Company Formation

Benefits of holding company in Switzerland

kovalkov — Tue, 20 Oct 2015 04:52:11 +0000

Benefits of holding company in Switzerland kovalkov Tue, 10/20/2015 - 06:52

A Swiss holding company is usually founded in the form of a GmbH or AG. This type of company holds and manages long – term financial investments and participations in other corporations.

A holding company is the perfect solution for investors that need to manage the majority of the shares from other companies. Switzerland is currently one of the countries that offer the best tax benefits for foreign investors.

If you need to decide which type of holding company you should found in Switzerland, probably the best option is an AG, or a joint stock corporation, because of the advantages if offers.

Tax benefits of a holding company in Switzerland

If the affiliates are located in foreign jurisdictions, the Swiss holding company will enjoy certain tax advantages, regulated by double tax treaties and other incentives, depending on each Swiss canton. The nature of the company’s income will also determine its tax rate. Holding companies will have the most tax advantages, if the investments in foreign companies represent at least two – thirds of the total assets or revenues.

The beneficial tax regime is somewhere around 8%, consisting of 7.8% for the corporate income tax on capital and of the corporate officer tax that oscillates between 0.35% and 0.075% of the capital.

Although the standard tax rate for the source in Switzerland is 35%, due to double tax treaties, this rate can be reduced to somewhere between 5% and 15%. These advantages applly to dividends as well, as dividends paid by a subsidiary of a Swiss holding company are not liable for taxation, depending on various conditions. Therefore, Switzerland is able to receive dividends from countries that are part of the European Union free of withholding tax.

Considering that cantons have the right to apply their own taxes, it’s important to note that they exempt Swiss holding companies from all income taxes, which creates a privilege for holding companies. This enables holding companies to not depend on deductions made on capital investments.

Given all these privileges and regulations for Swiss companies, the result is that all dividends and profits, as well as interest income are exempted from tax payments.

Requirements and conditions to found a holding company in Switzerland

In order to qualify as a holding company under Swiss tax authorities, a company must meet the following conditions:

The company may not conduct any commercial activities in Switzerland, except in the case of long – term asset management of the company and for investments management of its subsidiaries.
The company must own at least 20% or 2 million CHF of other corporations’ outstanding assets. The total revenue or income can be derived from dividends or capital gains, but also from shares, cooperatives LLC’s and share certificates.

Founding an AG or a GmbH is a relatively simple process, that shouldn’t take more than two or three weeks. Both types of companies require registration, but the advantage of an AG is that the shareholders may remain anonymous, if they wish so.

Before you decide to found a holding company in Switzerland, it’s important to verify if Switzerland has a tax treaty with your country and under what type of conditions and regulations. Countries that have tax treaties wit Switzerland can benefit from the many advantages this country has to offer, especially in terms of tax rates. It is equally important to verify the tax rates applied by each Swiss canton, as some cantons have significantly lower tax rates than others.

For more details and assistance regarding company formation in Switzerland, feel free to reach out to our expert consultants. Our highly experienced and well-informed team is ready to answer all your questions and give you all the help you might need.

Add new comment

Establish a subsidiary in Switzerland

kovalkov — Tue, 20 Oct 2015 05:02:06 +0000

Establish a subsidiary in Switzerland kovalkov Tue, 10/20/2015 - 07:02

Subsidiaries are legal entities with capital that is partially or totally owned by foreign companies. However, the management of the subsidiary is not conditioned by the foreign capital, and the entity is able to handle business contracts, hire employees or issue and transfer shares.

Why should you found a subsidiary in Switzerland?

Subsidiaries follow a decentralized business model, which means that the independently managed entities are financially and operationally self – sufficient. Each business unit finances itself, manages its own risks and deals with the consequences of its own bad decisions, without affecting the foreign companies.

By founding a subsidiary, it’s easier to contain losses in the event of failure. It’s also the most common practice for those interested in forming a company in Switzerland, by simply expanding their business operations.

Certain Swiss regulation favor subsidiaries opened in this country, for instance, different tax treaties are regulating the way the withholding taxes on dividends, interests or royalties paid to the treaty country are issued. In many cases, the withholding tax is consistently minimized, or even exempt.

The corporate tax on profits is paid only in the country of origin, or if an exception is made and it’s paid in Switzerland, a refund is offered.

How to register a subsidiary in Switzerland

A subsidiary is usually registered as a GmbH or an AG. The process is similar for both types of companies. You don’t need a special license to perform activities under this form of business, however it is mandatory to register the new subsidiary with the Swiss Companies Register.

Subsidiaries in Switzerland are formed as companies with limited liability, and they may be public or private, depending on their type – GmbH or AG.

At least two shareholders, with a minimum deposit of 20,000 CHF in a Swiss bank account must form a GmbH. It’s also mandatory that the director is a Swiss resident.

In the case of an AG, this company must be formed by at least three shareholders, with a minimum share capital of 100,000 CHF. It’s important to note that the capital cannot be increased more than a half at a time, which is why you need to decide right from the start how much you’re willing to invest. Half of the sum must be provided prior to registration. The majority of the directors should also be Swiss residents.

