Starting a Business in Switzerland: A Complete Guide to the GmbH and AG for Foreign Investors, Multinationals and In-House Counsel

Switzerland occupies a unique position among European business jurisdictions. It is not a member of the European Union, yet it maintains bilateral agreements with the EU that provide meaningful market access, and its combination of political neutrality, legal stability, low corporate taxation, and a world-class financial infrastructure makes it one of the most sought-after locations in the world for international holding structures, headquarters operations, and treasury centres. For CFOs, in-house counsel, and international entrepreneurs, Switzerland offers something that few jurisdictions can match: a stable, predictable, and internationally respected framework for doing business, entirely outside the EU regulatory perimeter.

This guide focuses on the two company forms most commonly used by international investors and multinationals setting up in Switzerland: the GmbH (Gesellschaft mit beschränkter Haftung) and the AG (Aktiengesellschaft). Both are capital companies with limited liability, but they differ meaningfully in share capital requirements, governance structure, and transferability — differences that matter for the specific commercial and tax objectives of each structure. WVT’s attorneys and tax advisors advise international clients on Swiss entity setup as part of cross-border structures involving Luxembourg, the Netherlands, the United Kingdom, and beyond.

Why Switzerland Attracts Multinationals and International Investors

Switzerland’s appeal as a business location rests on a set of structural advantages that have remained durable across decades of global regulatory and political change. The Swiss legal order is stable, the judiciary is independent and experienced in commercial matters, and the country’s federal structure allows cantons to compete for business through differentiated tax regimes — creating a range of effective corporate tax rates that, in cantons such as Zug, Nidwalden, or Appenzell Ausserrhoden, are among the lowest in Europe.

The Swiss franc is a globally recognised reserve currency, and Switzerland’s banking system — while subject to significant post-2008 regulatory reform — remains one of the most sophisticated and internationally connected in the world. For treasury centres, family offices, and holding companies that manage assets across multiple currencies and jurisdictions, the Swiss banking infrastructure provides access and capability that few other jurisdictions offer at comparable scale.

Switzerland also maintains an extensive network of double tax treaties covering more than 100 countries, including the US, China, and most major emerging markets. Combined with Switzerland’s domestic participation exemption and IP box regime, this treaty network gives Swiss holding and IP holding structures a level of international tax efficiency that competes directly with Luxembourg and the Netherlands for the most demanding multinational structures. For foreign investors, Switzerland’s non-EU status is an additional advantage in structures where EU regulatory reach is undesirable.

GmbH vs AG: Choosing the Right Swiss Legal Form

The first structural decision when setting up a company in Switzerland is selecting between the GmbH and the AG. Both provide limited liability protection and access to Switzerland’s tax benefits, but they serve different purposes in terms of governance, capitalisation, and the profile of shareholders they are best suited to accommodate.

GmbH — Gesellschaft mit beschränkter Haftung

The GmbH is the Swiss equivalent of a private limited company and is the most commonly used vehicle for wholly owned subsidiaries, operational entities, and closely held investment structures. It requires a minimum share capital of CHF 20,000, which must be fully paid up at incorporation — a requirement that distinguishes it from the Dutch BV, where symbolic capital is permitted, but which is modest relative to the AG.

Shares in a GmbH are not represented by certificates and are not freely transferable. A transfer requires a notarial deed and, by default, the consent of shareholders representing at least 75% of the share capital. This structural restriction makes the GmbH well-suited for joint ventures and closely held structures where ownership control is a priority. A notable feature of the Swiss GmbH is that shareholder names are entered in the commercial register and are therefore publicly accessible — a consideration for beneficial owners who prefer privacy.

From a governance perspective, the GmbH can be managed by one or more managing directors without a formal board structure. At least one managing director with sole or joint signing authority must be domiciled in Switzerland, which is a substantive requirement that in-house counsel should account for in the setup plan. WVT’s attorneys and tax advisors advise on Swiss director appointments and substance structures as a standard part of the entity setup process.

