How do I set up a branch office in Switzerland? - Complete guide 2025

What is a Branch Office in Switzerland?

A branch office is a legally dependent part of a company that is geographically separated from the main establishment. It conducts business activities under the name and on behalf of the parent company, while maintaining a certain degree of economic and operational independence.

Key Characteristics:

• Legally dependent part of the main establishment
• No separate legal personality
• Own premises and permanent activity
• Certain economic independence
• Must be registered in the Commercial Register

Basic Requirements for Establishment

Legal Requirements

Mandatory Prerequisites:

• Commercial Register Entry: Mandatory at the branch office location
• Local Business Address: Physical address in Switzerland as official domicile
• Authorized Representative: At least one person with residence in Switzerland
• Company Name: Must correspond with headquarters (additions allowed)

Permitted Main Legal Forms

For Domestic Companies:

• Public Limited Company (AG)
• Private Limited Company (GmbH)
• Cooperative
• Commercial General and Limited Partnerships
• Sole Proprietorship (commercial enterprises only)

Not Permitted:

• Simple Partnership
• Non-commercial General/Limited Partnerships

Signatory Authorization

Two Options Available:

• Individual Signature: One person with residence in Switzerland
• Collective Signature: Two persons with residence in Switzerland

Note: Swiss citizenship not required. Professional domicile services available.

Establishment Costs and Fees

Commercial Register Fees

Registration Costs:

• Basic Fee: Approximately CHF 2,000 (as of 2024)
• Additional Fees: Depending on complexity and canton
• Processing Time: 1-2 business weeks

Additional Costs

One-time Establishment Costs:

• Notarial Certification: If required
• Translation Costs: For foreign documents
• Consulting Costs: Legal and tax advisory
• Domicile Service: CHF 1,000-3,000 annually

Ongoing Costs:

• Accounting Costs: CHF 2,000-5,000 annually
• Bank Account Maintenance: CHF 500-1,000 monthly (difficult account opening)
• Tax Return: CHF 1,000-3,000 annually
• Audit Costs: If required

Required Documents

For Foreign Parent Companies

Basic Documents:

• Commercial Register Extract: Certified copy from home country
• Articles of Association: Notarially certified copy with translation
• Incorporation Resolution: Board of directors meeting minutes
• Business Purpose Proof: Evidence of identical activities
• Board Directory: Names, nationality, residence

Translation Requirements

Official Languages:

• German, French, or Italian
• Depending on branch office location
• Certified translations required
• Legalization by competent authorities

Step-by-Step Establishment Guide

Phase 1: Preparation and Planning

1. Strategic Decisions:

• Location selection (Zurich, Zug particularly attractive)
• Define business purpose
• Establish organizational structure
• Create financial planning

2. Legal Preparations:

• Determine authorized representative
• Secure business address
• Establish company name (identical to parent company)
• Regulate signature authorizations

Phase 2: Document Preparation

3. Obtain Documentation:

• Commercial register extract of parent company
• Certified articles with translation
• Board resolution for branch establishment
• Proof of business activity

4. Formal Requirements:

• Legalize and translate documents
• Obtain notarial certifications
• Powers of attorney for authorized representatives
• Domicile acceptance declaration

Phase 3: Commercial Register Entry

5. Register Application:

• Complete application form
• Submit all documents
• Pay fees (approx. CHF 2,000)
• Review by Commercial Register Office (1-2 weeks)

6. Registration Process:

• Completeness check of documents
• Legal review by authorities
• Entry in cantonal Commercial Register
• Publication in Swiss Official Gazette of Commerce (SHAB)

Phase 4: Operational Setup

7. Business Opening:

• Open bank account (difficult, high fees)
• Set up accounting system
• Tax registrations
• Conclude insurance policies

8. Ensure Compliance:

• VAT registration
• Social security registration for employees
• Observe labor law provisions
• Data protection compliance

Tax Aspects and Benefits

Taxation in Switzerland

Branch Office Tax Liability:

• Profit Tax: On profits earned in Switzerland
• Capital Tax: On capital allocated to branch office
• VAT: From CHF 100,000 annual turnover
• Withholding Tax: 35% on payments to parent company

Tax Advantages

Double Taxation Agreements:

• Tax Exemption: Possible with corresponding agreements
• Withholding Tax Relief: Payments to parent company
• Loss Offset: With other Swiss income
• Holding Relief: With appropriate structure

Attractive Cantons:

• Zug: Particularly low tax rates
• Zurich: Excellent infrastructure
• Schwyz: Low capital taxes
• Basel-City: International orientation

Accounting Obligations and Compliance

Bookkeeping Requirements

Mandatory Accounting:

• Independent Accounting: Separate from parent company
• Swiss Standards: HGB/Swiss GAAP FER compliant
• Annual Financial Statements: Balance sheet and income statement
• Documentation Language: German, French, or Italian