If you want to start the registration process for an AG, the first step is depositing the required minimum share capital in the bank and receiving an extract from the bank that certifies the financial operation.

Documentation needed to register a Swiss subsidiary

After the deposit was made, the articles of association are drafted in front of a notary, who must notarize the personal and the corporate signature from the application.

The next step is depositing the notarized articles of association, the decision to incorporate the company in Switzerland and the bank certificate to the commercial registry. The process of registering a subsidiary in Switzerland should take no more than two or three weeks.

If necessary, your Swiss subsidiary should be registered for VAT and the employees need to be registered at the social insurance system.

Overall, establishing a subsidiary in Switzerland is a relatively simple process and it offers many great business opportunities for various companies looking to expand their businesses abroad.

For more details and assistance regarding opening a subsidiary in Switzerland, feel free to reach out to our expert consultants. Our highly experienced and well-informed team is ready to answer all your questions and give you all the help you might need.

Add new comment

Register a company in Switzerland

kovalkov — Tue, 20 Oct 2015 05:02:58 +0000

Switzerland is often considered one of the best locations for incorporating a company. It is a prestigious country with a relatively low tax rate and, above all, a credible reputation for the quality and security of its business environment.

Furthermore, Switzerland has concluded double taxation treaties with the majority of industrialized countries. Therefore, there is no risk that your company will be taxed in two countries. Taking all these advantages into account, setting up a Swiss company, or opening a Swiss business branch is a rewarding experience. Switzerland also presents an excellent opportunity for young entrepreneurs, start-ups or small and medium-sized businesses to enter the European Union.

The Swiss government continues to support a very attractive business environment through economic measures designed to encourage foreign investors to open companies or subsidiaries in Switzerland.

As a general rule, the freedom of trade and industrial activities, guaranteed by the Swiss Constitution, allows any person, including non-residents, to operate a business in Switzerland, to set up a company or to hold interests in an existing one. The incorporation process is completed only with the registration in the district where the headquarter is set up.

The registration of different types of companies in Switzerland

The main types of legal entities among which foreign and local investors can choose are sole proprietorships, limited liability companies, stock companies, limited partnerships, and general partnerships.

A sole proprietorship can be opened by a single individual who carries out his economic activity. The individual can initiate and independently run their business on a commercial basis, without fulfilling formalities related to incorporation, registration in the trade register, social capital, accounting. Company registration is optional but becomes compulsory if annual revenues outweigh 100.000 CHF.

The limited liability company is formed by association, based on the statute, of two or more persons or companies (Swiss or foreign). When the company is registered with the Trade Register, it acquires a legal personality. The company must hold an annual general meeting where major business decisions will be discussed. Our team of Swiss consultants can help you with detailed information on the registration of a limited liability company. Company taxation is made on profit and capital, and for associates, it is done individually, on social shares (wealth) and distributed benefits (as income).

The stock company is the form of organization that entirely separates the assets of the company from the private assets of the shareholders. This is what mainly distinguishes it from other types of companies. The minimum number of associates, natural or legal persons, is 3, of which at least one must be a Swiss resident living in Switzerland. All the company rules are defined in its statute—they should be notarized together with the constitutive act. Registration with the Trade Register is mandatory. The minimum share capital that is set by law is CHF 100,000. Also, under Swiss law, the board of directors must be composed mostly of Swiss citizens residing in Switzerland. A stock company is the most common type of business in Switzerland. In most cases, foreign companies operating here opt for this form of organization for their branches.

The significant legal difference between a limited liability company and a stock company is that: the shares of the former cannot be freely traded on the market; however, the stocks of the later are transferable to the public through the stock market.

The general partnership or limited partnership in Switzerland can be formed by two or more partners. The main advantage of these legal entities is that no minimum capital for registration is required. Furthermore, to incorporate a partnership, an agreement signed by the partners is required. A limited partnership is formed by at least one general partner with full rights and at least one silent partner who has rights and responsibilities within the limit of the contribution to the entity. On the other hand, a general partnership consists of members responsible for the entity’s actions in the same manner and with equal rights in decision making.

Simple detailed steps for company incorporation in Switzerland

Under the agreement on the free movement of persons, an entrepreneur can also work in Switzerland without a residence permit (permit C). A residence permit (permit B) with a validity of 5 years is enough. When obtaining a permit in Switzerland, the entrepreneur must, however, be able to provide evidence for their business endeavours.

The establishment of a company in Switzerland starts with the opening of a bank account and depositing the paid-up capital, after which a receipt will be received to register the company. The following requirements to be completed after this first step are signing the company’s articles of association to a notary public in Switzerland, the authentication of the company’s incorporation documents and the authentication of the association memorandum. You also need to notarize company representatives and corporate signatures on the application form.

All these documents must be submitted to the local commercial register to obtain legal status. After the Swiss Company Register issues the incorporation certificate, the company must also register for VAT and tax purposes. The last step you need to do is register your employees with the social insurance system, at federal and cantonal authorities.

Be sure to properly fulfil these requirements by appealing to specialized consultants in opening a legal entity in Switzerland.

