Becoming an Entrepreneur in Switzerland: why is it interesting?
SIG Fiduciaire offers its expertise to any entrepreneur who would be interested in creating their company in Switzerland. The firm provides comprehensive and professional assistance in auditing, accounting, payroll management and taxation. However, why use this type of firm to open a company? Firstly, because these services are often less expensive than those of a lawyer, an advantage which often attracts attention. But also, because there is a difference between theory and practice. And only professionals master the latter. Another undeniable advantage is the saving of time, this resource which entrepreneurs so often lack. With a firm, everything happens quickly. Everything is fluid, and above all, everything is compliant. “Otherwise, the entrepreneur can very well do everything himself,” begins Raphael Soubeiran. Ultimately, whether going through SIG Fiduciaire or operating alone, the fundamental question remains: who will run the company, where will its offices be located and who will its managers be? It is essential to understand that anyone can open a company in Switzerland with a single shareholder, without any residency restrictions. However, the head office of the company must be in Switzerland and a director residing there is required. This is often where things get complicated, especially when all the founders and managers reside in France at the time of the company's creation. “This is generally the first point where it gets stuck,” explains Raphaël. “We can act as domiciliary, find premises for them and provide them with an administrator. Then they can become co-administrators.”
Establishing a Business in Switzerland: Structural Options and Capital Required
For what type of business is it interesting, relevant, or even possible to establish in Switzerland? Does Switzerland require considerable start-up capital? Three types of structures are possible in Switzerland. First, individual reason, often for liberal professions such as a psychologist wishing to practice in Switzerland. In this case, no start-up capital is required. Only an address, generally that of the firm, is required. The second scenario concerns the SARL, which requires a minimum capital of 20,000 francs. What is interesting here is the diversity of forms in which this amount can be provided. This could be cash, an asset, property valued at 20,000 francs, or even cryptocurrency. In an SARL, the shareholders are visible. On the other hand, in an SA, as its name suggests, they remain anonymous. The starting capital is higher, starting at 50,000 euros. But this amount can be contributed in cash, in participation, in gold, even in master paintings, in real estate or even in a computer application benefiting from a patent.
Taxes, Deductions and VAT: Business Taxation in Switzerland
Once you have created your company, what are the financial implications for you? Taxation in Switzerland amounts to 15% of net profit, in terms of income tax. In addition, there is a capital tax, although this is generally minimal, according to information from SIG Fiduciaire. An interesting feature is the possibility of deducting losses over a period of 7 years. In other words, this means that if your company makes losses, it will be able to deduct them from its taxable income throughout this period. Another advantage, particularly interesting for those who plan to create a company selling goods and services, is the VAT rate of 8.1%. This concerns advisors, business coaches, managers, law firms, IT companies, but also paramedical professionals, life coaches, or even alternative therapies, who are subject. These sectors are among SIG Fiduciaire's regular clients, alongside financial and consulting companies. This tax applies to the sale of all kinds of goods, although exceptions may exist for certain products, as in the case of reduced rates for catering, for example.
Management of Salaries and Social Security Charges in Switzerland: Advantages and Obligations
Let us now focus on the salary aspect and the obligations of employers. Switzerland presents, once again, a clear advantage, with social charges of around 15%. This 15% covers benefits related to old age, disability, illness, unemployment and maternity. When it comes to retirement, a subject that is debated in France, Switzerland offers considerably more advantageous conditions than France. “To obtain a pension of 500 francs in France, you have to work 30 years. In Switzerland, 10 years is enough,” emphasizes Raphael. This difference is explained in particular by the standard of living which differs between the two countries. Salaries are actually higher in Switzerland, with employer contributions being around 15%. This allows you to “recover the substance you have earned, after which it will be taxed,” adds Paul. Health insurance, on the other hand, must be paid separately and is the responsibility of the employees. Once salaries have been deducted, it is possible to deduct dividends. These are taxed at 35% for residents abroad and 25% for residents in Switzerland. For the French, a double taxation agreement between Switzerland and France allows them to benefit from a tax rate reduced to 20%. Thus, “we forget the 35%, we are at 15%”, affirms Raphaël.
