When a foreign company wishes to do business in Switzerland, it can open a branch in Switzerland. A branch is an establishment that carries out business activities without being considered a separate legal entity from its parent company. This means that the legal form of the branch is similar to that of the main company. In this text, we will examine the main features of a branch in Switzerland, including the formalities involved in setting up and managing a branch, tax and legal obligations, dissolution, and the advantages and disadvantages of this type of structure.
Setting up a branch in Switzerland involves a number of steps and formalities. Firstly, the foreign company must appoint a representative in Switzerland to act on its behalf and manage the affairs of the branch. Representatives are not required to be Swiss nationals. However, he or she must be domiciled in Switzerland. Next, the foreign company must register with the Swiss Commercial Register and provide documents such as the company’s articles of association, an extract from the foreign company’s commercial register and a power of attorney authorizing the representative in Switzerland to act on its behalf (art. 113-114 ORC).
The management of a branch in Switzerland is governed by the rules laid down by the foreign company. The company can thus determine the decision-making powers of the representative in Switzerland, the management of bank accounts and the allocation of tasks within the branch. It is also possible for the foreign company to appoint a Board of Directors for the Swiss branch, which can facilitate important decision-making.
A branch in Switzerland is subject to the same tax and legal obligations as a local company. It must, for example, keep accounts that comply with Swiss standards, submit annual tax returns and pay taxes on profits earned in Switzerland. The branch must also comply with the laws and regulations in force in Switzerland, particularly with regard to employee protection and safety in the workplace.
The branch is subject to taxation in Switzerland, but this can pose a problem in terms of tax optimization, as the tax authorities of the main company have an overview of its activities in Switzerland.
The dissolution of a Swiss branch of a foreign company is possible and can be carried out according to specific legal procedures. These procedures differ depending on the legal form of the branch and the foreign company’s choice to dissolve the branch. The procedure for dissolution is similar to that for creation, and involves closing the accounts, paying any debts and taxes, and removing the branch from the commercial register (art. 115 ORC). To do this, the branch’s representatives must submit an application for deletion from the commercial register, and provide the documents justifying the dissolution. If the main company is deregistered, the branch is automatically deregistered.
Setting up a Swiss branch of a foreign company can offer many advantages, not least access to the Swiss market. Indeed, by setting up a branch in Switzerland, a foreign company can gain access to the Swiss market, considered to be one of the most stable and prosperous in the world. Opening a branch in Switzerland can also enhance a foreign company’s brand image. Switzerland is known for its high quality standards and compliance with rules and regulations. In addition, Swiss branches can benefit from attractive tax rates and other tax advantages, such as incentives for research and development activities. The branch can be organized to meet the specific needs of the foreign company and its customers.
Setting up a branch in Switzerland can be costly, particularly in terms of incorporation, administrative and personnel costs. Furthermore, branches are considered an extension of the parent company and are not separate legal entities. This means that the parent company can be held liable for all the activities and debts of the branch in Switzerland. Currency fluctuations can also have an impact on branch profitability. In addition, foreign companies operating in Switzerland may be confronted with conflicts of law between Swiss legislation and that of the company’s country of origin. Finally, Switzerland is a highly competitive market, with many local and international companies.
Setting up a branch in Switzerland for a foreign company can have both advantages and disadvantages. Companies need to weigh up these factors and follow the necessary procedures in collaboration with local professionals to guarantee the legality of the process. Foreign companies are strongly advised to consult a lawyer for personalized advice on the steps to be taken when setting up a branch in Switzerland.