How To Start A Business In Switzerland

Located in the heart of Europe, Switzerland is renowned for its unbelievable landscapes and excellent quality of life. It has earned the reputation of a top tourist destination, with plenty for visitors to see. From the majestic Swiss Alps to the iconic Lake Geneva, the country sees about 20 million tourists per year.

But it is far more than just a holiday destination. Switzerland boasts some of the top infrastructure in the world with a robust economy, attracting entrepreneurs from all over.

With it being one of the most business-friendly locations, you may be wondering how to go about starting a business there. This guide will cover everything you need to know before you make your decision.

 

Why Start A Business In Switzerland?

 

Switzerland consistently ranks in the top spots when it comes to global competitiveness indexes. The Basel Area Business & Innovation reported that the country has the 2nd highest GDP per capita as well as the 10th highest GDP globally.

Overall, the salaries are attractive, the labour laws are fair to workers and the unemployment rate remains low. Here are a few more reasons as to why you should consider opening a business there.

Location: Switzerland is a landlocked country, with access to the rest of Europe in every direction despite not being a member of the European Union.

Low taxes for businesses: The country has very appealing corporate tax rates compared to some of its European neighbours.

Regulations support companies: The Swiss welcome entrepreneurship, offering supportive business regulations to assist business founders.

Innovation is prioritised: Switzerland has long been a global leader when it comes to research and development especially in technology, with some even referring to it as the new Silicon Valley.

 

Business Opportunities In Switzerland

 

Switzerland has a plethora of thriving industries, giving new entrepreneurs plenty of opportunities to innovate in those sectors.

Luxury goods: Switzerland is probably most famous for its jewellery and high-end fashion brands along with luxury watch brands. The country is home to the likes of Rolex, Tag Heuer, Breitling and Jaeger-LeCoultre.

Tourism and hospitality: The Swiss Alps is one of the most distinguished landmarks, attracting millions of tourists to see the beauty of it in person. Entrepreneurs can take advantage of the need for real estate and rental properties.

Pharmaceuticals: Businesses like Roche and Novartis have a heavy presence in Switzerland, and startups in biotechnology are increasingly on the rise.

Technology: The Swiss government is highly supportive of tech startups with incentives for entrepreneurs in this sector.

 

What Are The Tax Regulations In Switzerland?

 

While Switzerland does have very competitive corporate tax rates, they do differ by canton. The country is currently made up of 26 cantons, or states, part of the Swiss Confederation.

The federal tax rate is 8.5% but in some cantons they can range from 12% t0 24%. Value Added Tax (VAT) has a standard rate of 7.7% and employers will need to contribute about 6% for employee social security.

For dividends paid to shareholders, there is a withholding tax of 35%.

 

 

Visa Requirements For Foreign Entrepreneurs

 

Visa requirements for non-resident entrepreneurs will vary according to their nationality and business setup, but these are the primary visas that can be applied for.

EU or EFTA nationals: Are allowed to start a business in Switzerland with minimal limitations. If the intention is to stay long-term, a residence permit will need to be applied for.

Non-EU nationals: These individuals are required to get a residence permit and indicate financial stability. Additionally, they need to prove that their business can benefit the Swiss economy.

Work permits: Some investors and business owners may need to have a permit to be able to live and work in Switzerland.

Golden visa: Non-EU nationals are able to obtain Swiss residency by making an investment in the country.

 

What To Consider Before Starting A Business There

 

While Switzerland is highly appealing for entrepreneurs and startups, of course, there are potential challenges to keep in mind. These may not affect everyone, it will depend on you as the business owner and the nature of your business activities.

Costly living expenses: Cities like Zurich and Geneva are among the world’s most expensive cities to live in. It can be more affordable if you move out to the more outlying areas.

Language barriers: Switzerland has four official languages which are German, French, Italian and Romansh. If you plan on starting a business there without any knowledge of these languages, you may definitely encounter some challenges along the way.

Stringent immigration laws: It can be harder for non-EU nationals to get a business or work permit there.

Cultural differences: The Swiss are known to have a high regard for formality and precision in their business environments. If you plan to work on the country, you will need to be mindful of this.

 

How To Set Up A Business In Switzerland

 

Here is a step-by-step guide on how to successfully start a business in Switzerland with all of the key steps that you will be required to take.

 

Select A Business Structure

 

There are four common types of structures that you can choose from.

Sole proprietorship: Also known as an Einzelfirma. This is ideal for smaller businesses or freelancers.

Limited liability company (GmbH/SARL): This will require a minimum capital amount of CHF 20,000.

Public limited company (AG/SA): This structure is more suited to bigger companies and will need a minimum capital amount of CHF 100,000.

Branch office: An existing foreign company is allowed to open up a Swiss branch in the country.

 

Register The Business

 

The next step is to decide on your business name and register with the Commercial Register (or Handelsregister). After this, you can obtain the identification number for your business.

 

Open A Swiss Bank Account

 

You can open up a Swiss bank account to manage your company’s finances. If you have a limited liability or public limited company, you will need to deposit the relevant minimum capital amounts.

 

Apply For Relevant Permits

 

Some industries like finance and healthcare will require additional licenses or permits. You will be able to check cantonal regulations to find out this information.

 

Register For Tax

 

If your yearly turnover is more than CHF 100,000 then you will need to apply for a VAT number. If you have employees, you can also register for social security contributions.

 

Should You Start A Business In Switzerland?

 

Switzerland has one of the most stable, business-friendly economies in the world. Starting a business there could open up a wealth of opportunities for you as an entrepreneur.

While the high cost of living and language barriers may be off-putting, the country’s low taxes and ideal location still make it highly attractive for startups. The key to success will be securing enough financial resources and navigating the Swiss regulations to give your business the best start.

Viel Glück! (Good luck)