AG vs. GmbH in Switzerland – Differences and Similarities
GmbH and AG are the most common types of legal entities formed by entrepreneurs in Switzerland. Both types of companies have their cons and pros. The following information could be very helpful for those interested in establishing a firm in Switzerland.
Both types suppose limited liability and the possibility to transfer shares to various beneficiaries. It is important to know that it's more difficult to deal with the GmbH. In terms of the AG, the governing board is composed of shareholders. The decisions are made through general meetings of shareholders, a board of directors, firm auditors. In the case of a GmbH, the representatives take the decisions through general meetings and the firm's management.
Forming a GmbH or an AG is a more rapid procedure than establishing other operational frameworks. The whole process takes about 1 or 2 weeks, under the condition that all the legal obligations are satisfied. The domicile of the firm can be transferred from one canton to another while dealing both with an AG and GmbH. Meanwhile, taxation depends on the residency of the firm's management.
Corporate Legal Requirements
If there is an intention to form a GmbH, the required nominal capital is 20,000 CHF. There are no bearer shares allowed, but the firm should have just one shareholder and one company director. Besides, there is a requirement to have at least one director with Swiss citizenship and a registered office in the country.
In the case of an AG, there is a mandatory requirement to have at least 100,000 CHF of share capital. 50% of this sum must be paid – up upon registering the firm. If it is paid – up fully, bearer shares are allowed. This company legal form supposes to have at least one director, shareholder, and a local director. It also requires a registered office in the country.
Both legal forms are mandatory by the statutory regulations to go along with the payment of corporate tax. The rate is from 8% to 15%. The worldwide income of a firm is subject to taxation and some tax benefits are applicable to holding firms and mixed companies.
These benefits include participation exemptions. For example, a part of the withholding tax dividends is remunerated. It is up to 35%. It depends on the double taxation treaties in order. Meanwhile, the withholding tax on interests could be from 0 to 15%. The calculation is the same as in the previous case. depends on the d It is important to know that a withholding tax on royalties is not supposed. The VAT rate in the country is 8%. It is applicable to most products and services.
The director or directors of both companies should be entered in the Public Registry of Directors. The representatives of both legal forms have to file the annual tax return. It should be noted, that there isn't a requirement but they provide annual reports of the firm's accounts. The owner or owners or the firm are not disclosed publicly. Their identities are revealed only to the bank during the opening of a bank account.
The shareholders of an AG can stay undisclosed, but it is not possible for the shareholders of a GmbH.
Annual audits are required for both companies if they satisfy any two of the following condition:
● the company's cash flow is at least 40 million CHF; ● the company has assets valued at 20 million CHF and more; ● the company has at least 250 employees.
A GmbH is a good choice for entrepreneurs or small businesses who are ready to continue to strengthen their activities in Switzerland. An AG is a good choice for corporations.
Both legal entities could benefit from essential tax privileges. It is available on the federal level and on the cantonal level, depending on the factual situation. Thus, it is important to weigh the pros and cons of these two forms, before making a decision to start a business in Switzerland.
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