Starting point. What should I read first?
The principles are pretty similar the world over, albeit most other countries do not operate in three different languages: German, French and Italian. Fortunately, there is an increasing amount of information available in English on a variety of subjects. Including setting up a business. It is also the case that the main government institutions and larger commercial bodies (i.e. banks) always seem to have someone more than happy to prove their language skills. A good starting point is www.ch.ch/en (an information site provided by the Swiss Confederation, cantons and communes).
Like most countries there are a variety of business entities recognised in Switzerland. All come with a certain amount of red tape. For example, an independent (sole trader) needs to prove at least three separate clients to be given official status and a Social Security number (AVS/AHV – which covers state pension, unemployment and invalidity benefits) (www.ahv-iv.ch/en/Home).
Ignore the Swiss Government website, where the Federal Department of Economic Affairs, Education and Research (EAER) has set up a site to help foreign nationals establish a business in Switzerland. This is aimed at outsiders wanting to move their enterprise here, and provides little to help a foreign national already in residence.
A better starting point is with State Secretariat for Economic Affairs (SECO), a department of the EAER. SECO is the federal government’s centre of excellence for all core issues relating to economic and labour market policy. As they write: ‘It is our aim to contribute to sustained economic growth, high employment and fair working conditions, by creating the necessary regulatory, economic and foreign policy framework.’ So far so good. It gets better.
SECO has designed a brilliant tool: StartBiz, aimed at facilitating and simplifying the creation of new companies in Switzerland, by aiding the process of registering with the Trade or Commercial Register, VAT, AVS and Accident Insurance. It only works in German, French or Italian which is reasonable in the circumstances. Most importantly, it is fairly straightforward and will make sure you have thought about every detail required. The legal forms of business are described in the attached document (in French).
Another similar site is operated by a collaboration between various public and commercial bodies in the Canton of Zurich. It is biased to setting up in Zurich but it contains a lot of useful information in English, has another start-up check list and an extremely helpful Start-up Guide in English (thank goodness).
So, you’ve got the big picture. Now ensure you get local, professional advice
Having been in Switzerland for some years, we had a basic understanding of the different types of company structure open to us. My background as a lawyer also meant some of the terminology, if not precisely the same, was at least recognisable.
It was clear from studying the various sources of information online that while we could establish the company, before commencing operations we would need professional advice on the accountancy and insurance aspects, given our lack of ease with French technical language. There are various compulsory insurances that employers need to put in place for employees, starting with the basic: Accident (Professional and Non-Professional – UVG/AI). Getting to grips with the TLA (three/two letter abbreviations) has been one of the most frustrating aspects. Like I said at the beginning, I think the Swiss are born to understand this. For foreign nationals it requires patience and perseverance.
Through a combination of good fortune and effort, we pulled in considerable practical advice and recommendations from our network of friends and business contacts. First, we identified a local, small accountancy practice able (and willing) to help with the financial formalities and registration with the VAT/TVA Authority and our local Caisse Cantonale (Social Security office - www.caisseavsne.ch). Second, we identified an insurance broker equipped (and willing) to search for the best available policies to cover our required Public Liability Insurance, Employee Accident Insurance, Employee Loss of Earnings and Employee Pension Provision. Without doubt we would have been dead in the water without these two invaluable sources of advice. Negotiating the early minefield months of being a new business would have been nigh on impossible.
Getting used to the paperwork. Fast, cost-effective online options
One of the best pieces of advice came from an unlikely source – the Neuchatel Employment Bureau - Office Régional de Placement Neuchâtelois (ORPN). A very helpful counsellor advised that we consider using an online agency to complete the legal documentation required to set up the company. Provided the company structure is simple it could prove much less expensive that the traditional route via a notaire (lawyer).
One such company is Swiss Registration GmbH, which operates in French and German, but has English-speaking staff members. There are other options, and a swift search on the internet will reveal this. On the Swiss Registration homepage it declares one can create an Sàrl (limited liability) for as little at chf 780, including the necessary notary fees. This seemed so incredibly reasonable we did not compare with other providers. Conceivably it could be cheaper.
Just like StartBiz there is an online tool that helps you set out all the essential information required to form the business – company name, registered office (siège social), aims of the company, personal details of the shareholders and signatories. It does not hurt to go through this process a number of times. It is surprising what one can miss out.
