Introduction – What does a contribution in kind mean?

A contribution in kind occurs when the required share capital — for an LLC (minimum 20,000 CHF) or a PLC (100,000 CHF) — is not provided in cash, but instead through assets.

These assets take the place of cash — partially or fully.

Typical contributions in kind include:

• vehicles
• machinery & tools
• computers, IT infrastructure, servers
• inventory
• real estate
• patents, software, licences
• equity investments
• sole proprietorships or general partnerships (business transfer)

A contribution-in-kind founding is also called a qualified founding.
It is more complex than a cash contribution, but offers major benefits:

• protects liquidity
• allows tax-neutral transfer of existing assets
• strengthens financial base from day one

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This guide walks you through every step: requirements, documents, valuation rules, examples, special cases, risks, and best practices.

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Legal Requirements for a Valid Contribution in Kind

To be legally accepted, contributed assets must meet four key requirements. These are the most common sources of mistakes during foundation reviews.

1. Asset eligibility: Balance-sheet capability

The asset must:

• provide economic value
• have an objectively determinable market value
• serve the business purpose or have resale value
• be usable over a prolonged period

Not allowed:

• outdated or disposable equipment
• personal skills or ideas without IP protection

2. Availability at the time of founding

The asset must already exist and be under the founder’s control.

Examples:

• a vehicle must already belong to you
• inventory must physically exist
• software must be usable, not only planned

“Future value” (e.g., future development work) is not allowed

3. Marketability (use or resale)

The company must be able to use or sell the asset.

Not allowed:

• leased vehicles (not transferable)
• rights of use such as lease contracts
• personal or non-transferable rights

4. Transferability

Ownership must be proven and transferable:

• proof of ownership
• no pledges or security rights
• no third-party claims

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What can be contributed? (Most complete list)

Allowable contributions in kind

Tangible assets

• Vehicles (car, van, motorcycle)
• Machinery & production equipment
• Tools
• Office furniture and equipment
• Electronics, computers, servers
• Inventory

Intangible assets

• Trademarks
• Software (developed or acquired)
• Patents & licences
• Domain names
• Customer portfolios (with transferable contracts)

Financial assets

• Securities
• Equity participations
• Receivables against third parties

Business units

• Sole proprietorship or general partnership
• Operational divisions

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Assets not allowed

• Future claims
• Work performance or know-how
• Supply, service, transport contracts
• Lease or rental rights
• Personal rights (e.g., right of residence)
• Low-value objects
• Leased equipment
• Ideas without IP protection

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Valuation of contributions in kind — How is it done?

A contribution in kind must be objectively valued by an independent licensed auditor. Two valuation principles apply:

| Type of asset               | Valuation method                  | Example                     |
| ----------------------------| --------------------------------- | --------------------------- |
| Operationally essential     | Purchase price minus depreciation | inventory, machinery        |
| Not operationally essential | Liquidation / resale value        | car not needed for business |

The auditor MUST test the asset when required — especially software.

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Example valuation: Software + Vehicle

| Asset    | Classification  | Valuation                                               |
| -------- | --------------- | ------------------------------------------------------- |
| Software | operational     | documentation of development hours + functional testing |
| Car      | not operational | Eurotax valuation + photos + mileage proof              |

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Mandatory documents for a contribution-in-kind founding

• Contribution-in-kind agreement
• Founding report (Art. 635 Swiss Code of Obligations)
• Auditor’s confirmation (Art. 635a CO)
• Inventory list
• Valuation documents
• Proof of ownership
• Photos for physical assets

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Asset-specific documentation table

| Type of asset       | Required documents                                  | Notes                           |
| ------------------- | --------------------------------------------------- | ------------------------------- |
| Vehicle             | Eurotax valuation, registration, photos, receipts   | Leasing vehicles not allowed    |
| Office furniture    | Inventory list, photos, receipts or appraisal       | Must exceed 1,000 CHF value     |
| Inventory           | Detailed list, photos, purchase documents           | Valuation at purchase price     |
| Tools & machinery   | List, photos, receipts or appraisal                 | Appraisal only if unclear value |
| Software            | Development records, documentation, test version    | Auditor checks functionality    |
| Patents / IP        | Registration, valuation report, payment proof       | Research alone is insufficient  |
| Domain names        | Purchase contract, transfer documentation           | Market value must be justified  |
| Sole proprietorship | Accounts, inventory, debt statement, audit report   | Net assets must ≥ capital       |
| Receivables         | Loan contract, payment proof, creditworthiness docs | Must be collectable             |

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Step-by-step: Founding a company with a contribution in kind

1. Create an inventory

List all assets to be contributed.

2. Valuation

Collect receipts, take photos, obtain expert opinions.

3. Contribution in kind agreement

Document the legal transfer.

4. Founding report

Justify the valuation and the benefit to the company.

5. Audit confirmation

A certified auditor checks:

• Existence
• Ownership
• Transferability
• Valuation

6. Articles of association with reference to contribution in kind

Mandatory component.

7. Commercial register entry

Submission of all documents.

8. Start of business activities

The company is operational after registration.

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^{Startups.ch supports the entire legal and audit process}

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Special Case: Contributing a Sole Proprietorship

Requirements:

• Net asset value ≥ required share capital
• Profitable results or verifiable financial plan

Example 1 — Profitable business

Assets 100,000 CHF – liabilities 80,000 CHF → net assets = 20,000 CHF

→ eligible for founding an LLC

Example 2 — Loss-making business

Assets 250,000 CHF – liabilities 150,000 CHF → excess 100,000 CHF

But current losses → auditor requires future valuation

Startups.ch provides full advisory and auditor coordination

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Common mistakes

• Missing ownership documentation
• Unrealistic, inflated valuation
• Missing technical proof (software not testable)
• Inclusion of leased assets
• Low-value or irrelevant items
• Missing appraisal where necessary

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Benefits of founding a company with a contribution in kind

• preserves liquidity
• usually tax-neutral
• allows contribution of assets already owned
• no capital deposit account required

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^{LLC in Switzerland — Pros & cons}

^{PLC in Switzerland — Pros & cons}

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Related articles

• Founding an LLC with a contribution in kind
• Founding a PLC with a contribution in kind
• Founding with a cash contribution
• Compare Swiss legal structures

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Conclusion

A contribution in kind is an excellent choice for founders who already possess valuable business assets or operate an existing business.

With accurate documentation and the support of Startups.ch, the process is:

• efficient
• secure
• and fully compliant with Swiss law

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^{Founding an LLC in Switzerland}

^{Founding a PLC in Switzerland}

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