AG — Aktiengesellschaft

The AG is the Swiss corporate form of choice for holding companies, capital-intensive businesses, and structures that involve multiple institutional investors or require a formal board governance framework. It requires a minimum share capital of CHF 100,000, of which at least CHF 50,000 must be paid up at incorporation, and it mandates a board of directors with at least one member who is domiciled in Switzerland.

Shares in an AG can be issued as registered shares (Namenaktien) or, in certain circumstances, bearer shares (Inhaberaktien) — though Swiss law now requires that bearer shares be held through a regulated intermediary, significantly reducing their practical anonymity. For most international holding structures, registered shares are used, and the shareholder register is maintained privately by the company rather than appearing in the commercial register.

In practice, WVT’s attorneys and tax advisors recommend the AG for Swiss holding companies managing participations in multiple subsidiaries, for IP holding structures where the formal governance framework supports the substance argument, and for joint ventures where institutional co-investors require a board-level oversight structure. The AG’s higher capital requirement and governance formality also send a credibility signal to banks, counterparties, and tax authorities that is relevant for structures managing significant asset values.

Setting Up a Swiss Company: The Incorporation Process

Switzerland’s company incorporation process is conducted at the cantonal level, with each canton maintaining its own commercial register (Handelsregister). The choice of canton — which also determines the applicable cantonal corporate tax rate — is a strategic decision that should be made before incorporation begins, informed by a tax analysis of the canton’s rates and any available cantonal tax incentives.

The process begins with verifying the proposed company name with the cantonal commercial register and confirming its availability. The articles of incorporation (Statuten for the AG, Gesellschaftsvertrag for the GmbH) are then drafted, setting out the company’s purpose, capital structure, governance rules, and management authority. Swiss articles are typically more concise than their Luxembourg or Dutch equivalents but must comply with the applicable provisions of the Swiss Code of Obligations.

For an AG, the share capital must be deposited into a Swiss bank account in the company’s name before the notarial deed of incorporation is executed. The bank issues a capital deposit certificate confirming the deposit, which the notary requires. For a GmbH, the capital must likewise be paid up in full before incorporation. Swiss banks have materially increased their KYC and AML requirements in recent years, and account opening for entities with non-Swiss parent companies or complex ownership chains should be initiated early in the process.

The deed of incorporation is executed before a Swiss notary. For an AG, the founding shareholders must also sign a declaration of incorporation (Gründungsakt) in which they subscribe the shares and confirm compliance with legal requirements. The company is then registered with the cantonal commercial register, at which point it has legal existence. Tax registration with the Swiss Federal Tax Administration (ESTV) for federal withholding tax and VAT, and with the relevant cantonal tax authority for income and capital tax, completes the administrative setup.

Key milestones in the Swiss incorporation process:

• Canton selection based on tax analysis and operational requirements
• Company name reservation with the cantonal commercial register
• Drafting articles of incorporation and shareholders’ agreement (where applicable)
• Bank account opening and share capital deposit
• Notarial deed of incorporation
• Commercial register (Handelsregister) filing and registration
• Tax registration (federal withholding tax, VAT, cantonal income and capital tax)

For a straightforward AG or GmbH with a clean ownership structure, the total timeline from mandate to registration is typically four to eight weeks. Bank account opening is the most variable element and often the critical path item for structures with non-Swiss ultimate beneficial owners.

Corporate Taxation in Switzerland: Rates, Regimes and Treaty Access

Switzerland’s corporate tax system is structured at three levels: federal, cantonal, and communal. The federal corporate income tax rate is a flat 8.5% on after-tax profit (equivalent to approximately 7.8% on pre-tax profit). Cantonal and communal taxes vary significantly — canton Zug has a combined effective rate of approximately 11.9%, making it one of the lowest in Europe, while Zurich is approximately 19.7% and Geneva approximately 24%. Choosing the right canton is therefore a material tax decision, not merely an administrative one.

Switzerland introduced the OECD’s 15% global minimum tax (Pillar Two) for large multinational groups with effect from 1 January 2024. Groups with consolidated revenues above EUR 750 million are subject to a domestic top-up tax to the extent that their Swiss effective rate falls below 15%. For most large multinationals, the low-tax cantons such as Zug will now see their advantage partially offset by the top-up tax, though the Swiss cantonal tax base — with its range of deductions and the participation exemption — means that the effective Swiss rate for qualifying holding and IP structures often remains competitive even after Pillar Two.

