Setting Up a Branch Office in Switzerland

Many people dream of establishing themselves in Switzerland because of its stable economic and political environment, world-class infrastructure, business-friendly authorities, and attractive low-tax system. These factors provide companies with a high degree of legal and tax certainty—something that cannot always be taken for granted in many European countries.

In our blog article “Setting Up a Company in Switzerland – The Key Steps“, we explained how to establish a company in Switzerland and introduced the different legal business structures. This article describes a fourth option: establishing a Swiss branch office of your existing foreign company. Depending on your circumstances, this may be an attractive alternative.

What Is the Difference Between a Swiss Company and a Swiss Branch Office?

Unlike a Swiss limited company, a Swiss branch office does not require any share capital because it is not a separate legal entity. Instead, the branch office is registered in the Swiss Commercial Register through a notarized registration process. Although this may sound straightforward, establishing a branch office is generally more time-consuming than incorporating a Swiss company, as the registration documents must meet specific legal requirements.

A Swiss branch office has the same rights and obligations as a Swiss company with regard to taxation, VAT, accounting, employment law, and other regulatory requirements. Its accounting records must be maintained in accordance with Swiss law and subsequently consolidated into the financial statements of the foreign parent company.

If you do not relocate to Switzerland yourself, you must appoint a managing director who is resident in Switzerland and has sole signatory authority on behalf of the branch office.

Key Advantages of a Swiss Branch Office:

• No share capital is required.
• Closing a branch office is significantly easier, faster, and less expensive than liquidating a Swiss company. While the liquidation of a Swiss legal entity typically takes between 18 and 24 months and involves considerable costs, a branch office can usually be closed within two to three months at comparatively low cost.

Key Disadvantages of a Swiss Branch Office:

• Most Swiss banks are no longer willing to open bank accounts for branches of foreign companies due to increasingly stringent compliance requirements imposed by the Swiss Financial Market Supervisory Authority (FINMA). As a result, finding a suitable banking partner can be challenging and time-consuming. Even if a bank accepts the relationship, monthly account fees typically range from CHF 500 to CHF 1,000.
• The registration process generally takes longer and results in higher overall incorporation costs.
• Many Swiss banks are no longer prepared to maintain ongoing banking relationships with branches of foreign companies.
  
  -> A Swiss branch office can serve as an effective first step toward entering the Swiss market before committing to the incorporation of a separate Swiss legal entity. If the business develops less successfully than anticipated, the branch office can be closed relatively quickly and at a comparatively low cost.
  
  However, due to the increasing difficulty of finding a suitable Swiss banking partner, establishing a branch office has become a considerably less attractive option in practice today.