Company Formation in Switzerland: Legal Advice for Entrepreneurs

Swiss law offers entrepreneurs a legally secure framework with straightforward formation requirements. Switzerland operates a system of cantonal tax sovereignty, with corporate tax rates that vary by canton and are in many cases considerably lower than those found in neighboring jurisdictions. Its social insurance system is independently structured, with contribution levels that differ from those in many other countries.

For companies with international operations, Switzerland’s extensive network of double taxation agreements is also significant — covering over 100 states worldwide. Holding structures with Swiss participation can, under certain conditions, be structured in a tax-efficient manner, but they require careful legal and tax planning.

Swiss private law is primarily codified in the Civil Code (Zivilgesetzbuch — ZGB) and the Code of Obligations (Obligationenrecht — OR). The OR is notable for consolidating all key company and commercial law provisions in a single piece of legislation — a more unified structure than is found in many other civil law systems.

Switzerland offers several legal forms for business activity. The choice between them depends on the scale of the venture, the number of founders, liability considerations, and longer-term structural goals.

The AG is the classic capital company for larger projects and international structures, governed by Articles 620 et seq. OR. The minimum share capital is CHF 100,000 (Article 621(2) OR). At incorporation, at least 20 percent of the par value of each share must be paid in; in any event, no less than CHF 50,000 must be contributed (Article 632 OR). Contributions in kind are permitted but are subject to specific audit requirements.

A single person can incorporate an AG. A board of directors (Verwaltungsrat) is mandatory. At least one person resident in Switzerland must be authorized to represent the company — that person must be either a member of the board of directors or the managing director (Article 718(4) OR). Liability is limited to the company’s assets (Article 620(1) OR). A wide-ranging reform of Swiss stock corporation law came into force on January 1, 2023, introducing, among other things, greater flexibility in capital structuring, the option of holding virtual general meetings, and simplified procedures for digital incorporation.

The GmbH (Articles 772 et seq. OR) is well suited to small and medium-sized enterprises and start-ups. The minimum share capital is CHF 20,000 and must be fully paid in at incorporation. A single founder is sufficient here too. Members are listed by name in the commercial register, which increases transparency. Share transfers must be made in writing and require the approval of the shareholders’ meeting under Articles 785 et seq. OR. Liability is limited to the company’s assets.

The sole proprietorship is the simplest business form: no minimum capital and no formation formalities in the strict sense. It arises automatically when self-employed activity begins. The owner is personally liable without limit for all business debts. Any sole proprietor whose annual turnover reaches CHF 100,000 is required to register in the commercial register under Article 931 OR.

These partnerships are broadly equivalent in function to general and limited partnerships found in many other jurisdictions. In practice, they are rarely the vehicle of choice for foreign investors, but may be relevant for specific partnership structures.

Every capital company (AG and GmbH) must be notarized and entered in the cantonal commercial register. Notarization by a Swiss notary is mandatory — a purely private-form incorporation, as permitted in some other jurisdictions, is not possible in Switzerland. The company acquires legal personality only upon registration.

Further steps include opening a formation account at a Swiss bank for payment of the share or stated capital and registering with the competent cantonal tax authority. Once a certain turnover threshold is reached, registration with the Federal Tax Administration (Eidgenössische Steuerverwaltung — ESTV) for VAT purposes is also required. Companies with employees must additionally comply with Swiss social insurance law.

For entrepreneurs establishing a Swiss company from abroad, several issues deserve particular attention. Switzerland’s double taxation agreements with over 100 states determine which country holds the right to tax specific types of income — careful analysis is especially important for dividend distributions, royalty income, and managing director remuneration. Founders should also consider whether their home country’s foreign income or controlled foreign corporation rules may apply to a Swiss entity, as these can affect how the company’s passive income is treated for tax purposes. Specialist advice on the interaction between Swiss tax law and the rules of the founder’s home jurisdiction is essential before incorporation.

On the data protection side, Switzerland’s revised Federal Act on Data Protection (revidiertes Datenschutzgesetz — revDSG) has been in force since September 1, 2023. It has been largely aligned with the EU’s General Data Protection Regulation (GDPR) but retains distinct provisions of its own. Companies operating across borders must assess their compliance obligations under both Swiss law and any data protection regimes applicable in the jurisdictions where they are active.

Forming a company in Switzerland requires careful planning and specialist knowledge. Our Swiss Desk guides clients from the initial structural discussions through to a fully registered company. This covers advice on the choice of legal form with tax, liability, and practical considerations all taken into account; drafting and reviewing formation documents; coordinating with notaries and authorities in Switzerland; and ongoing legal support across company law, employment law, and compliance.