Switzerland’s participation exemption (Beteiligungsabzug) reduces the tax on dividends and capital gains from qualifying subsidiaries in proportion to the ratio of qualifying income to total income. To qualify, the Swiss company must hold at least 10% of the share capital of the subsidiary (or have an acquisition cost of at least CHF 1 million), and for capital gains, the holding must have been held for at least one year. For holding companies managing a portfolio of subsidiaries, the participation exemption effectively eliminates Swiss-level tax on qualifying dividend flows and exit proceeds.

Switzerland’s IP box regime applies a cantonal tax reduction to qualifying net income derived from patents and comparable rights. The maximum cantonal tax reduction is 90%, resulting in effective cantonal rates on qualifying IP income that can be well below 10% in favourable cantons. Combined with the federal flat rate and the IP box, Switzerland remains a competitive location for IP holding structures for technology, pharmaceutical, and industrial groups that need a credible, well-regulated jurisdiction outside the EU.

The Swiss Holding Company: Structure and Tax Advantages

The Swiss holding company — typically structured as an AG — is one of the most established vehicles in international corporate structuring and continues to attract multinationals, PE sponsors, and family offices seeking a non-EU holding jurisdiction with strong treaty access and a credible regulatory environment.

A Swiss holding company qualifies for the participation exemption on dividends and capital gains from subsidiaries, as described above. It also benefits from a Swiss cantonal holding privilege in certain cantons, which historically reduced or eliminated cantonal income tax for qualifying holding companies. While the 2020 Swiss tax reform (STAF) replaced earlier preferential regimes, transitional measures and the standard participation exemption continue to make Swiss holding companies tax-efficient for structures managing EU and non-EU participations.

Switzerland’s treaty network is a particular strength for holding structures that involve subsidiaries or investors in jurisdictions where Luxembourg and the Netherlands have weaker treaty positions — including several Asian and Latin American countries. For a multinational with subsidiaries in India, China, or Brazil, a Swiss intermediate holding company may provide better treaty access than an equivalent Dutch or Luxembourg vehicle, and the two jurisdictions are frequently used in combination within a single group structure.

Swiss holding companies are also increasingly used in structures where beneficial owners require a non-EU holding jurisdiction for regulatory or privacy reasons. Switzerland’s non-EU status means that EU beneficial ownership registers do not directly apply to Swiss entities, and the Swiss legal framework for shareholder confidentiality — while subject to international exchange of information standards — provides a different privacy profile from EU-domiciled holding companies.

Substance Requirements and the Swiss Director Rule

Switzerland’s substance requirements for holding and operational companies are enforced through both the domestic tax framework and the country’s bilateral agreements with the EU. For Swiss companies to access treaty benefits and the participation exemption, the Swiss Federal Tax Administration and the cantonal tax authorities expect genuine economic activity and meaningful management presence in Switzerland.

The most immediate substance requirement is the Swiss domicile rule for directors: at least one managing director of a GmbH, or at least one board member of an AG, must be domiciled in Switzerland and must have sole or joint signatory authority. This is not a mere formality — the domiciled director must be capable of exercising genuine management oversight, and the tax authorities will scrutinise whether board decisions are actually taken in Switzerland or whether the Swiss entity is managed from abroad.

In practice, multinationals and PE sponsors address the Swiss director requirement either by appointing a senior employee already based in Switzerland or by engaging a professional trustee or independent director service. WVT’s attorneys and tax advisors advise on both approaches, including the governance framework required to ensure that the appointed director’s role satisfies Swiss substance requirements and supports the company’s position in any future tax authority review.

For operational subsidiaries with employees and business activities in Switzerland, substance is self-evident. For holding companies, the substance analysis focuses on board composition, the location of decision-making, the adequacy of Swiss-based management resources, and the maintenance of proper books and records in Switzerland. Proactive substance planning at the entity setup stage — rather than remediation after a tax authority challenge — is consistently the more cost-effective approach.

