Setting up a sole proprietorship in Switzerland as a cross-border worker

How do you set up a sole proprietorship in Switzerland as a cross-border worker?

To set up a sole proprietorship in Switzerland as a cross-border worker, the procedures are relatively straightforward. You must first notify the competent AHV compensation fund for your activity, then register with the Commercial Register if your annual turnover reaches or exceeds CHF 100,000. No minimum capital is required. The entire procedure can be carried out online via cantonal offices or with the help of a fiduciary.

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What is a sole proprietorship under Swiss law?

Under Swiss law, the sole proprietorship (or individual enterprise) is a form of commercial operation in which a single natural person carries out a lucrative activity independently. It has no distinct legal personality: the holder of the sole proprietorship is personally liable for all obligations of the business. The company name must mandatorily include the surname of the operator. For example: "Dupont Consulting" or "Jean Dupont Architect".

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Conditions for a cross-border worker to set up a sole proprietorship

A cross-border worker can set up a sole proprietorship in Switzerland on condition that they actually carry out their professional activity on Swiss soil. The G permit authorises this. They must have a place of business in Switzerland (an actual place of work, not necessarily a physical office for all professions). The activity cannot be carried out from the country of residence: it must be linked to Switzerland. The cross-border worker must notify the cantonal migration authority to adapt their permit to a self-employed activity.

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Steps to set up your sole proprietorship

• ‍Step 1 – Notifying your self-employed activity: The cross-border worker must inform the competent cantonal authority (generally the Employment Service or the Population Service) of their intention to carry out a self-employed activity in Switzerland. This notification allows verification that the G permit covers the planned activity.‍
• Step 2 – Affiliating with the AHV fund: Affiliation with the AHV compensation fund is mandatory for all self-employed persons in Switzerland. The cross-border worker must choose the fund corresponding to their sector of activity or affiliate with the cantonal fund. AHV contributions are calculated on the net income from self-employed activity.‍
• Step 3 – Registering with the Commercial Register (if necessary): Registration with the CR is mandatory once annual turnover reaches CHF 100,000. It is possible on a voluntary basis before this threshold. Registration is done with the cantonal Commercial Register office, online or by post. Registration fees are modest (approximately CHF 100 to 300 depending on the canton).‍
• Step 4 – VAT registration (if necessary): VAT liability is mandatory from an annual turnover of CHF 100,000. The standard rate is 8.1% (special rates for certain sectors). Registration is done with the Federal Tax Administration (FTA).

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Advantages and disadvantages of the sole proprietorship for a cross-border worker

• ‍Advantages: Quick and inexpensive to set up. No minimum capital. Reduced administrative formalities. Simplified and autonomous management.‍
• Disadvantages: Unlimited liability on personal assets. No separation between professional and private assets. Less credible for certain institutional clients. Difficulties in bringing in partners or raising funds.

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Taxation of the sole proprietorship for a cross-border worker

Income from a sole proprietorship is taxed as self-employment income. For a French cross-border worker, this income is in principle declared and taxed in France under the Franco-Swiss tax convention, subject to the specific rules for each border canton. The cross-border worker is also subject to withholding tax in Switzerland on certain income. It is essential to be accompanied by a tax expert familiar with both systems.

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FAQ - Setting up a sole proprietorship in Switzerland as a cross-border worker

Does a sole proprietorship have to include my surname in its name?

Yes, under Swiss law, the name of a sole proprietorship must mandatorily include the operator's surname. You can add a descriptive complement (e.g. 'Dupont Management Consulting'), but the surname is compulsory. This rule distinguishes the sole proprietorship from capital companies which can freely choose their company name.

When must I mandatorily register my sole proprietorship with the Commercial Register?

Registration with the Commercial Register is mandatory once annual turnover reaches CHF 100,000. Below this threshold, it is optional but possible. Voluntary registration can be beneficial to strengthen the credibility of your activity with clients and partners. Registration fees are modest (approximately CHF 100 to 300 depending on the canton).

Do I need to present invoices before I can register with AHV social insurance?

No. AHV affiliation is not conditional on the prior existence of invoices. You must notify the competent AHV fund as soon as you start your self-employed activity. The fund will assess your projected income to set your contribution instalments. Initial contributions are often calculated on a flat-rate basis then adjusted to actual income.

Does an inactive sole proprietorship still have to pay taxes?

A sole proprietorship with no activity or turnover can be dormant, but it remains technically active as long as it has not been deregistered. If registered with the CR, it can be deregistered on request. Taxes are only due on actual income. In the absence of income, there is generally no profit tax, but declaration obligations may remain.

Can I have a sole proprietorship AND be employed at the same time in Switzerland?

Yes, it is possible to combine employed activity and a sole proprietorship in Switzerland. You will then be subject to AHV contributions as an employee for your main employment and as self-employed for your sole proprietorship. Specific rules apply to avoid double contributions. It is advisable to check the conditions with your employer and AHV fund.

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