Doing Business in Switzerland

Switzerland is an important centre for international business. The following factors make it an especially attractive location for doing business:

Central location

Since the Middle Ages, Switzerland has played an active role in trade due to its geographically key position in the heart of Western Europe.

Free enterprise economy

A business can only grow and develop if it can operate within a free enterprise environment. The Swiss economy is based on the principle of free enterprise. Freedom of trade and commerce has been guaranteed by the Swiss Constitution since 1847.

Political and social stability

Ever since the foundation of the Federal State, Switzerland has enjoyed uninterrupted political stability. This is evidenced by the pre-dominance of political parties which support the functioning of the market economy. Even though the 7.7 million inhabitants of Switzerland belong to four different language groups and possess different cultural backgrounds, there is a high degree of tolerance and personal freedom. The strong relationships between employers and employees have provided an excellent social climate for decades, which has contributed to the above average growth of the standard of living. Switzerland’s policy of neutrality, to which it is bound by its constitution, is an important reason for making Switzerland a good place in which to conduct business.

Strong international links of the Swiss economy

Due to the lack of any raw materials as well as the impossibility of growing sufficient food for its population, Switzerland relies heavily on imports. On the other hand, Swiss industry, which produces goods of high quality, exports almost half and in some sectors even more than 90% of its production. Excellent international relations also exist in tourism, telecommunications and the finance sector.

Efficient centre of finance

Switzerland is one of the leading and most efficient centres of finance in the world. Besides the local banks, international banks offer services such as foreign exchange, precious metals trading, asset management and underwriting. Banking secrecy, which guarantees discretion on the part of banks and their employees in respect to client information, is famous. Interest rates are low when compared to other countries. This has a favourable impact on the attractiveness of doing business in Switzerland.

Foreign Invest

Switzerland offers ideal operating conditions for a foreign company, including liberal and business-friendly legislation, political and financial stability, first-class infrastructure as well as a highly motivated and well-trained workforce.

The country ranks as one of the world’s most important technology locations. Leading domestic companies and well-known foreign companies have chosen Switzerland as their location for research, development and production activities in the following sectors: bio/medical technology, information technology, telecommunication, pharmaceuticals and chemicals.

The high quality of the Swiss education system guarantees the competence and know-how found in the labour market, and provides a strong incentive for foreign managers and their families to relocate to Switzerland. The quality of research programmes is recognized world-wide.

Switzerland is also a prime location for international headquarters and management centres. Successful multinationals from all over the world have moved to Switzerland over the past few years, recognising that it is an ideal location from which to cover the European market.
Switzerland’s international banking system, the multilingual capabilities of its professionals and academics, set the foundation for a supportive and dynamic international environment.

Forms of business organisation

Swiss company law is part of the Swiss Code of Obligations. The following sections describe some of the commonly used and most widespread forms of business organisation.

Sole proprietor

The business is carried out by a sole proprietor and has to be registered in the commercial register if it produces at least CHF 100,000 gross income per year. It is not a legal entity (i.e., the proprietor is personally liable for his business without any limitation). The proprietor himself is subject to taxation. This form of business organisation is commonly used for smaller enterprises.

Ordinary partnership

An ordinary partnership is based on a contract of association between two or more partners and is a very loose formation without being a legal entity. Each partner is individually subject to taxation rather than the partnership itself. For business debts, each partner is personally liable with his own private assets. The ordinary partnership cannot be entered into the commercial register. This form of business organisation is often used for activities of short duration or for specific projects only (e.g., consortia or joint ventures).

General partnership

To form a general partnership, two or more individuals enter into a contract of association in order to operate an enterprise based on commercial principles. It has a trade name and must be registered in the commercial register. Although it can acquire rights, incur liabilities, take legal action and be sued, the general partnership is not in itself a legal entity. Liability for debts is not limited to the capital of the partnership but is extended to the private assets of the partners in the form of a joint and several liabilities. This form of business organisation can be set up by companies, where the liability is limited to the capital of the company.

Limited partnership

A limited partnership has two kinds of partners – one must be liable for the business without any limitation, while all others are only liable to the extent of their capital contribution. Only individuals can be partners with unlimited liability, whereas partners with limited liability may also be legal entities, such as corporations. Since the limited partnership is derived from the general partnership, their other characteristics such as rights and duties are the same as described in the above section.

Limited liability company

A limited liability company is a legal entity with fixed capital. The minimum capital is CHF 20,000 and has to be fully paid in cash or in-kind. For the formation of a limited liability company, one founder is required. Each partner (individual or company) participates with a capital contribution (minimum CHF 100) and they each must have a name and domicile registered in the commercial register.
The management and representation of the company may be transferred to people who are not partners, but at least one of the managing officers must be domiciled in Switzerland. All partners and managers may be non-Swiss citizens.

In terms of auditing, the limited liability company is treated in the same way as the corporation.

Corporation

The most common form of a company in Switzerland is the corporation. Because of the ease of which shares can be transferred, it is a very flexible form of business organisation. In most cases, foreign investors choose the corporation as the vehicle for their enterprise.