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The variety of legal structure in Switzerland

In this article, we will look specifically at the characteristics, advantages, disadvantages and challenges of each legal structure to provide you with even clearer guidance when deciding on the optimal structure for your company. Join us on this informative journey and gain valuable insights to help you choose the right legal structure.


Hochhäuser

Overview of the legal structure:

  • Sole proprietorship

  • General partnership

  • limited liability company (SARL)

  • Limited company (SA)

  • Limited partnership


Sole proprietorship:

A sole proprietorship in Switzerland is one of the simplest and most uncomplicated forms of company formation. In legal terms, this legal form is not an independent legal entity. Instead, the entrepreneur manages the business personally and is therefore personally liable for all of the company's liabilities and debts. Setting up a sole proprietorship is comparatively straightforward. The sole proprietorship is ideal for small companies or freelancers who operate alone and require little capital.


  • Minimum capital: no minimum capital required

  • Founding persons: at least one person (owner)

  • Liability: The owner has unlimited personal liability for all debts and obligations.

  • Taxation: Income tax is calculated on the owner's personal tax rate.

  • Advantage: Little administrative effort and no formalities required when setting up the company

  • Disadvantage: Liability and the social security aspect



General partnership:

In Switzerland, a general partnership is a classic form of partnership in which two or more natural people jointly manage a company. In contrast to corporations such as the SA or the SARL, the general partnership is not an independent legal entity, but a form of association in which the partners are personally and jointly liable for the liabilities of the company. The general partnership is ideal for smaller companies or start-ups where personal and close co-operation between the partners is crucial.


  • Minimum capital: no minimum capital required

  • Founding partners: at least two natural people

  • Liability: the partners are personally, jointly and severally liable without limitation

  • Taxation: the company (as a structure) is not subject to tax, but the individual partners are taxed directly based on their salary, any profit share, interest on equity and their assets

  • Advantage: Little administrative effort and no formalities required when setting up the company

  • Disadvantage: Liability and the social security aspect, non-competition clause


Limited liability company (SARL):

The limited liability company (SARL) is a popular and widespread legal form for founding companies in Switzerland. In contrast to a sole proprietorship, the SARL is an independent legal entity, which means that it exists independently of the personal assets of its shareholders. The formation of a SARL requires certain formal steps, including the drafting of articles of association and registration with the commercial registery office. The SARL is a popular choice for medium-sized companies with several shareholders.


  • Minimum capital: CHF 20,000

  • Founding persons: at least one person (shareholder)

  • Liability: up to a maximum of the amount of the registered share capital.

  • Taxation: Profit tax is calculated at company level, whereby dividends are taxed at personal level. Capital tax is also due.

  • Advantage: own legal personality and low share capital required

  • Disadvantage: no anonymity, formal requirements for incorporation (higher costs), transfer of ordinary shares not easily transferable


Limited company (SA) :

The limited company (SA) represents an established and frequently chosen legal structure for company formations in Switzerland. Like the SARL, the SA is an independent legal entity. The formation of an SA requires certain formal steps, including the drafting of articles of association and entry in the commercial register. The SA is a suitable choice for larger companies that wish to offer a broad capital interest.


  • Minimum capital: CHF 100,000 (at least half of which must be paid in at the time of formation)

  • Founding persons: at least one person (shareholder)

  • Liability: Liability is limited to the share capital contributed

  • Taxation: As with the SARL, with separate taxation of company profits and dividends

  • Advantage: Anonymous, simple transfer / sale of shares, high creditworthiness

  • Disadvantage: Formal requirements for formation (higher costs), high initial capital


Limited partnership :

The limited partnership is a legal structure of partnership in Switzerland that represents a hybrid form between personally liable general partners and limited partners with limited liability. This structure makes it possible to establish different levels of liability within the company. The limited partnership is particularly suitable for companies where a division of responsibilities and liability levels within the partners is desired.


  • Minimum capital: no minimum capital required

  • Founding partners: at least two natural people

  • Liability: General partners have unlimited liability, limited partners are only liable up to the amount of their contribution.

  • Taxation: Profit tax is calculated at company level.

  • Advantage: Clear distinction between operational management and financial investors.

  • Disadvantage: General partners are jointly and severally liable without limitation


It is advisable to look into this issue thoroughly and, if necessary, seek legal or tax advice to ensure that the chosen legal structure is the best fit for your company's needs and objectives.


Do you have any questions on this topic or would you like to find out more? Contact us for an appointment.

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