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Switzerland Routes to Market

So you've decided to expand your business in Switzerland and researched your market. Now it's time to decide how you will register and set up a business in Switzerland. What is the best, most viable option for your company, your products, and yourself? Which is the path of least resistance?

Here are your typical options when expanding a business into Switzerland:

Sole Trader

This type of business in Switzerland is set up and run by one person. They have unlimited liability and the individual name appears in the title of the business. There is unlimited liability and the individual's name has to appear in the business. Registration with the Chamber of Commerce is compulsory if yearly sales are in excess of CHF 100,000. Additionally, the sole trader has to be a Swiss resident.

General partnership

This type of business in Switzerland is set up by two or more people. The name of one of the partners has to appear in the business name of the company. Partners have unlimited liability and must register with the Chamber of Commerce. Partners have to be residents and the company needs to have a national address.

Limited partnership

This type of business is set up in Switzerland by two or more people. There is a general partner who has unlimited liability, whereas the limited partner has limited liability, usually up to the amount they have invested. Registration with the Chamber of Commerce is compulsory.

Corporation or joint-stock company (AG/SA)

This type of business is most common form taken by companies when registering a business in Switzerland. Liability is limited to the value of the business's assets, and the minimum amount of equity is CHF 100,000. A minimum of three original shareholders is required .

Stamp duty and legal advice fees must be paid and the business has a compliance obligation to formal incorporation procedures for which it must pay fees.

Swiss or European citizen residents must constitute the majority of the board. The board members can be individually liable for the payment of Swiss taxes and social security.

Limited liability company (GmbH/Sarl)

This type of company must have a minimum of two original shareholders and at least one managing director must be a Swiss resident when registered in Switzerland. The minimum shareholders' equity of CHF 20,000 is required. The founders are permitted to perform the duties of governing bodies and there is limited liability should any debts occur.

Offshore Companies

Switzerland is known as the original and first true tax haven by many and therefore is often chosen for offshore companies. By choosing to incorporate an offshore company, business owners and investors can set-up a business outside the jurisdiction of its operations. Offshore companies are traditionally incorporated for lower fees and taxes. Business owners must abide the regulations of the offshore jurisdiction, and must not trade within the jurisdiction.

The benefits are vast. Reduced tax and fees are often big factors when considering offshore incorporation. A company may also choose and offshore location to:

• Simplify set-up and maintenance - entrepreneurs may find bureaucracy and red tape less of an obstacle in offshore jurisdictions
• Assume anonymity - the names of owners and directors are not for public record, and references to the company may only be made in its registered agent
• Ensure legal protection - for instance, some jurisdictions favour corporate governance, meaning a company is only liable to offshore laws as opposed to those in its areas of operation
• Protect assets - business owners may opt to arrange their assets and transactions in such a way that protects them from liability

Characteristics of an offshore company:

• Memorandum and Articles of Association
• Certificate of Incorporation
• Registered Office/Agent
• Shareholders / Members
• Directors / Managers
• Company secretary
• Statutory Register
• Bookkeeping

Branch

A branch is a legally dependent subsidiary of a head office that operates outside the parent country. At a financial level, however, it operates independently.

The entire incorporation process normally takes approximately two to three weeks from the date of the incorporators' meeting.

Licensing

Licensing is the permission for someone else to use your intellectual property rights: either a patent, trademark, trade secret, or copyright. Different types of license include:

• Non-Exclusive License - A non-exclusive license implies that your intellectual property rights can be awarded to more than one licensee.
• Exclusive License - A little more complex because, although the license may not be exclusive to one licensee, it may be exclusive to a geographic location, a certain product, or limited area of use. For instance, you may grant a licensee exclusive use of the rights in France, yet grant another licensee its use in Germany.
• Patent License - The allowance of another party to use your patented product, design or process.
• Trademark License - Trademark licensing means permission is awarded to a licensee to sell a product or service. However, the licensor retains more control in order to ensure that quality is maintained. Quality control is in place to uphold the image of the brand / product / service / licensor, and therefore sustain customer confidence and satisfaction.

Franchising In Switzerland

Franchising is the licensing out of a business name, product, technique, philosophy, trademark, etc, for a percentage of the income. Instead of setting up new outlets as part of your expansion, you license your existing business blueprint out to franchisees who then set up and manage it for you.

The benefits of franchising your business in Switzerland include: more freedom, as the franchisee takes on major responsibilities; minimal expense; lower cost and higher profits; potential for fast growth; brand building.

Disadvantages of franchising a business in Switzerland: although few, rely predominantly on your franchisees. They include: poor quality franchisees; franchisees not declaring all income; poor performance.

When setting up a franchise in Switzerland it is best to research the market first. The Swiss Franchise Association is a member of the European Franchise Federation and the World Franchise Council, both can help with advice and potential opportunies.

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