Instead of incorporating a subsidiary in Switzerland during Swiss company formation and administration, a foreign company may also establish one or several branch offices. Branch offices in Switzerland have a certain organisational and financial independence from the principal office. Under Swiss law, a branch office can enter into contracts and execute and settle transactions in its own name. The Swiss branch office can also sue and be sued at its place of business. However, legally the branch offices are part of the foreign company. If the foreign company is liquidated or falls into insolvency, the effects of the liquidation or insolvency also extend to the Swiss branch office.
- Although it’s a similar cost, it is slightly more of a burden to establish than an AG or GmbH. However, the Swiss branch office does benefit from:
- No share capital requirement
- Low tax burden
- Exemption from the 35% withholding tax on payments to the parent company
- Exemption of the Swiss profits in the hands of the parent company (according to terms of relevant double tax treaties)
Foreign Company Establishment Details
A foreign company may establish a branch office in Switzerland, if, among other things, the following requirements are met:
- The foreign company must show that it is lawfully existing and duly incorporated in its home country. For this purpose, it must provide the competent Commercial Register with an excerpt from the foreign commercial register or register of companies; if no such register exists under the law of the foreign company’s home country, it must provide official evidence that it lawfully exists.
- The foreign company must provide evidence that it has decided to establish a Swiss branch office during formation and administration. This evidence might include some of the minutes of a meeting from the board of directors or another corporate body of the foreign company which is empowered to establish branch offices.
- The Swiss branch office that your foreign company is assigned to during formation and administration must be given a name pursuant to Swiss standards (see below).
- The Swiss branch office must indicate the nature of its business or the business purpose of the foreign company.
- The Swiss branch office must have one or several signatories authorised to act on behalf of the Swiss branch office (see below).
- The foreign company may enact additional rules applicable only to the Swiss branch office. Under certain circumstances, these rules are recorded in the Commercial Register.
- The establishment of a branch office must be notified to and registered with the competent Commercial Register. The corresponding application must be filed by one or several members of the board of directors in the foreign company who are authorised to act on behalf of it.
Swiss Branch Office Name
The branch office of a foreign company set up during Swiss company formation and administration is limited in the choice of its corporate name. The name of the branch office must indicate:
- The name of the company;
- The place of the principal business office and the place of the branch office; and
- an expressed designation of the branch office as such.
- Accordingly, a permitted name for a branch office would be “Acme Widget Co., Inc., Chicago, Zurich branch office”.
If a foreign company establishes a branch office in Switzerland, it must record the persons authorised to act on behalf of the Swiss branch office. The entry in the Commercial Register may specify that authorised signatories may only act on behalf of the branch office, not on behalf of the principal office of the foreign company. At least one person providing their authorised signature must be residing in Switzerland and must be recorded in the competent Commercial Register as being authorised to act on behalf of the foreign branch office.
Swiss Law Aspects
The Swiss branch office of a foreign company is subject to Swiss law. This implies, among other things, the following:
- The scope of the authority of the authorised signatories to act on behalf of the Swiss branch office is governed by Swiss law, not by the foreign law at the place of incorporation of the parent company.
- The Swiss branch office of the foreign company may sue and be sued at its place of business in relation to matters arising from the business at that branch office.
- The Swiss branch office is subject to the Swiss rules on the conflict of laws. Accordingly, certain agreements and undertakings given by the Swiss branch office may be subject to Swiss substantive law if that’s what the Swiss rules provide.