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.