Swiss Trade Register

It’s designed to provide basic information about all types of Swiss companies as well as addresses, shareholders and other people. It is a commercial register in which each company is registered, registration of the entity should be in the district where it has its official headquarters. Moreover, through this institution, investors can check whether their favourite business name is already registered or not.

Formalities for starting a business in Switzerland

If the documentation process is followed properly, and the minimum share capital is available, a Swiss company can be incorporated in about three weeks average.

Then, companies should keep financial records and must submit annual financial statements following the accounting procedures applicable in this country. Besides, some businesses need to obtain individual licenses or permits depending on the type of activity they carry out. The tax system in Switzerland is quite complex. It's characterized by the existence of three distinct levels: federal, cantonal and communal.

If you want to quickly open your company or make sure there no mistakes during the incorporation process, it is advisable to ask for help from a specialized firm with expertise in such procedures. Our company has an entire network of professionals with extensive experience and solid knowledge of Swiss and European legislation.

Moreover, you can also benefit from other services such as tax planning, accounting, or corporate administration services for companies established in Switzerland. If necessary, we also offer our clients the epportunity of renting office spaces in Swiss business centres, and provide all the facilities required for opening a virtual office. For more details and assistance regarding registering a company in Switzerland, you can reach out to our expert consultants. Our highly experienced and well-informed team is ready to answer all your questions and give you all the help you might need.

Add new comment

New blockchain era for Switzerland. What you need to know?

kovalkov — Tue, 09 Feb 2021 16:12:58 +0000

New blockchain era for Switzerland. What you need to know?

kovalkov Tue, 02/09/2021 - 17:12

New blockchain era for Switzerland. What you need to know?

Switzerland is one of the leading fintech hubs worldwide. According to a study conducted by the Institute for Financial Services Zug (IFZ), the country has unimaginable potential for innovation, entrepreneurship, and financial technologies internationally.

Last year, Switzerland introduced a new law, the "blockchain law". The implementation of this law will follow two stages: the first which already occured on the 1st of February, and the other to eventuate in August. Invoked on the 1st of February were reforms on company law. In the second phase in August, the State will put into effect upgrades of the financial market infrastructure. These will allow Switzerland to have a properly managed cryptocurrency industry where all actors are fully informed of the opportunities & risks associated.

Other benefits of the blockchain law are:

It will allow swift trading;
It will attract a larger number of participants;
A diverse range of products may be accessible affordably.

Who are the first beneficiaries

There are about 3 organizations which already started to benefit from the blockchain law. These are:

Crypto Finance
SEBA
Sygnum banks

The Crypto Finance company received a securities house licence from FINMA. This license will enable the company's Crypto Broker division to activate trade for new digital securities. These securities may include shares, collectibles, assets (e.g. real estate), and luxury goods.

Sygnum banks and SEBA already received their licenses in 2019. They also recently announced their digital assets. Sygnum tokenized a variety of wines from another company on its Desygnate platform. It's believed that more companies will deliver their digital assets via the bank.

In addition to the above companies, more entities have shown interest in company formation in Switzerland and the acquisition of FINMA licenses. These entities include Bitcoin Suisse, Taurus and Lykke, etc.

Are there any drawbacks?

So far, there are no major challenges as far as obtaining a license is concerned. By the way, similar processes were initiated in 2019, but could not work out as expected. However, 2021 has a greater potential to yield better results. For more insights and tax guidance, feel free to reach out to our specialists at SIGTAX.

Add new comment

DLT regulations [2021 Update]

kovalkov — Fri, 22 Jan 2021 03:45:49 +0000

DLT regulations [2021 Update]

kovalkov Fri, 01/22/2021 - 04:45

Recently, Switzerland adopted a new DLT Regulations which sets the country as a leader in FinTech, Blockchain, DLT Technologies and other related programs. The new regulations will enter into force starting from this year.

The DLT amendments will mainly focus on security token exchanges. That means there would be a new license types for trading venues. These would be focused on digital assets; new custody service providers, clearer regulatory regime for digital asset custody providers; and edited asset token, enabling the creation and transaction of digital uncertified securities in a DLT ecosystem without legal hindrances.

A new DLT will amend such legal areas and bring in new solutions to the Civil Law, Insolvency law, Financial market law and most importantly Anti-Money laundering regulation and International private law. All these new amendments will bring a more legal consciousness to the area of blockchain applications.

Below you will find detailed information regarding how these new changes are being implemented:

The first central element of the new regulation is a new licence category for “DLT Trading Facilities” which is called (DLT-Handelssysteme) introduced in the Financial market infrastructure law (FMIA). This new licence type has been defined as a professionally operated venue for the multilateral and non-discretionary trading of Digital (DLT) Securities. Its goal is to offer service in trading, clearing, settlement and custody with DLT based assets not only for regulated financial market players, but regulating even private customers.
The new regulation allows the segregation of the digital assets for the benefit of the relevant creditors or investors, provided certain requirements are met. If the digital assets are held by the custodian in a way that unambiguously allows the identification of the owner on-chain or off-chain (through a sufficient internal ledger), the property to the digital assets remains with the client. In such case, banking regulations are not triggered, even if the digital assets of various clients will be pooled within the custody solution of the custodian.
Under the existing legal framework, the Civil law treatment of “security token” has created uncertainty. To solve this, the new law introduces a new type of digital securities, the so called “Uncertificated Register Securities” (Registerwertrechte). Alongside, new rules for corporations looking to issue shares in a tokenized form are being released. The goal of the legislator is to allow for a stable and legally robust tokenization of rights, through the electronic registration of rights, that entails the same protection and functionality as a security. The creation itself is made by the parties, through a registration agreement according to which the relevant right is entered into a “Register of Uncertificated Securities” and may exclusively be asserted based on and transferred via the register.

