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Knowledgebase
AG in Switzerland
Dari Podhur, Counsel
27 October, 2023 ----> revised 7 August, 2024
Incorporating a business in Switzerland can be an enticing prospect for entrepreneurs and companies seeking a stable and advantageous environment to operate within Europe. Switzerland, known for its picturesque landscapes, financial prowess, and political neutrality, offers a myriad of benefits that make it an attractive destination for business incorporation.
From its stable economy and favourable tax regime to its strong legal framework and access to international markets, Switzerland offers a unique blend of features that can foster business growth and prosperity.
Companies operating under AG structure are also subject to specific licensing obligations depending on their activities. Details can be found in our overview on Swiss Financial Services License.
From its stable economy and favourable tax regime to its strong legal framework and access to international markets, Switzerland offers a unique blend of features that can foster business growth and prosperity.
Companies operating under AG structure are also subject to specific licensing obligations depending on their activities. Details can be found in our overview on Swiss Financial Services License.
Table of Contents
Why incorporate in Switzerland?
For more on how companies may cease operations, read about the procedures related to company closure in Switzerland in our article on Company Liquidation in Switzerland.
There are several reasons why entrepreneurs and businesses choose to register a company in Switzerland:
There are several reasons why entrepreneurs and businesses choose to register a company in Switzerland:
- Stable economySwitzerland is known for its balanced and prosperous economy, which has consistently ranked among the top in the world. This makes it a prime destination for businessmen looking for a secure and reliable base for their operations.
- Business-friendly environmentSwitzerland has market-oriented conditions encouraging entrepreneurship and innovation. The country's legal system, tax policies, and regulatory framework are designed to support business growth and development.
- Strong financial sectorSwitzerland is home to some of the world's largest and most reputable financial institutions, making it a perfect location for companies involved in finance, banking, and related industries.
- Highly skilled workforceThe country has a proficient and educated workforce, with a strong focus on vocational training and continuous professional development.
- Strategic locationIn the heart of Europe, Switzerland is considered an excellent base for entrepreneurs looking to expand their operations across the continent. The country also benefits from convenient transport links and world-class infrastructure.
- Favorable tax regimeSwitzerland has a supportive tax system for businesses, with low corporate tax rates and a range of tax incentives and deductions. This can make it a more cost-effective place for startups than other European countries.
- Political stabilityThe country is known for its political balance and neutrality, which can provide companies with secure and predictable operating conditions. Registering a company in Switzerland has various advantages, from a stable economy and business-friendly environment to a highly skilled workforce and favorable tax regime.
What is AG?
When entrepreneurs are considering incorporating an AG, it is important to first understand the nature of this structure. Learn more about Switzerland’s legal landscape and our experience in corporate matters at Goldblum and Partners Law Firm.
An AG is a separate legal entity from its owners and shareholders. Shareholders in an AG are entitled to vote on certain corporate matters and receive a portion of the company's profits as dividends.
In Switzerland, AGs are subject to various accounting, financial reporting, and corporate governance regulations. Companies that are organized as AGs must also comply with the Swiss Code of Obligations, which sets forth rules for the management and operation of such companies.
An AG is a separate legal entity from its owners and shareholders. Shareholders in an AG are entitled to vote on certain corporate matters and receive a portion of the company's profits as dividends.
In Switzerland, AGs are subject to various accounting, financial reporting, and corporate governance regulations. Companies that are organized as AGs must also comply with the Swiss Code of Obligations, which sets forth rules for the management and operation of such companies.
Management of the Swiss AG
The company is exclusively liable and is governed by the Board of Directors, where at least one is domiciled in Switzerland. The founders of AG must be at least one physical person or a legal entity, either a Swiss or a foreigner. Shareholders of the company can hold the directors' posts, or directors can be employed to run the company.
In the Swiss AG company, a regular audit is required only when some economic thresholds concerning balance, sales, and number of employees are reached. A limited audit is also required for companies with more than 10 employees.
In the Swiss AG company, a regular audit is required only when some economic thresholds concerning balance, sales, and number of employees are reached. A limited audit is also required for companies with more than 10 employees.
Share Capital
A company limited by shares requires a minimum fixed share capital of CHF 100,000, with a minimum deposit of CHF 50,000.
The minimum value of each share must be CHF 0.01 – 20% of each share must be paid in, for a total of at least CHF 50,000.
The transfer of shares is possible without the consent of other shareholders unless formulated in any other way in the Articles of Association.
What are the advantages of incorporating AG company in Switzerland?
There are several benefits to setting up a joint-stock company (AG) in Switzerland, including:
Limited Liability
One of the most significant advantages of an AG is that the shareholders' liability is limited to the amount of capital they have invested in the company. This means that the shareholders' personal assets are protected in the event of the company's financial difficulties.