Audit Requirements

Audit Required When:

• Balance Sheet Total: Over CHF 20 million
• Revenue: Over CHF 40 million
• Full-time Positions: Over 250 on annual average

Audit Firm:

• Licensed audit company
• Independence from parent company
• Annual audit report

Advantages and Disadvantages Overview

Advantages of a Branch Office

Financial Benefits:

• No Minimum Capital: No capital contribution required
• Low Establishment Costs: Compared to subsidiary
• Tax Benefits: Through double taxation agreements
• Cost-effective Expansion: Quick market entry

Operational Benefits:

• Direct Market Access: Access to Swiss market
• Brand Usage: Use of established brand name
• Parent Company Synergies: Access to resources and know-how
• Strategic Control: Full control by parent company

Disadvantages of a Branch Office

Legal Disadvantages:

• No Legal Personality: Legally dependent on parent company
• Unlimited Liability: Parent company liable for all obligations
• Dependency: Strategic decisions at headquarters
• Debt Collection: Collection possible at branch office location

Operational Disadvantages:

• Banking Difficulties: Swiss banks avoid branch offices
• High Bank Fees: CHF 500-1,000 monthly
• Compliance Burden: Double accounting and reporting obligations
• Longer Establishment Time: More complex than subsidiary

Branch Office vs. Subsidiary

Choose Branch Office When:

Strategic Considerations:

• Cost-effective Expansion: Minimal establishment costs
• Full Control: Direct management by parent company
• Short Market Testing: Easy dissolution possible
• Tax Optimization: Use of double taxation agreements

Choose Subsidiary When:

Long-term Considerations:

• Liability Limitation: Independent legal personality
• Local Financing: Independent credit acquisition
• Banking Benefits: Easier account opening
• Strategic Flexibility: Autonomous decisions

Common Mistakes and How to Avoid Them

Location Selection

Mistake: Only considering tax aspects Solution: Holistic location analysis (infrastructure, talent, customers)

Bank Selection

Mistake: Underestimating banking difficulties Solution: Early contact with specialized banks

Compliance

Mistake: Underestimating accounting requirements Solution: Use professional accounting service providers

Personnel Planning

Mistake: Ignoring labor law provisions Solution: Consider Swiss labor law from the beginning

Frequently Asked Questions (FAQ)

How long does establishing a branch office take?

With complete documents, 4-8 weeks. Foreign companies need longer for translations and legalizations.

Can a branch office open a bank account?

Yes, but difficult. Many Swiss banks refuse. Specialized banks charge high fees (CHF 500-1,000 monthly).

What taxes must a branch office pay?

Profit and capital tax in Switzerland, VAT from CHF 100,000 turnover, 35% withholding tax (often reduced through double taxation agreements).

Can a branch office later be converted to an AG/GmbH?

Yes, through dissolution of the branch office and new establishment of a subsidiary.

Must branch office personnel be employed in Switzerland?

Yes, with permanent activity in Switzerland, Swiss labor law and social insurance obligations apply.

Branch Office Establishment Checklist

Before Establishment

• Define strategic objectives
• Choose location (canton and municipality)
• Determine authorized representative
• Secure business address (domicile service)
• Financial planning including ongoing costs

Document Preparation

• Obtain commercial register extract of parent company
• Translate and certify articles
• Board resolution for establishment
• Powers of attorney for authorized representatives
• Create business purpose proof

Establishment Process

• Complete application form
• Submit all documents to Commercial Register
• Pay fees (approx. CHF 2,000)
• Wait for registration (1-2 weeks)
• Check SHAB publication

After Establishment

• Open bank account (specialized institutions)
• Set up accounting system
• VAT registration
• Social security registration for employees
• Conclude insurance policies

Expert Tips for Successful Branch Offices

1. Use Professional Support:

• Experienced law firms for corporate law
• Specialized trustees for accounting
• Domicile service providers for operational support

2. Develop Banking Strategy:

• Early discussions with specialized banks
• Review alternative financing models
• Fintech solutions for payment transactions

3. Plan Tax Optimization:

• Optimally use double taxation agreements
• Design transfer prices according to market conditions
• Consider cantonal tax differences

Conclusion

Establishing a branch office in Switzerland offers foreign companies a cost-effective opportunity for market entry. Despite some challenges (banking, compliance), the advantages outweigh for strategically planned expansions.

Key Success Factors:

• Careful Preparation: Complete documentation and legal advice
• Location Choice: Tax-optimized cantons like Zug or Zurich
• Professional Support: Experienced advisors for all areas
• Long-term Planning: Clear strategy for market development

Recommendation:

For initial market testing and cost-effective expansion, a branch office is ideal. For long-term engagement, a later conversion to a subsidiary should be evaluated.

Switzerland remains one of the most attractive locations for international business activities in Europe, despite regulatory challenges.