As a result, this new legal amendments will allow more secure exchange of shares and other securities, trading facility, a better banking regulation, release of assets and access to data in bankruptcy procedures.

If you have any further question, related to this subject. Please don’t hesitate to contact us, we will provide with professional help from our specialists.

Add new comment

Swiss Asset Management Takes a New Turn in 2020

kovalkov — Wed, 13 May 2020 20:20:58 +0000

Swiss Asset Management Takes a New Turn in 2020 kovalkov Wed, 05/13/2020 - 22:20

From January 1, 2020. The Swiss Financial Institutions Act (FinIA) and the Swiss Financial Services Act (FinSA) entered into force, updating the regulatory regime for trustees working in Switzerland. This means that all independent portfolio managers (PMs) and trustees subject to supervision under FinIA will have to be supervised by a Supervised organisations (SO) authorised by FINMA and get licensed by FINMA before they can be able to carry out their activities as financial intermediaries in Switzerland.

The new regime is intended to strengthen the overall reputation and competitiveness of Switzerland as a financial centre, at the same time improving the quality, integrity and accountability of the Swiss trust industry. A particularly important point of innovation is the inclusion of trustees in the concept of “financial institutions.”

How it was before and what changes?

Previously known as asset managers, portfolio managers were required to comply with anti-money laundering (AML) regulations and be affiliated with a self-regulatory organization (SRO) in order to oversee compliance with AML requirements and industry standards. However, they operated without a license and no supervision from the Swiss Financial Market Authority (FINMA).

However, according to the new ammendments, asset managers that fall within the scope of FinIA activities will be subject to regulatory oversight must be authorized to carry out their activities in addition to meeting the structural, organizational, business and audit requirements. It's only after obtaining such a license that the asset managers will be able to register with the Commercial Register and get off the ground.

How the new law defines portfolio manager and trustee

A portfolio manager is a person mandated to manage assets on a commercial basis in the name of and on behalf of clients, and may dispose of clients' assets in any other manner (Art. 17 FinIA). Portfolio managers manage individual portfolios.

Thus, according to the law, the asset manager is based on two criteria:

(i) the power of disposal over assets of clients and

(ii) the commercial nature.

The authority to dispose of the assets must result from a corresponding order of the customer. This refers to a management mandate granted to the financial service provider.

The second criteria is commerciality according to FinIA is fulfilled if a financial service provider either:

- Has a gross income of more than CHF 50'000 per year;

- Maintains a business relationship with more than 20 contracting parties per year or 20 contracting parties which are not limited to a single activity; or

- Possesses power of disposal over third-party assets of more than CHF 5 million.

Any financial services provider who meets the two criteria (power of disposal over client assets as well as professionalism), qualifies in principle as an asset manager pursuant to Art. 17 para. 1 FinIA and is therefore considered a financial institution.

Asset managers are also considered as managers of collective assets. They manage the assets of collective investment schemes or occupational pension schemes below the defined thresholds (see Art. 24 para. 2 FinIA) and are deemed to be portfolio managers.

Initially business activities as trustees were not previously regulated, apart from the AMLA provisions which had to be observed.

A trustee is a person who on a commercial basis manages or disposes of a separate fund for the benefit of a beneficiary or for a specified purpose based on a restricted grant given namely in the instrument creating a trust. All this should be in accordance with the Hague Convention of 1 July 1985 on the Law Applicable to Trusts and Their Recognition. The trustee manages the separate fund, and ensures its value is maintained and employed in a restricted manner.

The second relevant criterion, the professionalism, is basically the same as that for the asset manager only if, with regard to Business volume the threshold values according to FinIA are achieved. The amount of assets under management, do not constitute third-party property under civil law.

According to the the Hague Trust Convention, foreign trusts are legally recognized in Switzerland.

MAIN DEADLINES

Other deadlines and obligations:

Financial institutions must affiliate to an ombudsman's office within six months of the Federal Department of Finance recognizing or establishing for them an ombudsman`s office in accordance with Article 84 FinSA.
During one year after approval of SO by FINMA, PMs and trustees starting activity during 2020 to affiliate with SO and file a licensing application with FINMA according to Article 74(3) FinIA. They can continue to operate until a decision is reached regarding their authorisation—provided that they are affiliated to an SRO, as defined in Article 24 AMLA, and are supervised by this SRO in relation to compliance with the relevant requirements.

How to get authorisation?

