Instead of incorporating a subsidiary in Switzerland, a foreign company may also establish one or several branch offices. Branch offices have a certain organizational 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, and can sue and be sued at its place of business. Legally, however, the branch offices are part of the foreign company. If the foreign company is liquidated or falls into insolvency, the effects of such liquidation or insolvency also extend to the Swiss branch office.
Although a similar cost to establish and slightly more of a burden to establish than and AG or GmbH, the branch office does benefit from:
- No share capital requirement
- Low tax burden
- Exemption from the 35% withholding tax on payments to parent company
- Exemption of the Swiss profits in the hands of the parent company (according to terms of relevant double tax treaties)
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, the foreign company 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, the foreign company must otherwise provide official evidence that it lawfully exists.
The foreign company must provide evidence that the foreign company has decided to establish a Swiss branch office. Such evidence may be brought by an excerpt of the minutes of a meeting of the board of directors or other corporate body of the foreign company which is empowered to establish branch offices.
The Swiss branch office 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 authorized to act on behalf of the Swiss branch office (see below).
The foreign corporation may enact additional rules applicable only to the 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 of the foreign company authorized to act on behalf of the foreign company.
The branch office of a foreign company 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 authorized to act on behalf of the branch office. The entry in the Commercial Register may specify that authorized 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 – or two persons with joint signatory authority – must be residing in Switzerland and must be recorded in the competent Commercial Register as being authorized 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 authorized 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 of such 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 the Swiss rules on the conflict of laws so provide.