Learn how foreign parent companies can establish a subsidiary in Switzerland: AG or GmbH, capital, representation and commercial register entry.
For foreign parent companies, establishing an AG or GmbH is generally the preferred option in Switzerland. The GmbH requires a share capital of at least 20,000 CHF, while the AG requires a higher share capital with partial payment. The process involves articles of association, notarial certification, payment into a blocked account and entry in the commercial register. This also requires a domestic representative and clear tax and reporting obligations.
In short: - An operative subsidiary often takes the form of a GmbH: the share capital amounts to at least 20,000 CHF and must be paid in full upon incorporation. - At least one authorised signatory must reside in Switzerland; third-country nationals usually require a convincing business plan and proven overall economic interest for a permit. - Foreign documents of the parent company often require an apostille and translation; missing documents or unclear representation relationships delay the entry even after notarial certification. - Many double taxation treaties require a holding of at least 10 to 25 percent for relief; in a sister-company relationship, a minimum tax of 15 percent may nevertheless remain. - Intra-group fees, licence payments and loan interest must correspond to market prices; an early agreed transfer pricing policy reduces the risk of subsequent tax adjustments by the tax authorities.
Table of Contents
- Choice of Legal Form: AG or GmbH for the Subsidiary?
- Who Must Reside Locally? Representation and Permits for Foreigners
- From Drafting Articles to Commercial Register Entry: The Process
- Documents Required by Notary, Bank and Commercial Register
- Profit Tax, Withholding Tax and Transfer Prices in the Group
- Costs and Timeframe until Entry
- Transfer Pricing and Reporting Procedures: What Matters in Practice
- Brief Outlook: Typical Pitfalls in Subsidiary Formation
- Our Support in Establishing Your Swiss Subsidiary
- FAQ
- Sources
Choice of Legal Form: AG or GmbH for the Subsidiary?
The choice of legal form depends on the purpose of the Swiss entity. A holding or finance company can be structured as an AG or GmbH depending on the purpose. An operative subsidiary can be structured as a GmbH or AG depending on the purpose.
For the GmbH, the share capital of at least 20,000 CHF must be paid in full upon incorporation. The AG has different capital requirements from the GmbH. Which legal form is better suited depends on the planned structure. The GmbH comes into existence upon entry in the commercial register. The required incorporation steps should be reviewed for the chosen legal form.
- AG: a possible legal form for a Swiss subsidiary.
- GmbH: share capital from 20,000 CHF, to be paid in full upon incorporation.
- Both forms: incorporation occurs upon entry in the commercial register.
Those wishing to examine the differences in more detail will find an in-depth comparison in our article on AG or GmbH incorporation.
Who Must Reside Locally? Representation and Permits for Foreigners
Every Swiss AG or GmbH requires at least one person with signatory authority and residence in Switzerland. This representation can be a board member, a managing director or a director with corresponding power of attorney. For a GmbH or AG, at least one authorised representative must have residence in Switzerland and hold a valid permit.
Special rules apply to company formations for nationals of the EU or EFTA. Those coming from a third country must meet stricter requirements: a residence and work permit is usually only granted if a convincing business plan and overall economic interest are demonstrated.
- EU/EFTA nationals: simplified access to settlement, fewer bureaucratic hurdles.
- Third-country nationals: permit linked to business plan and economic interest.
- Without own residence in Switzerland, a local representative for management is mandatory.
Those who do not obtain a permit themselves should review the required local representation and permit requirements. More on practical pitfalls for international founders can be found in our article Incorporating a Company in Switzerland as a Foreigner.
From Drafting Articles to Commercial Register Entry: The Process
Incorporation follows a fixed sequence. Those who prepare the steps carefully avoid unnecessary waiting times at the notary or bank.
- Draft articles of association and prepare the founders' meeting, including appointment of corporate bodies.
- Open a blocked account at a Swiss bank and pay in the capital.
- Notarial certification of the deed of incorporation and articles of association.
- Submission of documents to the competent cantonal commercial register.
- After examination, entry and publication in the Swiss Official Gazette of Commerce.
- Release of the blocked account upon presentation of the commercial register extract to the bank.
For simpler cases, such as a sole proprietorship or certain individual steps, the authorities' StartBiz administrative portal offers an electronic alternative to the traditional paper process. The required incorporation steps depend on the chosen legal form. A detailed step-by-step guide for the GmbH variant has been compiled in our article GmbH Incorporation Switzerland.
Documents Required by Notary, Bank and Commercial Register
An incomplete document package is the most common cause of delays. The following documents should be ready before the first appointment:
- Draft articles of association and deed of incorporation in certifiable form.
- List of shareholders with participation quotas.
- List of board members or managing directors with signature rules.
- Identity documents of all involved persons, for foreign documents partly with apostille.
- Bank confirmation of payment into the blocked account.
- For permit applications: business plan and proof of organisational connection to the parent company.
Foreign documents, such as a commercial register extract of the parent company, often need to be apostilled and translated before they are accepted by the Swiss commercial register. Those wishing to acquire an existing operative company instead of founding a new one will find an overview of the acquisition of ongoing GmbHs as an alternative to new incorporation at Nachfolgehaus.