FINMA has opened a new online instrument to fulfil the authorisation requirements. Supervised institutions and their audit firms as well as supervisory organisations can use the web-based survey and application platform (EHP) to submit encrypted supervisory data and authorisation applications to FINMA electronically.

The FINMA portal is the central entry point for using the survey and application platform. To access the FINMA portal, users from the institutions must first register. After registering successfully, users can log in to the FINMA portal with two-factor authentication. The institutions must provide FINMA with the name of at least one authorisation coordinator before they can use the platform. This person may authorize other people from the institution to use EHP.

User guides are available to view on the FINMA’s website.

Conclusion

The new legal framework for financial institutions represents a new legislative age for trustees working in Switzerland and thus creates new steps of authorization in the field of regulation and administration. The good news is that that these procedures will lead to new opportunities that will take the Swiss trust industry to a whole new level.

Add new comment

How to Run a Swiss Business in 2020 [Key Changes]

kovalkov — Wed, 22 Apr 2020 09:09:33 +0000

How to Run a Swiss Business in 2020 [Key Changes] kovalkov Wed, 04/22/2020 - 11:09

The new year has brought with it a raft
of new laws and changes in Switzerland.

In this article, several changes in
Switzerland were noted, taking into account everything that has changed since 1 January 2020, from taxation and
contribution rates to the ban on disposable plastics.

One of the main changes which are
unlikely to affect the average Swiss resident - is the tax haven status of Switzerland. The scope of changes
came through the Federal Act on Tax Reform and AHV Financing reforms, which were approved by a majority of Swiss
voters in May of 2019.

Key changes you need to
know

Not a tax haven
anymore

As of 2020, the European Union changes
the status of Switzerland from a "tax haven" to an EU-compliant country, removing the strict control of
transactions within the EU. While the decision was made in October, it became official just from January
1st.

While Switzerland complies with
international corporate tax standards, foreign investors are still confident to invest in Switzerland and the
majority of the Swiss people find the reform beneficial.

First, it’s important to note that the
preferential tax privileges for holdings, domicile and “mixed” companies at the cantonal level were canceled.
Furthermore the profit allocation rules for principal companies and Swiss finance branches no longer apply at
the federal level.

However, there is positive news for
business owners: the corporate tax for companies is being reduced in almost all cantons of the country resulting
from the successful TRAF vote in May 2019. Thus, the effective rate of corporate tax across the country now
varies between 12-15%.

Whereas the changes in some cantons are
minor, some cantons have significantly reduced the tax rate. In Geneva, for example, the corporate tax rate has
been lowered from 24.16% to 13.99%.

Benefits for Research and
Development

The tax system offers the patent box
regime provisions to encourage research and development. Taxation on patents and other similar rights is
reduced. Tax relief for patents can be up to 90 percent.

Cantons may allow R&D costs incurred
in Switzerland to be deducted for up to 150% of the actual costs incurred. This is based on R&D personnel
expenses incurred by the taxpayer plus a 35% markup for other R&D costs, and 80% of the R&D costs
charged by third party providers in Switzerland.

Check out more information about
corporate taxation changes here.

Rise of social protection
contributions

One of the most important areas for the Swiss Social security system is old age, survivors’ and invalidity
insurance. This compulsory insurance for everyone, that aims to cover basic living costs.

As a result of tax reform, the AVS/AHV
contribution rate for staff rises from 8.4% to 8.7%. This applies to contributions of AHV / IV / EO / ALV,
collected from wages and salaries, thus constituting 12.75% in 2020 (compared to 12.45% in 2019). Half is
deducted from the gross salary amount and the other half is paid by the employer.

The minimum monthly social security
payouts will remain fixed at 1,185 francs.

For self-employed persons, the
contribution also increases by 0.3 percentage points. The contribution of the AHV increases from 7.8 to 8.1
percent in annual income over CHF 56,900. For lower income, a scale of deferred contributions is applied,
which currently ranges from 7.55 to 4.35 percent. The minimum contribution to the AHV is increased from CHF 395
to CHF 409, which self-employed persons pay for an annual income of CHF 9,400.

This increase will guarantee more than 2 billion francs a year in social insurance.

House expenses from
taxes

Homeowners can now benefit from new
deductions in direct federal tax from 2020 onwards. Expenses for energy-saving investments and deconstruction
costs can now be spread over three consecutive tax periods. This is a measure to implement the energy
strategy.

Investments

Investor protection will be improved on
a selective basis. The Financial Services Act regulates how clients must be informed about financial
instruments. With the Financial Institutions Act, independent asset managers are also now a subject to
supervision.

New requirements for
banks

Stricter capital adequacy requirements
apply to big banks. For UBS and Credit Suisse, the additional requirement amounts to around CHF 24 billion.
Small and particularly well-capitalized banks and security firms will now benefit from administrative
simplifications and savings.

Energy cost

The compensation rates for photovoltaic
systems will be reduced. The feed-in tariff will fall to 9 centimes per kilowatt hour, and the basic
contribution of the one-off tariff from 1400 to 1000 Swiss francs. The Federal Council is thus releasing funds
to speed up the reduction of waiting lists.

