The limited liability company (LTD) is one of the most widely used legal forms in Switzerland. It can be founded by a single person with a minimum capital of CHF 50,000. An AG must have a director domiciled in Switzerland. The rules governing the SA are codified in Articles 620 et seq of the Swiss Code of Obligations. The formalities for incorporation are the same as for a limited liability company (Sàrl).
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Steps involved in setting up a limited liability company (LTD) in Switzerland
If you want to open your business and your choice has leaned towards the LTD instead of operating under a sole proprietorship (RI) or even a limited liability company (LLC). Below, we will detail the step-by-step process for creating your limited company in Switzerland.
Budgeting
It is important for any entrepreneur to track down these expenses before you even start. When setting up your limited company, it is advisable to budget for your project. To do this, you need to take the following expenses into account:
- Capital to be paid up to create the company
- Notary fees
- Commercial register fees
- Business plan creation
- Website creation
- Registering your trademark
- Administrative costs
Choose the company name
The company name will be the name of your company. You are free to choose the name, but you may not use the name of an existing company, nor may you use a name that is protected or could lead to confusion.
To find out if the name you have in mind is available click here.
Breakdown of capital
If you are a group of people embarking on an entrepreneurial adventure, it is essential that the share capital is divided up.
Organisation of the LTD
As a limited liability company is a legal entity, it is managed by the following bodies:
- General Meeting of Shareholders: This is the supreme body of the company. It has the power to amend the Articles of Association and approve the annual accounts. It also has the power to appoint and dismiss members of the Board of Directors, the auditors, etc.
- Board of Directors : Senior management of the company
- Auditing body : This is an independent body that audits the company's accounts and draws up a report for the general meeting of shareholders.
Choosing a bank and opening a consignment account
To make things easier, the best thing to do is to ask your personal bank. You should ask them to open a consignment account for you in order to block the capital.
You will be given an IBAN to make the transfer, and once the transfer has been made, the bank will send a consignment certificate proving that the money has been properly consigned.
Please note:The consignment account must be opened in the name of the company. The company name must be the same as the one you have chosen.
Foundation deed and regulations drawn up by a notary
The deed of incorporation and articles of association of the company are usually drawn up and validated by the notary, who will then send them to the commercial register. The company's articles of association are the principles and rules that the company must respect, which is why it must be well drafted.
Bylaws generally contain the following information:
- Company name
- Registered office and purpose of the company
- Share capital
- Company shares
- Partners' rights and duties
- Organisation of the company
- General Meeting
- Management
- Auditors
- Preparation of accounts
- Exit conditions for partners
- Dissolution and liquidation
- Communication and publications
- Legal form
Foundation Meeting
The founding meeting is the first meeting of shareholders to decide on the creation of the company.
Entry in the Commercial Register
A letter of requisition must be sent to the registre du commerce with the proposed formation. It is only once the company has been entered in the commercial register that it acquires legal personality.
Release of share capital
Once the company is registered, you can go back to the bank where you deposited the money to ask them to convert your consignment account into a business current account.
If the internet publication on the zefix is not yet available, you can request the release by presenting a stamped extract from the commercial register.
Share certificate and share register
The company must keep a share register showing :
- Name, address and date of birth of partners
- Number and nominal value held by each partner
- Name and address of usufructuary
Every shareholder has the right to inspect the share register.
Registration with the compensation fund
Every company is required to register with a compensation fund, even if it does not employ any staff. Checks are carried out periodically.
VAT liability
Depending on the business and sales volumes, this may be worth considering, as investments are generally made at the start of the business and VAT could be reclaimed on these expenses.
How much capital is needed to set up a limited liability company (LTD)?
The mandatory minimum share capital for a limited liability company (LTD) is CHF 100,000 and the minimum paid-up capital must be CHF 50,000. If the capital is higher, the pay-up must be at least 20% of it.
Each share may have a par value of at least 0.01 centime.
What costs are involved in setting up a limited liability company (LTD)?
The capital you contribute is not the only cost you need to consider when setting up a company:
- Capital contribution min. CHF 50,000
- Advice on setting up between CHF 400 and CHF 1,500
- Notary fees between CHF 500 and CHF 3,500
- Commercial register fees CHF 600
- Stamp duty of 1% if capital of more than 1mio
Conditions and documents required to set up a limited liability company?
There is only one condition for creating a limited company in Switzerland and that one of the administrators must be domiciled in Switzerland to represent the company. Once this condition has been met, the following documents must be produced:
- By-laws
- Consignment certificate
- Auditors
- Lex-friedrich declaration: generally for property-related activities
- Stampa declaration: certifying the absence of a contribution in kind
- Legalisation of signatures: for each participant
- Entry in the commercial register
Advantages of a limited liability company (LTD)
The main advantages of a limited liability company are :
- Free choice of name "LTD" mandatory
- Shareholder liability limited to share capital
- The identity of shareholders is anonymous
- Shares are easy to trade
- Fixed taxation of profits
- Shareholders working in the company are considered to be employees and pay social security contributions on their salaries.
Disadvantages of a limited liability company (LTD)
The main disadvantages of a limited liability company are :
- Relatively high amount of capital CHF 100,000
- High set-up costs
- Economic double taxation
- Accounting in accordance with the Swiss Code of Obligations
- High management costs (protocols)
Taxation of limited liability company (LTD)
Since the company is registered for the purpose of developing commercial activities, it becomes a tax subject in its own right.
The main tax applicable to a commercial entity in Switzerland is the profit tax, which is levied according to a three-tiersystem levels: federal, cantonal and communal.
At federal level, the basic tax is 8.5%, calculated on the basis of the company's net annual profits. To this tax must be added the two other levels: cantonal and communal, which vary according to the location of the company.
The company is also responsible for paying capital tax and Value Added Tax (VAT).
Entities owning real estate in Switzerland are also subject to transfer duties and real estate gains tax.
Other taxes to be taken into account include: Stamp duty, withholding tax.
Tax advice
Our Swiss accounting and tax specialists can help you with all your business management needs: accounting, taxation, tax returns, VAT, etc.
Are you thinking about taking the plunge but have more questions? Book an appointment with one of our patented specialists. A 15-minute consultation is completely free of charge.
FAQ - Limited Liability Company
The main advantages are the separation of private and commercial assets, limited shareholder liability, the negotiability of shares, the possibility of regulating commercial restrictions, a high level of good repute and the anonymity of the holder's legal status.
People who make decisions or who can influence those decisions considerably.
A limited liability company can be founded with a minimum of 1 shareholder.
The minimum capital requirement is CHF 100,000. CHF 50,000 must be paid in at the time of formation, the remainder can be paid in at a later date.
In the event of bankruptcy, the shareholders of a limited liability company lose their share capital.
This is done by transferring shares.
