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Companies registration in Switzerland

The Federal Republic of Switzerland consists of 26 cantons with Bern as the seat of the federal authorities. Each canton has its own constitution, laws, but their rights are limited by the federal constitution. Legislative power is assigned to Parliament and the executive to the Federal Council.

Switzerland's economy is one of the most stable and prosperous, the unemployment rate is very low and skilled labor force is at a very high standard.

Swiss banking secrecy rules (or regulations) prohibit banks to disclose even the smallest details about the account holder, so the Swiss banks remain among the most secure and private. In Switzerland there is a special law on trusts which makes this country popular for those who want to protect their assets. The same applies to joint stock companies as well as to limited liability companies.

Brand Name and Activities

Brand name and the profile of the activity must be approved by the Federal Office of the Trade Register. The approval will be denied if a name already exists, misleading or does not contain distinctive elements. Using geographical, official and other similar terms (such as "international") is limited. The name can be registered in several languages other than the official but can only contain letters of the Latin alphabet. The name of a limited liability company shall contain a reference to the legal form, for a joint stock company such reference is required only if there is a risk of confusion (French- SA, German-AG,  English-Ltd. or Inc. or Corp., French - sàrl / SARL, German - GmbH).

Address

The company must provide an address of that canton of where it is registered in the Commercial Register. The company is not obliged to have a physical office, it can be registered at a private address or at an attorney or branch company and therefore a domiciliation fee is required to be paid.

Director

Director may act on a fiduciary basis in accordance with the instructions received from the shareholders and at their risk. In this case the directors and the shareholders make a so called fiduciary agreement. Nominee directors usually charge for their services annual fee, they also usually provide office services (address, management accounting, etc.).

Reporting

A joint stock company and a limited liability company are obliged to maintain permanent and reliable records of business transactions. Joint-stock companies must comply with more detailed accounting rules.

Commercial Register

The Company is considered to be established (or incorporated) after it is submitted at the Commercial Register which is open for review and is available on the web site: http://www.zefix.ch. Registry provides certified extracts which is the equivalent of a certificate of registration in other countries. The certificate specifies: company name, profile of business, address, last name, location and nominees, authorized to act on behalf of the company.

It is permitted to register only limited powers:

•   requirement which states that a certain legal entity may oblige the company only if it acts jointly with another authorized person (double signature);

• authority is designated only to the the transactions of main office or a certain branch.

Any other restrictions shall not apply regarding the third parties who in good faith rely on the information published in the commercial register.

The general principles of taxation of profits

In Switzerland, the company pays taxes at the federal, cantonal and municipal levels. Federal tax law apply for all Swiss companies while cantonal tax legislation is still very different, despite the fact that the general principles of taxation are defined by the Federal Law on the harmonization of direct taxes of cantons and municipalities. In particular, the cantons are free to set tax rates. Municipal taxes are calculated usually as a percentage of the cantonal tax.

From a technical point of view all direct taxes are collected by the cantons. The federal government collects only indirect taxes (VAT, state fee on securities) and withholding tax of certain payments (mainly dividends and interest). The Swiss tax laws are very general. Decisions on specific issues may be obtained fairly easily and are mandatory for the authorities which established them. In some cases such solution should be resolved by both - cantonal and federal tax administrations.

The federal tax is levied on a progressive scale and ranges from 3.63% to 9.8%. The cantonal taxes are much higher. They comprise 20-30%. Additionally, municipal taxes should be added as well.

Tax rate in Switzerland is 35%. This means that 35% of dividends allocated to the company will be deducted if Switzerland does not have a tax treaty agreement with that company.

If a shareholder is a non resident of Switzerland then dividends are calculated complying with double taxation rates; if the company is registered in the EU its dividends are not taxable in Switzerland.

It is possible to register so-called "domiciled" company. They are exempt from tax in the 20 cantons and pay taxes only on the level of the confederation. Such a company should be subject to the principles of classic offshore: not to be resident, not to do business in Switzerland, does not have an office, staff and property in Switzerland.

There is no currency control in Switzerland.

Double Taxation Treaty

Switzerland has signed Double Taxation Treaty with more than 70 countries to reduce taxes on dividends to 0-15%. However, these agreements contain a number of restrictions on the use of reduced rates of tax.

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