Real Estate Investment in Switzerland: What Opportunities Are There to Seize?
SIG Fiduciaire's clients reflect the diversity of advantages offered by Switzerland: players in the IT sector, liberal professions, human resources, employment agencies, trading companies, real estate and construction companies. In this regard, what are the arrangements for purchasing real estate in Switzerland? A foreigner can acquire any commercial property without restriction and can establish a company for this purpose, which he can hold in his own name or in the name of the company. Overall, for those looking for an "investment product", namely a company acquiring property and making investments, the advantage lies in investing in Swiss francs, a currency known for its stability. Variable mortgage rates are also advantageous, generally below 2.5% for loans. It is also possible to buy real estate to make it your main residence. However, whether in their own name or within a company, a foreigner can only purchase a main residence and on condition of residing there for at least 183 days per year. The acquisition of a second home is possible without restriction, provided that it is located in an area authorized for this purpose. Geneva is unfortunately not one of these zones, but many other cantons, particularly those bordering the mountains, allow it. Finally, what makes real estate investment attractive are tax rights. Transfer taxes amount to 3%, a much more advantageous rate than notary fees in France, which are around 8%. Whether for a real estate company or goods and services, it is possible to move a French company to Switzerland, the law allows it. In this case, the advantage is on the French side. Instead of deregistering the company in France, we transfer it to Switzerland. SIG Fiduciaire can intervene in this process as an auditor.
Switzerland: Eden for Estate Planning and High Income Taxation?
As one may be tempted to create a company for commercial purposes, one can do so from an inheritance perspective. Until recently, there was legal uncertainty, because there was no longer an agreement between France and Switzerland. In any case, one thing is now certain: between spouses and their children, the tax is zero. At least in Geneva. For Swiss law to apply, you must have resided in Switzerland for at least 7 years. We cannot therefore leave overnight, specifies SIG Fiduciaire. What matters is the residence of the deceased. The heirs of the Swiss resident will therefore not have to pay inheritance tax in Switzerland or in France. Switzerland does not attract wealthy people by chance. Its taxation is all the more attractive as the amounts are high. For example, for people earning 2.3 million Swiss francs in income, the maximum tax rate is 45%. From 100,000 francs, the tax rate is 15% for a single person, and 7% (only) for a married couple where one of the spouses does not work. For very wealthy people, without a salary, living on property annuities and dividends, it is possible to impose an expense tax. And there, the advantage is particularly attractive. We will not be subject to the maximum rate of 45%, but to a tax based on expenditure. An expense which is calculated by estimating five times the rent. And since it is difficult to estimate this amount on a case-by-case basis, the state generally assumes an average expenditure of 300,000 francs. We will then have a tax rate of 4%. So, even if you earn 10 million per year, you will only be taxed on 300,000 francs. A detail which is obviously not negligible.
In the end, what is so attractive about Switzerland? Beyond its advantageous taxation, it is its pleasant living environment, the impressive number of multinational companies that it hosts, its mountainous landscapes, its sparkling lakes, and its proximity to the Mediterranean. Each canton offers its own advantages. Zug, for example, has become a cryptocurrency empire. You can even open a cryptocurrency company. A process that's even faster as you don't need a bank account. In just 10 days, you can create a cryptocurrency business. Count 20 days in shares, and 30 days in cash. In Switzerland, foreigners feel good and succeed. There are a multitude of business clubs, such as Lions, Rotary, and even the state holds information sessions. Without forgetting the institutions. What really matters is the network. This is how business prospers, SIG Fiduciaire reminds us, before adding “The secret of every entrepreneur is to have a product that pleases, a product that offers an advantage for Switzerland”.
Do you want to create your business in Switzerland? Do not hesitate to contact Raphaël (raphael@sigtax.com) and Paul (paul@sigtax.com), who will be happy to answer you.