A Switzerland liaison office does not feature a legal personality, therefore, it is not withdrawn from its parent company's heritage. It will also not feature a trade name or it's own property. This means in the event the liaison office experiences financial issues, the parent company is liable for the office's debt.
The process of setting up a liaison office in Switzerland is simple as it is strongly attached to its parent company.
The office offers no autonomy whatsoever from a legal or economic standpoint and entirely rests on the principal company. It has no power to engage in entering a contract and its employees are not able to bind the company. Additionally, if the liaison office concludes commercial operation in the nation is was established, it must recourse to the parent company.
When setting up a liaison office in Switzerland, there are only a few formalities which are required to be followed. The first is submitting a declaration of existence to the Chamber of Commerce and Industry. This declaration does not enter the Commercial Register and does not allow the liaison office to function as an independent company. There is one restriction when setting up a liaison office if it is connected to a foreign bank; authorisation from the Swiss Federal Banking Commission is required before operations can begin.
It's vital to for business owners to understand that when establishing a liaison office in Switzerland, that if it does NOT directly sell or provide services to clients for the foreign company, it is exempt from income tax. Additionally, as it does not make any sales for the foreign company it is also exempt from VAT. Moreover, the foreign company can also recover the VAT changed during the setup of the liaison office.
Although the liaison office is exempt from income tax, it is not immune to property tax. So, whether the liaison office is engaged in professional activities or not, it is still required to pay property taxes.
Founders who set up a liaison office in Switzerland must also be aware of payroll services and social duties, as all staff (excluding those working abroad) are covered by general employment laws. Liaison offices are subject to identical obligations as social enterprises are, within the country of operation.
A liaison office has more flexibility than branch structures, but when commercial activity is undertaken by the liaison office, it is regarded as a permanent establishment and is required to adhere to the same tax laws and obligations as a branch structure.
We recommend getting in touch with our Swiss business establishment consultants for more information regarding legal and financial information before opening a liaison office in Switzerland.
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