Single use plastic
ban

From 1 January 2020, single use plastics
are prohibited in Geneva. This includes not only plastic bags from supermarket shelves, but also cups, cutlery,
straws, plates and bags. Traders have repeatedly been informed of the ban - and they face a fine of 100 francs
if they continue to offer disposable plastic bags.

Animal welfare laws

Animal husbandry controls in problematic
farms will be strengthened. In the future, 40 percent of inspections must be unannounced. Problematic farms will
be checked more regularly, unproblematic farms less frequently.

The shredding of live chicks shall be
prohibited. So far, male animals have been killed in some hatcheries using this method. Killing with CO2 is
still permitted.

An animal movement database will be
introduced for sheep and goats. Animals born before 1 January 2020 must be identified by a second ear tag. For
sheep, an electronic ear tag is compulsory, while for goats the keeper can choose between ear tags with or
without a microchip.

Pollution and
emissions

For passenger cars, a target value of 95
grams of CO2 per kilometer now applies. Importers who do not reach this average value will pay a penalty. For
car buyers, the improved energy label is intended to provide more transparency. The new target value must be
indicated on it.

Switzerland and the EU link their
emissions trading systems. Swiss companies will thus also be able to trade their emissions rights in the larger
EU market in future. To date, the Swiss emissions trading system covers slightly more than 50
emissions-intensive industrial plants. Due to the small number of participants, the Swiss market has so far only
functioned to a limited extent.

Use of fungicides

The fungicide chlorothalonil is
forbidden. The Federal Council had already banned the approval in mid-December; from the beginning of 2020,
thus products containing the active substance may no longer be used. This is because its negative effects
on health cannot be ruled out.

A number of other changes have also been
forecast, including bans on certain pesticides as well as military support for farmers during times of
drought.

Health care

Nurses will be able to assess care needs
of patients without the intervention of a doctor.

Cancer diseases are recorded completely
and uniformly in the national cancer registry throughout Switzerland. Doctors and hospitals must provide
precisely defined data and the cantons are obliged to keep a cancer register or to join an existing
register.

Pharmaceutical cost groups are now taken
into account in the risk compensation of the compulsory health insurance. This allows patients suffering from
cost-intensive chronic diseases to be identified. The insured structure of the individual insurance companies is
thus better balanced, which makes the hunt for young, healthy insured persons less interesting.

As of January 1 2020, doctors are
limited in receiving financial benefits from specific pharmacy companies, if it may affect the choice of
treatment.

Price discounting is also restricted for
doctors and all discounts must be passed on to patients. That means doctors are no longer allowed to take the
benefit.

Health insurance premiums are set to
rise from 2020. The average premium is set to increase by around 0.2 percent to roughly CHF315.14 francs per
month. Note that the amount may vary in cantons, so you need to check with local authorities to know the exact
difference.

Money

Old banknotes can be exchanged for an
unlimited period of time and not only for 20 years as before. The new rules apply to banknotes from the sixth
series, which was issued in 1976. Until now, banknotes could still be exchanged at the National Bank during this
period, but could no longer be used for payments.

Marriage

Marriageable bridal couples encounter
fewer bureaucratic hurdles. The waiting period of ten days between marriage preparation and the wedding ceremony
will be abolished. This means that a wedding ceremony can be performed immediately after the marriage
preparation procedure has been positively concluded. The requirements for marriage preparation will not
change.

Domestic violence

The Swiss confederation is becoming more
involved in combating violence against women and domestic violence. There is now a legal basis for prevention
projects and awareness campaigns. With the funds earmarked for this purpose, the Swiss confederation can now
implement its own programs and projects, but also support private organizations.

NB. The content of the Article is
intended for general information only and is not to be relied upon as advice on which to base any decision.
To the extent permitted at law we do not accept any responsibility for any material appearing in the
Article.

Add new comment

Company formation in Switzerland – a short guide for 2020

kovalkov — Tue, 07 Jan 2020 05:43:09 +0000

Company formation in Switzerland – a short guide for 2020 kovalkov Tue, 01/07/2020 - 06:43

Before you can start business operations in Switzerland, there are a number of crucial steps that you need to follow carefully and diligently. The registration process requires thorough planning—you have to select a unique business name, choose a business structure suitable for your intended business and prepare all the necessary documentation.

Anyone intending to conduct commercial activity in Switzerland should either set up a company, join a partnership or work as an independent individual. All these popular options have specific legislature that applies to them and you have to do your due diligence to observe all of them and draft the necessary paperwork.

The most commonly chosen Swiss business structures are Gesellschaft mit beschränkter Haftung (GmbH) or Societé à Responibilité Limité (SARL) – basically a private limited liability company; and Aktiengesellschaft (AG) or Societé Anonyme (SA).

Choosing a Swiss company name
The Swiss authorities reserve the right to approve of business names for the purposes of registration. This approval must be received for you to be able to use the name for commercial purposes. This is done as a precaution, to ensure the uniqueness of all business names. With the Switzerland Federal Registry having a list of all registered business names, it is quite easy to check for yourself if the name is available prior to registration.

