Setting up a Swiss company while living abroad: what is possible and what matters
A Swiss company stands for stability and trust. You can set one up even if you live abroad yourself. But for it to work in practice and be tax resident where it should be, it takes more than an entry in the commercial register.
- You can set up a Swiss GmbH or AG while living abroad. However, the company must be able to be represented by at least one person resident in Switzerland.
- The Swiss company is taxable here. But if you run it from abroad, the other country may also regard it as resident there.
- In practice, the biggest hurdles are usually not the law but the bank account, substance on the ground and ongoing administration.
What is legally possible
Swiss law requires neither Swiss citizens nor shareholders resident in Switzerland. Foreign individuals and companies can set up a GmbH or AG and hold all the shares. One requirement applies to every company, however: it must be able to be represented by at least one person resident in Switzerland. This can be a managing director, a board member or a director with signing authority.
This person bears responsibility and may be personally liable. They should therefore know what is happening in the company, have access to the figures and not exist only on paper.
- Share capital of at least CHF 20,000, fully paid in
- Shareholders visible in the commercial register
- Managing director resident in Switzerland, or a director
- Simple and inexpensive for smaller businesses
- Share capital of at least CHF 100,000, of which at least 50,000 paid in
- Shareholders not in the commercial register
- Board member or director resident in Switzerland
- Since 2023, capital also possible in euros, dollars or pounds
The route to formation
- Choose the legal form, registered office and structure: GmbH or AG, in which canton, held directly or through an existing company abroad.
- Settle representation in Switzerland: who will take on the role of the authorised representative resident in Switzerland?
- Address: the company needs a business address in Switzerland, either its own premises or an address with a domicile provider.
- Capital deposit account: the capital is paid into a blocked account at a Swiss bank before formation.
- Notarisation and commercial register: the notary certifies the formation, followed by entry in the commercial register. From then on, the company exists.
- Registrations: VAT, social security and insurance, where required.
If the documents are complete and the bank cooperates, this takes a few weeks. For foreign founders, the bank is usually the bottleneck: it wants to know who is behind the company, where the money comes from and what business is planned. A clear business plan and complete documents speed things up considerably.
Tax: where the company is resident
A company with its registered office in Switzerland is subject to unlimited tax liability here. The effective profit tax rate ranges from around 12 to 20 percent depending on the canton and municipality, and is around 12 percent in the city of Lucerne. There is also a small capital tax.
It becomes delicate if you run the company from your home abroad. Many countries also tax companies where they are actually managed. If all key decisions are taken in your living room abroad, your country of residence may regard the Swiss company as resident there. The double taxation agreement then determines who has the right to tax, and that is not always Switzerland.
What helps:
- real management in Switzerland with decision-making authority
- board meetings or shareholder meetings held in Switzerland, with proper minutes
- substance that matches the business: premises, employees or service providers on the ground
- a clear separation between your activity for the company and your activity in your country of residence
Salary and dividends to you abroad
Dividends from a Swiss company are subject to withholding tax of 35 percent. As a recipient abroad, you can reclaim part of it if your country of residence has a double taxation agreement with Switzerland. How much depends on the agreement. In your country of residence, you also pay tax on the dividend under local law.
If you work for the company yourself, two questions arise: where is your salary taxed, and where are you covered by social security? Both depend on where you actually do the work. Between Switzerland and the EU states, coordinated rules apply to social security. Anyone who works regularly in Switzerland may also need a permit, depending on their nationality.
Ongoing obligations after formation
- Bookkeeping and annual accounts: under Swiss law, with a ten-year retention obligation.
- Audit: small companies with no more than ten full-time positions can opt out of the audit if all shareholders agree.
- VAT: mandatory from annual turnover of CHF 100,000, usually filed quarterly.
- Tax return for the company every year, plus withholding tax notifications for distributions.
- General meeting within six months of the end of the financial year, with minutes.
- Reporting to you as the owner, ideally prepared so that your adviser in your country of residence can also understand it.
How I support you
I compare locations and legal forms with you, coordinate the formation with the notary and the bank, and set up accounting, VAT and payroll. After that, I take care of year-end closing, tax returns and reporting to the agreed extent and coordinate with your advisers in your country of residence. Whether I can take on the role of the authorised representative is something I review case by case.
This article gives a general overview and does not replace advice in an individual case. Advice on the law of your country of residence must be obtained locally.
Igor Pavlovic is a fiduciary and auditor in Lucerne, Switzerland. He advises business owners and wealthy private individuals on tax, succession and audit, including cross-border matters.