Swiss company branch

A Swiss company branch is a commercial establishment dependent on the main company. It can be established in Switzerland or abroad. Swiss-based companies can set up branches throughout the national territory. A branch of a legal entity headquartered in Switzerland is governed by the Swiss Code of Obligations, as well as the Commercial Register Ordinance (art. 109-112 ORC). This text will explore the main characteristics of a Swiss company branch, its legal and fiscal obligations, dissolution, as well as its advantages and disadvantages.

Characteristics of a branch

A branch allows a company to conduct activities in a location other than its head office. It is considered by the main company as an extension of its activities in a different geographic area. The branch is legally and financially dependent on the main company and commercially connected to it. The branch must have a similar activity to the main company over an extended period and operate in separate premises.
A branch does not have a legal personality separate from the main company. It is an integral part of the main company and subject to the same legal and fiscal rules and obligations. This means that the main company is responsible for the actions of the branch, and any liability or debt incurred by the branch is also attributable to it. However, the branch enjoys a certain independence in managing and directing its activities. The branch’s representative must be domiciled in Switzerland and have the right to sign on behalf of the branch.

Legal and fiscal obligations

A branch must comply with several legal obligations in Switzerland. One of the main obligations is the registration of the branch in the commercial register of its location (art. 931 para. 2 CO), through a requisition. Authenticated form and notarization are not necessary.
The registration is declarative and must include information such as the headquarters, business name and legal form of the parent company, the identification number of the main seat, the purpose, address and objective of the branch, as well as its representatives. Additional documents like certified statutes may also be required.

The branch is subject to the same tax rules as the main company. Therefore, it must comply with Swiss tax laws and pay local, cantonal, and federal taxes applicable to its activities. The branch is considered a permanent establishment and is thus subject to taxation where it is established. It must also maintain separate accounting from the main company, allowing it to declare its income and expenses independently. The profits it generates can be transferred to the main company without double taxation. This is possible due to the international tax treaties that Switzerland has concluded with many countries.

Advantages of a branch

Creating a branch allows a company to expand its activities to new territories without creating a new company. Moreover, having a branch in another country can improve the company’s brand image with local customers. It can also enable the company to respond to local tenders otherwise unattainable. Finally, the branch benefits from a certain autonomy in management and direction, which can facilitate its local management.

Disadvantages of a branch

In the event of a dispute or fault of the branch, the main company can be held responsible, which can endanger its reputation and finances. Additionally, geographical distance and cultural differences can cause communication difficulties between the main company and the branch.

Dissolution of the branch

The dissolution of the branch can be decided for various reasons, such as the end of the activity for which it was created, merger with another entity, or the sale of the branch. The dissolution process is similar to the creation of the branch and involves closing the accounts, paying debts and any taxes, and deregistering the branch from the commercial register.
Thus, the branch’s representatives must file a request for deregistration with the commercial register and provide documents justifying its dissolution. Deregistration is effective from the time it is published in the Swiss Official Gazette of Commerce.

If the main company is deregistered, the branch is automatically deregistered.

In conclusion, a branch is a practical legal structure for Swiss companies wishing to expand their activities abroad or in the Swiss market. It offers great flexibility in terms of organization while benefiting from the experience and resources of the main company. Creating a branch in Switzerland is relatively simple and quick, but requires consideration of several legal, fiscal, and accounting aspects.