How WVT’s Attorneys and Tax Advisors Support Your Swiss Structure

WVT advises multinationals, private equity sponsors, family offices, and foreign investors on Swiss entity setup and cross-border corporate structuring. Our attorneys and tax advisors have specific experience in Swiss holding and operational structures, canton selection and tax rate optimisation, participation exemption planning, IP box structuring, and Swiss-Dutch or Swiss-Luxembourg combined structures. For clients looking to establish a GmbH or AG in Switzerland, WVT provides end-to-end support from initial canton analysis through commercial register filing, tax registration, and ongoing governance. Further information on WVT’s Swiss incorporation services is available at wvant.com/incorporation/switzerland.

WVT’s attorneys and tax advisors work with clients whose Swiss structures interact with group entities in the Netherlands, Luxembourg, Belgium, or the United Kingdom, and we regularly advise on the interface between Swiss tax law and the group’s broader BEPS and Pillar Two compliance framework. For large multinationals subject to the EUR 750 million revenue threshold, we advise on the impact of the Swiss domestic top-up tax on canton selection and the overall economics of the Swiss structure.

Clients typically engage WVT at the design stage of a Swiss project, where early involvement in canton selection, tax analysis, and substance planning creates the most measurable value. We also support ongoing corporate governance, annual compliance, and transaction work when Swiss entities are involved in M&A, financing, or group reorganisation processes. If you are considering establishing a GmbH or AG in Switzerland — or reviewing an existing Swiss structure — WVT’s attorneys and tax advisors are available for an initial consultation.

Frequently Asked Questions

Which Swiss canton is best for setting up a holding company?

Canton selection is primarily a tax decision, since cantonal corporate income tax rates vary significantly across Switzerland. Zug is consistently among the most competitive cantons for holding companies, with a combined effective rate of approximately 11.9%, followed by Nidwalden and Appenzell Ausserrhoden. Zurich and Geneva are more expensive but offer better infrastructure and banking access for operational businesses. For large multinationals subject to Pillar Two, the effective cantonal rate advantage is partially offset by the domestic top-up tax, and the canton analysis should be performed on an after-Pillar-Two basis. WVT’s attorneys and tax advisors conduct this analysis as part of the initial structuring mandate.

Can a non-Swiss or non-EU individual set up a company in Switzerland?

Foreign nationals and non-Swiss companies can freely establish a GmbH or AG in Switzerland. There are no restrictions on foreign ownership of Swiss entities. However, at least one managing director of a GmbH or one board member of an AG must be domiciled in Switzerland and have signatory authority — a requirement that applies regardless of the nationality of the shareholders. For foreign investors without a Swiss-resident director, WVT’s attorneys and tax advisors advise on professional director appointments and the governance framework required to satisfy both the legal requirement and Swiss tax substance standards.

How long does it take to incorporate a company in Switzerland?

A straightforward GmbH or AG with a clean ownership structure can typically be registered with the cantonal commercial register within three to five weeks of completing the required documentation and notarial deed. Bank account opening is frequently the longest step in the process, particularly for entities with non-Swiss parent companies or complex UBO chains, and should be initiated at the earliest possible stage. WVT’s attorneys and tax advisors manage the critical path and coordinate bank introductions proactively to avoid the delays that are most commonly encountered in Swiss entity setup.

How does the Swiss participation exemption compare to the Dutch and Luxembourg equivalents?

All three jurisdictions offer participation exemptions that effectively eliminate holding-level tax on qualifying dividend flows and capital gains, but the threshold conditions differ. Switzerland requires a 10% shareholding or CHF 1 million acquisition cost; the Netherlands requires 5%; Luxembourg’s SOPARFI requires 10% or EUR 1.2 million. Switzerland’s non-EU status makes it the preferred choice where EU regulatory reach is undesirable, and its broader treaty coverage in certain Asian and Latin American jurisdictions gives it an advantage for specific holding structures. WVT’s attorneys and tax advisors regularly advise on the optimal jurisdiction for intermediate holding companies based on the group’s specific portfolio and investor profile.