Profit Tax, Withholding Tax and Transfer Prices in the Group
A Swiss subsidiary is subject to ordinary profit tax at federal, cantonal and communal level as well as cantonal capital tax. The effective burden varies considerably depending on the canton of domicile, making the choice of location within Switzerland relevant for tax purposes.
Dividend payments to the foreign parent company are principally subject to withholding tax. Under certain conditions, such as sufficient participation and an applicable double taxation treaty, the reporting procedure instead of direct tax payment can be used. In a sister-company relationship between two subsidiaries, a minimum tax of 15 percent often remains, as the treaty does not automatically provide for full exemption.
- Profit tax: combined from federal, cantonal and communal share, rate depends on canton of domicile.
- Capital tax: levied at cantonal level, often creditable against profit tax.
- Withholding tax: reporting procedure possible with sufficient participation and valid DTA.
- Sister-company relationship: a minimum tax of 15 percent often remains despite reporting procedure.
Many DTAs require a minimum holding of 10 to 25 percent before any relief on withholding tax applies, as shown by the tax authority's overview of transfer prices. Intra-group prices for goods, licences or management services must also withstand the arm's length principle, otherwise adjustments are threatened for both profit and withholding tax.
Costs and Timeframe until Entry
Incorporation costs depend heavily on the legal form and chosen procedure. Traditional AG incorporations usually cost between 6,000 and 8,000 CHF without stamp duty, while a GmbH incorporation is generally lower. Electronic incorporation procedures via the relevant portals can reduce costs noticeably compared to the traditional notarial route.
- Notary fees: main cost block for AG and GmbH, depending on canton and certification effort.
- Commercial register fees: fixed component, added to notary costs.
- Advisory costs: vary depending on complexity of structure and number of jurisdictions involved.
- Timeframe: duration depends, among other things, on document preparation and procedure.
Those wishing to calculate the cost structure of an AG in detail will find a breakdown in our article AG Incorporation Switzerland.
Transfer Pricing and Reporting Procedures: What Matters in Practice
Many guides mention the arm's length principle only in passing, yet it determines the risk of subsequent taxation in practice. Intra-group management fees, licence payments or loan interest must withstand a market comparison. If set too high or too low, the tax authority may reclassify them as a benefit in kind and demand additional profit tax and withholding tax.
The reporting procedure differs fundamentally from the classic declaration with subsequent refund: instead of first paying the withholding tax and later reclaiming it, the payment is reported directly, saving liquidity. However, the prerequisites must be reviewed in advance, not only at the first dividend distribution.
Pro Tip: Agree a transfer pricing policy early with the competent cantonal tax authority before the first intra-group payments flow, rather than creating documentation only after the fact.
Brief Outlook: Typical Pitfalls in Subsidiary Formation
The most frequent delays arise not from the capital contribution but from documentation: missing apostilles, unclear representation relationships or a withholding tax issue that only surfaces after the first dividend payment. Multilingual support without an interpreter intermediary is possible.
— Bitblade
Our Support in Establishing Your Swiss Subsidiary
We accompany foreign parent companies through the entire incorporation process: from reviewing the suitable legal form through preparing the articles of association to notarial certification and commercial register entry. Our advice takes place directly in several languages, without the detour via external interpreters, which can avoid misunderstandings especially in complex group structures.
Our services include reviewing permit issues for foreign managing directors, drafting and reviewing contracts, and assisting with apostilles and translations. An initial consultation is available from 150 CHF per hour, a full service overview can be found on our company incorporation page. Schedule an initial meeting if you are concretely planning your Swiss subsidiary incorporation.
This article contains general information and does not replace advice from a qualified lawyer. Consult a qualified legal professional regarding your personal situation before acting on the basis of this content.
FAQ
How do I establish a subsidiary in Switzerland?
You first choose the legal form, usually AG or GmbH, draft the articles of association and have them notarised. You then pay the capital into a blocked account and submit the documents to the commercial register, which enters the company after examination and publishes it.
Can I, as a German, establish a company in Switzerland?
Yes, as an EU national you benefit from simplified settlement rules compared to third-country nationals. In any case, at least one authorised representative with residence in Switzerland is required, regardless of your own nationality.
Why establish a subsidiary instead of a branch office?
A subsidiary and a branch office differ in their legal classification and representation. The suitable structure depends on the specific project. This difference affects liability, tax liability and perception vis-à-vis Swiss business partners.
When is a GmbH worthwhile compared to an AG in Switzerland?
A GmbH is usually suitable for operative subsidiaries with manageable business volume, as the share capital of 20,000 CHF must be paid in full. For holding structures or companies with frequent share transfers, an AG may be considered; the appropriate choice depends on the specific requirements.
What permit does a foreign managing director need?
Managing directors from the EU or EFTA require a residence permit under the simplified rules of free movement of persons. Managing directors from third countries must apply for a work and residence permit, which is linked to a proven business plan and overall economic interest.
Sources
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