With fantastic transportation infrastructure, clean environment and a hub for innovation, the Zug canton is an attractive region for establishing a Swiss residence, as well as a popular location for doing business. Zug offers a wide range of business sectors, focused in this popular Swiss canton, which makes it an attractive location for new entrepreneurs who want to invest in business ventures and take advantage of the favorable tax system and business-friendly environment.
Another reason for which many investors choose Canton Zug is because this region has some of the lowest taxes in Switzerland. Just to name a few tax advantages, the deductible tax on income and wealth was in 2011 at 8.5%, the withholding tax had a rate of 35% and a the VAT tax was only 8%. In addition, the VAT tax was not payable for goods and services that were exported.
Though in Switzerland there are many types of companies to choose from, in Zug, the most popular are the “Aktiengesellschaft (AG)” and the “Gesellschaft mit beschränkter Haftung (GmbH)”.
The Aktiengesellschaft, AG is a type of legal structure that is liable for its own actions. The capital of the corporation is divided into shares. The actual management of the AG falls into the exclusive responsibility of a Board of Directors and respectively into the responsibility of executive officers, which are also appointed by the Board. To establish an AG, a minimum share capital of 100’000 CHF is required. The share capital may be divided into registered shares. However, the nominal value of each share must be at least 0.01 CHF. When the AG is established, each of the shares must be paid up to at least 20% of its nominal value. The total paid-up share capital must be at least 50’000 CHF, regardless of the number of shares.
A limited by shares company, the GesellschaftmitbeschränkterHaftung (GMBH), has also the capital divided into shares, but with a minimum value of 100CHF. For the incorporation of a GmbH is it required to have at least one person, regardless it is a legal entity or an individual. Nevertheless, the GmbH must be represented by a person that is a resident of Switzerland. The said person can also be a managing director. The equity share capital must be at least 20’000 CHF, which must be fully paid in when the company is incorporated. There is no market capitalization value on the equity share capital.
The main steps to follow for the registration of a new entity are as follow:
1. Provide an unique name for the company;
2. Provide identification documents and signature legalized by a notary;
3. Open the bank account and deposit the capital;
4. Submit the documents to the Registry of Commerce.
For both entities the required documents to be provided for the registration procedure are:
- drafting of Statutes and bylaws;
- certified copies of the certificate of incorporation, statutes and bylaws;
- capital bank account proof
- application for the VAT, if required;
These two types of legal entities offer certain advantages such as:
- The liability and risk is limited to the capital;
- The transfer of shares or participation rights is simplified;
- Representation rights are regulated.
After the share capital has been deposited in the newly created capital account and the documents have been prepared, executed and submitted to the Commercial Register, the registration of the company shall take 5 to 10 days.
In Switzerland, the registration for tax purposes is not required for every formed company. The companies obliged to register for tax purposes in Switzerland must file an application with the Federal Tax Administration after they are incorporated and registered with the Swiss Commercial Register. The same rules are applied in the case of applications for VAT registration.
Depending on the type of business an investor chooses to open, certain permits and licenses might be required. In addition, if the registered Swiss company has employees, they must also be registered for social security.
Asides from an “AG” or a “GmbH”, in Zug it is also possible to establish branches of foreign companies or corporations that are registered with the Commercial Register, or to set up a private company, but it will not have the statue of a legal entity in its own right.A common practice in the business environment is opt for opening branches in Zug, which is more advantageous than setting up local companies because it is not required to deposit a minimum share capital when the company is registered and the foreign company takes full responsibility for the actions of the local company.
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