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Most entrepreneurs and legal entities interested in incorporating in Switzerland should know that the most common business structures used are the GmbH and the AG. Each type of company has certain advantages in terms of minimum required capital, simplicity of registration procedures, liability and taxation. Let’s take a look at the differences and similarities between the two Swiss business structures.
General information regarding GmbH and AG in Switzerland
Both company structures provide limited liability for the founders and the option to transfer shares to different beneficiaries.
For both types of companies, the registration process is rather quick, between one and two weeks, provided that all legal requirements are fulfilled and the necessary documentation is prepared.
The company’s domicile may be transferred from one Swiss canton to another, but taxation is based on the residency of the company’s management, which is something to take into consideration when deciding in which location to register the company.
Setting up procedures for GmbH vs. AG
To open a GmbH, the minimum required share capital is 20,000 CHF, which must be paid up upon registration. No bearer shares are allowed and the company must have at least one shareholder and one company director. It’s also mandatory to have a registered office in Switzerland.
In the case of an AG, the minimum required share capital is 100, 000 CHF, from which 50, 000 CHF or at least 20% must be paid up upon registration. Bearer shares are allowed only if the share capital is paid up entirely. The AG can be formed by at least one shareholder, but the board of directors must consist of 50% Swiss directors. A registered office in Switzerland is required for this type of company as well.
Taxation and reporting for GmbH vs. AG
Both types of companies must pay a corporate tax between 8% and 15%. The worldwide income of a company is subject of taxation, however, important tax privileges are applicable for certain companies, such as holdings, mixed companies etc.
Withholding tax on interests varies between 0 and 15%, under certain conditions and depending on the double taxation avoidance treaties in order. Royalties are exempt from withholding tax. For most goods and services, the VAT rate in Switzerland is 8%.
Annual tax return reports must be filed by both types of companies. The shareholders of a GmbH are listed into a public registry, but the shareholders of an AG, may remain undisclosed.
Mandatory audits are conducted each year for GmbHs and AGs that meet any of the following two criteria: having an annual turnover of 40 million CHF or more, holding assets worth 20 million CHF or more and having at least 250 employees.
Considering all the legal requirements and the registration procedures, the GmbH is a business structure suited mostly for entrepreneurs or small businesses, while the Swiss AG is suitable for a wide variety of business operations, including commercial activities, company subsidiaries, company branches and multinationals, being similar to a corporation.
In each case, after considering the advantages and disadvantages of a GmbH vs. AG, the easiest and fastest way to incorporate in Switzerland is to acquire help from a firm specialized in company formation in Switzerland.