pleased to provide further assistance during a company's ongoing operational business activities.

 

Our further services include: keeping and managing the bank accounts of the company, setting up and keeping the financial accounts, doing the annual reporting, auditing the annual statements and supplying the client with all required audit reports, providing advice in management questions and offering further services requested by a client.

 

According to Swiss law, any foreign company is allowed to establish a branch in Switzerland.

 

The joint stock company (AG) is the most commonly used Swiss company type. The AG can be used for companies active in the trading, production, holding or financing business.

 

Besides setting up a joint stock company, there is also the possibility of establishing a branch of a foreign company. A branch is a commercial business that carries on its own business activities. Commercially, the branch should be independent to such an extent from the headquarters that it can continue to exist without the support from the headquarters. The management of the branch must be able to act both internally, as well as externally in such an independent way that it can itself conclude contracts relating to the normal business activity of the branch.

 

Main characteristics of structure and taxation of a Swiss branch of a foreign company:

Registration:   The Swiss branch of a foreign company needs to be registered in the Companies Register. This registration is somewhat more complex than for a Swiss joint stock company.

Independence   from head office:   The branch must have a certain independence in order to be approved for tax purposes by the authorities. It must have its own premises, its own management that can act independently from the head office and conclude contracts on its own within the limits of the business. At least one person of the branch must be authorised to sign on its behalf who is not a signatory at the company's head office.

Advantages of a branch:  
  • Does not need own capital.
  • No application of the 35% withholding tax on payments to the foreign head office.
  • Favourable creation costs (no share capital required)
  • Exemption of the Swiss earnings at the foreign head office according to various double taxation treaties. These treaties exist with Germany, Austria, Luxembourg, Spain, Belgium, Bulgaria, and many other countries

Taxation:   The Swiss tax law has three levels of taxation authority: Municipal, cantonal and federal. Swiss branches with predominantly international activities enjoy a very favourable tax regime, at least on a municipal and cantonal level. Generally, a later change of a Swiss branch to a Swiss subsidiary company is possible but involves a lot of additional work.

Liability:   The management of the foreign head office is liable for the business activities of their Swiss branch.

Foundation of a Swiss branch: The setting up of a Swiss branch requires a personal meeting with a representative of Interis AG. The first meeting is usually free of charge and not binding. It takes 14-21 days to set up a Swiss branch, starting from the point at which the agreement has been reached and the required documents have been provided by the head office. The cost of registration mainly depends on the complexity of additional services required or wanted by a client.

Interis AG provides you the following services for Swiss and international companies:

 

  • We provide advice to clients in order to select the type of Swiss company most appropriate to a client's needs.
  • We issue all necessary contracts, statutes, regulations and legal documents.
  • We support clients in working together and setting up accounts with the world leading banks and if required, we keep in (daily) contact with the bank.
  • We register branches in Switzerland.
  • We set up and keep the accounts and do the reporting; if required, we do the payroll accounting.
  • We consult clients in tax planning related to foundations, reorganisations and changes in capital structure and liquidations. We establish tax declarations for all cantons (income, capital), we consult clients in tax and VAT matters and represent their interest towards the tax authorities.
  • If required by the client, we audit the annual statements of a branch and supply the client with all the required audit reports

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E-Mail: info(at)interis.ch

Tel.: +41 44 218 51 44