Within a day of completing the forms we received a letter confirming our ‘order’ and setting out the company structure. In typical Swiss fashion, an invoice would only be sent on our confirmation that we wished to proceed, so we had time to consider the objects of the company, whether any special articles of association were required and any last minute changes of mind before committing hard cash.
Initial Investment. Setting up a capital account
The next step on the ladder is to open a Compte de Consignation (Capital Account). For an Sàrl the minimum amount is chf 20,000. For an SA, the minimum is chf 50,000). This step must be completed before the company will be entered on the Commercial Register. It is, in effect, a proof of bona fide intent. If you are willing to part with chf 20,000, you must be serious. In reality, you do not part with the money. On the day after the company is entered in the commercial register - http://zefix.ch lists all the commercial registers in Switzerland - the account converts to a business account and the money becomes available for business purposes (minus the chf 200 fee! that setting up the account incurs).
Incidentally, it is possible to use assets instead of cash for the share capital. This may sound good, but it requires a formal valuation of the asset by a recognised valuer and eventually incurs a higher registration fee.
Which bank. Creating a Compte de Consignation
Setting up a Compte de Consignation is fairly straight-forward. Most Swiss banks provide the service and have a specialist business section to help. It is particularly easy if you use a bank with whom you already have a relationship. We chose Credit Suisse. Forms had to be completed online, but help was available over the phone and it was efficient. Once you receive a letter confirming the account number you just need to transfer the funds for the account to be established and for a letter to be issued confirming its existence. All banks charge a similar fee for this service.
With proof of the Compte de Consignation the notary is then able to complete the Founding Documents and Company Bylaws. Our notarised papers arrived the day after signature with a helpful letter setting out the next steps to complete the process.
Nearly there. Approval on the Commercial Register
The final step is to head to the Commercial Register office armed with the requisite papers. Frankly, at this point we were beginning to wonder what we had missed. It had proved fairly straightforward so far. So we entered the Registry with some trepidation expecting our company founded on the internet to be the laughing stock of the Neuchatel business community for years to come. Of course we needn’t have worried. Our papers were accepted without any fuss.
However, even if everything is in order there is a somewhat frustrating delay at this point since the Registry has to send a letter to the company’s registered address inviting the applicants to pay the registration fee (in our case chf 701) in cash. Yes, in cash. No other forms of payment are acceptable. Our letter arrived overnight, and back we went the following day.
The Neuchatel Registry then sent the papers to Bern with the promise it would take three to four working days for the company to be formally registered, the details publicly published and for the registration number to be issued.
Three days later the letter arrived and a quick search on the internet proved Quinag was up and running.
Ensuring you are insured.
With the registration number, our accountant was able to complete our TVA (VAT) registration since we anticipated surpassing the threshold of chf 150,000 of business in the first year. The accountant also dealt with our registration with the cantonale authorities for Corporate Tax and Social Security payments.
The insurance broker organized our Public Liability Insurance, and the various social insurances for employees required under Swiss Law. As mentioned above, our heads still swim with the nomenclature for these insurances, but effectively one needs the following:
Employee Accident Insurance – Compulsory (e.g. the minimum coverage) &, if you wish, Voluntary (e.g. private bed in hospital)
Employee Loss of Earnings – insurance to cover extended periods of illness suffered by any member of staff
Pension Savings – employer and employee contributions to an occupational pension fund (known as the 2eme Pilier) that will supplement the Swiss State pension (1er Pilier). All employees insured under the 1st pillar and those who earn at least CHF 21,150 a year (in 2016) must be entered into a 2nd pillar scheme.
QUINAG'S FIVE KEY TIPS TO SETTING UP A BUSINESS IN SWITZERLAND
1. Seek preliminary advice from all available sources
2. Do not be put off by language issues or strange terminology
3. Use online tools to save time and perhaps money
4. Identify professional accountancy, banking and insurance advice early
5. Invest time in understanding the legal obligations of a business owner
Three months in and we are still learning about the Swiss corporate world, but we have access to sound advice, have been properly established and, above all, are enjoying ourselves and looking to the future.
Giles Pearman, is a British national who has lived in the canton of Neuchatel since 2008. A former lawyer, Giles has over 20 years experience in the communication industry working with multi-national brands and clients, principally in the sporting environment. In 2016, Giles founded Quinag, a creative and grounded communication agency. Further details: www.quinagcommunication.com