Establishing a company in Switzerland is a significant step toward expanding your business into a stable and prosperous market. However, the journey doesn’t end with incorporation. To ensure compliance with Swiss regulations and maintain your company’s good standing, it’s crucial to fulfill several post-incorporation requirements.
1. Value Added Tax (VAT) Registration
In Switzerland, businesses are required to register for VAT if their annual turnover exceeds CHF 100,000. VAT is a consumption tax levied on most goods and services provided by businesses. Companies must charge VAT on their taxable supplies and submit periodic VAT returns, typically quarterly.
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Threshold: If your business generates revenue above CHF 100,000 per year, VAT registration is mandatory. Companies with a turnover below this threshold can voluntarily opt for VAT registration if it benefits their operations.
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Process: To register for VAT, you will need to apply to the Federal Tax Administration (FTA). Once registered, your company will need to charge VAT on applicable goods and services and submit periodic VAT returns.
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Rates: The standard VAT rate in Switzerland is currently 7.7%, with reduced rates of 2.5% for essential goods (such as food and medicine) and a special rate of 3.7% for the hotel industry.
Failure to register for VAT on time may result in penalties, so it’s essential to monitor your turnover and file for registration promptly if your revenue exceeds the threshold.
2. Social Security and Insurance Obligations
Switzerland has a well-established social security system designed to protect employees and employers alike. After company registration in Switzerland, your company must register its employees for social security and provide the necessary insurance coverage to comply with Swiss law.
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Social Security Contributions (AHV/AVS): All businesses must register their employees with the Old-Age and Survivors Insurance (AHV/AVS), which is Switzerland’s compulsory social security system. Both the employer and the employee contribute to this fund, which provides retirement benefits, disability insurance, and survivor benefits. The contribution rate is split equally between the employer and employee, and payments must be made regularly to the AHV compensation office.
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Accident Insurance (UVG/LAA): Employers are also required to take out accident insurance for their employees, which covers occupational accidents and diseases. This insurance is compulsory under Swiss law and is designed to protect employees in case of workplace injuries. Employers must arrange coverage through either Suva (the Swiss Accident Insurance Fund) or a private insurer.
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Occupational accident insurance is mandatory for all employees and covers accidents that occur in the workplace.
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Non-occupational accident insurance is required for employees working more than 8 hours per week and covers accidents outside of work.
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Occupational Pension (BVG/LPP): In addition to social security, companies with employees earning more than CHF 22,050 per year must offer an occupational pension plan (BVG/LPP). This second-pillar pension system complements the AHV/AVS and helps employees save for retirement. As with social security, both employers and employees contribute to the occupational pension, with the employer required to pay at least 50% of the contribution.
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Health and Disability Insurance: Although not directly provided by employers, health insurance is mandatory for all residents in Switzerland. Employers should ensure that their foreign employees are aware of this requirement, as they must obtain private health insurance within three months of moving to Switzerland. Additionally, employers may also consider disability insurance to cover the risk of long-term illness or disability for their workforce.
By fulfilling these post-incorporation obligations, your company will not only remain compliant with Swiss law but also ensure that your employees are protected and adequately insured. Ignoring these requirements can result in penalties or legal issues, so it is essential to prioritize these tasks as part of your ongoing business operations.
3. Accounting and Reporting Obligations
Swiss companies are required to maintain accurate accounting records and prepare annual financial statements under Swiss accounting standards. These records must be submitted to the tax authorities for review.
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Annual Financial Statements: Companies must prepare annual financial statements, including a balance sheet, income statement, and notes to the accounts. These statements provide a clear picture of the company’s financial position and performance.
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Audit Requirements: Depending on the size of the company, an audit may be required. A limited audit is required if your company has 10 or more Swiss resident employees. A full audit is required if two of the following three conditions are met:
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The company’s annual balance sheet is CHF 20 million or more.
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The company’s annual revenue has reached or exceeded CHF 40 million.
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The company has 250 or more full-time employees.
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Tax Returns: Companies must file tax returns annually. The tax return includes information on the company’s income, expenses, and profits. It is essential to submit these returns on time to avoid penalties.
4. Corporate Governance and Compliance
Maintaining proper corporate governance is essential for the smooth operation of your company and for building trust with stakeholders.
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Shareholder and Board Meetings: Regular shareholder and board meetings should be held to discuss company matters and make important decisions. Minutes of these meetings should be documented and kept for record-keeping purposes.
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Register of Shareholders: A register of shareholders should be maintained, detailing the ownership structure of the company. This register must be updated regularly to reflect any changes in ownership.
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Compliance with Local Laws: Ensure that your company complies with all local laws and regulations, including those related to employment, environmental protection, and data protection.
5. Business Licenses and Permits
Depending on the nature of your business, you may need to obtain specific licenses or permits to operate legally in Switzerland.
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Industry-Specific Licenses: Certain industries, such as finance, healthcare, and manufacturing, have additional regulatory requirements. Consult the Swiss Federal Office for Economic Affairs (SECO) for guidance on the necessary permits for your business sector.
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Cantonal Requirements: Each canton in Switzerland may have its specific requirements for business operations. It is essential to check with the local authorities to ensure compliance with cantonal regulations.
6. Ongoing Compliance and Monitoring
After fulfilling the initial post-incorporation requirements, it is crucial to establish a system for ongoing compliance and monitoring.
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Regular Audits: Conduct regular internal audits to ensure that your company is adhering to all legal and regulatory requirements.
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Training and Awareness: Provide training to employees and management on compliance matters to foster a culture of compliance within the organization.
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Legal and Regulatory Updates: Stay informed about changes in laws and regulations that may impact your business operations.
By proactively managing these aspects, your company can maintain its good standing and avoid potential legal issues.
Also Read: Legal Framework for Company Registration in Bermuda