Access to Capital
An AG can issue shares of stock to raise capital, making it easier for the company to finance growth and expansion. This is especially useful for companies that need much funding to start or grow their operations.
Reputation
Switzerland is known for its stable political and economic situation, giving it a status of first-rate location for businesses looking to establish a presence in Europe. A Swiss AG is a reputable, well-established company that can help attract customers, partners, and investors.
Tax Benefits
Switzerland has a favorable tax regime for companies, with low corporate tax rates and favorable taxation for foreign companies. An AG in Switzerland can take advantage of these tax benefits to improve its bottom line.
Strong Legal Framework
The Swiss legal system is considered one of the strongest and most stable in the world. This provides a high degree of certainty for companies operating in the country and can help to protect the company's assets and interests.
To explore how Switzerland’s tax system supports corporate entities and foreign investors, refer to our guide on Investing in Switzerland.
AG vs. GmbH
In Switzerland, in addition to AG, there is one more distinguished business entity –the Gesellschaft mit beschränkter Haftung (GmbH). Evidently, AG and GmbH have distinct characteristics and offer different benefits to business owners.
In terms of regulatory compliance for trustees and asset managers involved in Swiss AGs or GmbHs, we recommend reviewing the latest standards under FINIA: PMS and Trustees.
In Switzerland, in addition to AG, there is one more distinguished business entity –the Gesellschaft mit beschränkter Haftung (GmbH). Evidently, AG and GmbH have distinct characteristics and offer different benefits to business owners.
In terms of regulatory compliance for trustees and asset managers involved in Swiss AGs or GmbHs, we recommend reviewing the latest standards under FINIA: PMS and Trustees.
A GmbH, on the other hand, is a limited liability company, where the shareholders' liability is limited to the amount of capital they have invested in the company. A GmbH is required to have a minimum capital of CHF 20,000 and must also be registered with the Swiss Commercial Register.
Like in AG, the founders of GmbH must be at least one physical person or a legal entity, either Swiss or foreigner. GmbH is exclusively liable and governed by Managing Directors, among whom at least one has Swiss residence.
The minimum value of each share must be CHF 100, and the transfer of shares requires consent in the Company meeting unless formulated in any other way in the Articles of Association.
In terms of taxation, AGs and GmbHs are subject to a federal tax rate of 8.5% on their net income and cantonal and municipal taxes.
Like in AG, the founders of GmbH must be at least one physical person or a legal entity, either Swiss or foreigner. GmbH is exclusively liable and governed by Managing Directors, among whom at least one has Swiss residence.
The minimum value of each share must be CHF 100, and the transfer of shares requires consent in the Company meeting unless formulated in any other way in the Articles of Association.
In terms of taxation, AGs and GmbHs are subject to a federal tax rate of 8.5% on their net income and cantonal and municipal taxes.
Conclusion
In summary, an AG in Switzerland offers many advantages, including limited liability, access to capital, a strong reputation, tax benefits, and a clear legal framework. These advantages demonstrate that Switzerland is attractive for companies looking to establish a presence in Europe.
The choice between AG and GmbH will depend on the specific needs and goals of the business owner. AGs offer greater flexibility and access to capital but have more regulatory requirements, while GmbHs offer a more straightforward structure but lower capital requirements.
The choice between AG and GmbH will depend on the specific needs and goals of the business owner. AGs offer greater flexibility and access to capital but have more regulatory requirements, while GmbHs offer a more straightforward structure but lower capital requirements.
The minimum share capital required for incorporating an AG (Aktiengesellschaft) company in Switzerland is CHF 100,000, with a minimum deposit of CHF 50,000.
"AG" stands for "Aktiengesellschaft" in German, which translates to "joint-stock company" or "company limited by shares" in English.
Some advantages of incorporating an AG company in Switzerland include limited liability, access to capital through share issuance, a strong reputation, favorable tax benefits, and a robust legal framework.
A Swiss AG company is managed by a Board of Directors, with at least one member required to have a Swiss domicile. Shareholders can also hold director positions or external directors can be employed for company management.
The main difference is that an AG is a joint-stock company with a minimum capital requirement of CHF 100,000 and allows for more flexibility and access to capital, while a GmbH is a limited liability company with a lower minimum capital requirement of CHF 20,000 and a simpler structure. The choice between them depends on specific business needs and capital requirements.
Sources:
Legal disclaimer. This article does not constitute legal advice and does not establish an attorney-client relationship. The article should be used for informational purposes only.
- https://www.swissinfo.ch/eng
- https://www.bloomberg.com/europe
- https://kpmg.com/ch/en
- https://www.admin.ch/gov/de/start.html
- https://www.ubs.com/ch/en/corporates/foundation
Legal disclaimer. This article does not constitute legal advice and does not establish an attorney-client relationship. The article should be used for informational purposes only.
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