Doing business as sole proprietorship or as a partnership
Entrepreneurs who want to carry out their commercial activity without explicitly forming a company can do so as a sole proprietorship, or as part of a limited or general partnership. Both these legal structure options require little formality for registration. A business with an annual turnover exceeding 100,000 CHF, must be registered with the Swiss Commercial Registry. Registrations are made with the cantonal office for the canton where the business operates from.

Sole proprietorship
When choosing a name for a sole proprietorship, it is necessary to add a trading name. Registration does not require any special documentation. The process is simply just the filing of standard registration forms. A base registration fee is levied by the federal government and cantons add their own fees on top of that, thus the total registration costs may vary from one canton to another.

Swiss partnerships
Two or more entrepreneurs can come together to conduct business activities jointly under a partnership. Partnerships are usually made up of persons or companies providing similar or related services or products. A partnership agreement must be drawn up and notarized with a certified notary. There is no minimum capital requirement required and company articles are not necessary. However, partners are personally liable for the business debts and obligations in the event the business goes bankrupt.

Gesellschaft mit beschränkter Haftung (GmbH)
A minimum requirement of 20,000 CHF share capital is needed to set up a GmbH in Switzerland. The company shareholders are listed in a public register. The documentation necessary at registration includes the articles of association - the company statues. This document states the company’s purpose, object of activity, the governing bodies and details about the founders and the shareholders.
In addition, a constitutive act and proof of funding is also required. This document is normally issued by a Swiss bank after the share capital is deposited. Once the registration process is complete, the capital is transferred into the company’s bank accounts or the bank account becomes a business account for the company. A GmbH’s profits are taxed on dividends and as personal income.

Aktiengesellschaft (AG)
A Swiss AG has a minimum required share capital of 100,000 CHF. 50,000 CHF or at least 20% of the full figure must be paid up when the company is registered. This business structure is the most commonly chosen in Switzerland as it is suitable for a variety of activities, including for larger companies, corporations and multinationals. The shareholders for an AG company are not listed in a public registry. An articles of association is needed and it includes information about the company’s purpose, governing bodies, founding directors and shareholders. Much like a GmbH, it is necessary to provide proof of funding when registering an AG company. One of the main advantage an AG has over the GmbH is that it is easier to change ownership.

The process of company formation in Switzerland
When registering a company it is mandatory that at least one of the company’s directors be a Swiss resident. However, it is possible to hire company directors in order to meet this requirement, if none of the company’s founders is a Swiss resident. The company must also be registered with a notary. This does not necessarily have to be in the canton where the company is located.

Corporate taxation
All Swiss companies employing 10 or more people must audit their accounts annually. All businesses that generate more than 100,000 CHF in a year are required to register for VAT purposes.
In Switzerland, taxes are levied on three levels i.e. federal, cantonal and municipal. Federal tax rates are fixed. Cantonal taxes on the other hand vary from one canton to another, given that Swiss cantons are competing against each other to attract as much investors as possible. In addition, certain cantons offer tax incentives and advantages for foreign companies or for entrepreneurs who set up their businesses there.

Swiss trademarks
For businesses who are deal with intellectual property, it is recommended to register a Swiss trademark. Once determined to be unique, a trademark can registered with protections valid for 10 years. Once the trademark has expired, it can be repeatedly renewed for another 10 years. Trademarks used outside of Switzerland can be registered globally with The World Intellectual Property Organization (WIPO), which is based in Geneva.

Get professional assistance
Even though company formation is rather straight forward in Switzerland, it is advisable to rely on the services of a firm which is experienced with company incorporation in Switzerland. At Sigtax, we offer our clients expert assistance in handling all the legal requirements, paperwork and any other assistance they might need with company formation in Switzerland.

Add new comment

Important points to consider when starting a small business in Switzerland

kovalkov — Sat, 07 Dec 2019 18:17:42 +0000

Important points to consider when starting a small business in Switzerland kovalkov Sat, 12/07/2019 - 19:17

Establishing a new business can be a daunting task. While it's important to put much emphasis on the fulfilment of the legal requirements for company registration, the planning and execution of other elements in company incorporation shouldn't be taken lightly. This includes choosing the business location, obtaining financial resources, hiring employees among other factors.

Lack of due diligence in the planning stages can have dire consequences. Careful planning should be carried out so as to dodge the common pitfalls.

Compare terms and conditions for business loans
Establishing a business requires adequate funding and often small businesses are financed through loans. Entrepreneurs must take into account all their financing options to avoid difficulties in the future. Taking small loans may lead to the businesses taking up multiple loans in the long run. This holds the risk of the business faltering on loan payments. The mounting debt would result in unpaid bills and difficulties meeting installment payments. When weighing out the finance options available for your business, comparing the different offers different banks have for businesses of your size is vital, considering you are opting for a traditional installment loan. Foreigner entrepreneurs looking to start a small business in Switzerland should make arrangements concerning their financial resources beforehand.

Check premises and location
The choice of business location and premises should largely be influenced by the type of business activity to be carried out. The location of the shop, the office or the production site must provide a suitable environment for operations. The following questions can be relevant in making the decision:

In terms of accessibility for the customers, is the business location directly in the city center, or rather outside?
Is it a service that can be organized, planned or carried out mainly through telephone contacts, the Internet and other means of communication?
Is it a brick-and-mortar business that needs to be within walking distance of the city’s center and in a good location in the city?

The questions presented above and other relevant factors should be taken into consideration. If possible a thorough environment analysis can be carried out be carried out in advance for this purpose. This can be used to avoid situations such as opening two more shops on the same street or right next to your direct competitors. The smart business strategy is to fill a market gap not covered by any competitor. This increases the chances of a successful start for the business.

Don’t start a business without having a solid plan
A business plan is a vital instrument in planning your business. Creating a business plan is the first step when starting a business or carrying out any business activities. The good business plan does not only contain a viable business idea, but also answers the following important questions:

Where should you establish your company’s offices?
In which Swiss cantons are there more favorable tax rates for your business?
Can you run your business alone or do you need to employ people right from the start?
What is the total cost, including rent, production costs, and personnel costs?

These are just a few of the questions that should be addressed in the planning stage of the business in order to make implementation of the business plan systematically successful. If these and other questions that will affect your business in the near future can be successfully addressed and answered with certainty, you stand a chance of establishing a business that will make it past the initial stages new businesses go through.

Add new comment

Tax reform 2019 in the canton of Zug

kovalkov — Wed, 25 Sep 2019 05:30:50 +0000

Tax reform 2019 in the canton of Zug kovalkov Wed, 09/25/2019 - 07:30

On May 19, 2019, Swiss voters approved a referendum—a tax reform package that was also implemented in the cantonal tax laws.

While there are still a few obstacles to be overcome at the cantonal level, the cantons have already decided or at least announced the parameters of their implementation for the individual measures. On June 27, 2019, the Cantonal Council of Zug Canton adopted the transaction for amending the tax law. This way, it will have an absolute top tax rate from 2020.

The tax privileges so far in the canton of Zug

In the case of domiciled companies, there are no restrictions regarding company purpose, even if they fulfill purely administrative roles in Switzerland. Therefore, any income in Switzerland is taxed at a uniform rate, be it interest, dividends, capital gains, income from intangible rights and property income. Besides, foreign and investment income, such as dividends and capital gains, are not taxed in Switzerland. Only the reduced capital tax is paid on capital (equity).

Holding companies, a network of various business, must pay reduced capital tax only based on their capital. Only in some cases, the income is taxable, namely when it comes to property income or DBA-protected income.

Mixed companies carry out limited business activity in Switzerland, and the basic rule is that at least 80% of this activity takes place abroad. For this type of company, the taxable income is determined using the so-called accounting segment, which is based on the number of Group employees in Switzerland. Therefore, if there are less than 6 employees, the controllable rate is 10%. Between 6-10 employees, 15%, 11-30 employees 20%, and for companies with over 30 employees, 25%. Capital gains or revenues from intellectual property rights, as well as investment income, such as interest and dividends, are primarily taxed at a regular rate.

New taxes in Zug

When amending the tax law, the effective income tax rate combining all levels, federal, cantonal and municipal decreases to 11.91% (the main city, up to now, 14.35%). Comparing, for example with the canton of Zurich, where the estimated effective rate of income tax is 19.7%, the rate in the canton of Zug is significantly lower.

But the usual capital tax rate remains unchanged at 0.0717%, and equity attributable to qualifying participations, intellectual property rights and disclosed hidden reserves will be considered in the amount of 2%.

The following reduced income tax rates may be available for hidden reserves within 5 years from the change of ordinary taxation: 0.8% for 2020, 1.0% for 2021, 1.2% for 2022, 1.4% for 2023 and 1.6% for 2024. At the same time, the net income from patents and comparable rights, with a maximum discount of 90%, will be included in the calculation of the net taxable profit. Also, an additional 50% deduction is allowed in Zug for research and development costs.

In light of the reform, the current tax privileges for holding companies, domiciliary companies and mixed companies will be abolished. In the canton of Zug, the partial taxation of dividends from qualified holdings in the case of natural persons remains at 50%. In contrast, for direct federal taxation, it increases to 70%, previously was 60%.

January 1, 2020, is the date on which the new tax law will enter into force. Given that this is a comprehensive review of the tax law, Zug companies should prepare in advance for the changes mentioned above. Our Swiss specialists are ready to support any additional questions you may have about this topic. Comprehensive and timely planning, along with simulating the impact of different aspects of tax reform, should be prepared as soon as possible.

Considering that on September 3 the referendum period has elapsed and no other referendum has been called, another measure to be implemented, based on the new framework is the maximum limit of reliefs of 70% on profits subject to cantonal tax. Also, the partial taxation (50%) of dividends received from investments of at least 10% by individuals.

The Canton of Zug will remain one of the most tax-favorable places for Swiss companies and internationally, even with the implementation of all planned measures. And due to the differences between the income tax rates between the cantons, Zug is expected to become even more attractive in the future.

For more details and assistance regarding reforms in Switzerland, feel free to reach out to our expert consultants. Our highly experienced and well-informed team is ready to answer all your questions and give you all the help you might need.