Everything you need to know about starting a business, residence permits, and the legal framework in Switzerland
Switzerland ranks among the most attractive locations in the world for starting a business. Political stability, a reliable legal system, moderate tax rates, and access to highly qualified professionals make the country a magnet for entrepreneurs from around the globe. Yet many aspiring founders face one central question: Can I start and run a company in Switzerland without a residence permit?
The answer is more nuanced than you might expect at first glance. In principle, the nationality of the founder is not a deciding factor when it comes to corporations such as an LLC (GmbH) or a stock corporation (AG). However, there are important requirements that must be met – and these vary significantly depending on the founder’s country of origin. In this comprehensive guide, we cover all the relevant aspects: from the different types of permits, to the distinctions between EU/EFTA citizens and third-country nationals, to concrete solutions that make it possible to start a company even without your own Swiss residence permit.
Switzerland’s Dual System for Foreign Founders
When it comes to business formation by foreign nationals, Switzerland consistently distinguishes between two groups: citizens of EU and EFTA member states on one hand, and nationals of so-called third countries on the other. This distinction has far-reaching implications for employment authorization and, by extension, for the ability to start and manage a business.
Citizens of the EU and EFTA benefit from the Agreement on the Free Movement of Persons, which grants them extensive rights. Nationals of third countries, however, are subject to significantly stricter requirements. The legal foundations are set out in the Foreign Nationals and Integration Act (FNIA), the Ordinance on Admission, Residence and Employment (OASA), and the corresponding directives.
Starting a Business as an EU or EFTA Citizen
Thanks to the free movement of persons, nationals of EU and EFTA countries enjoy comparatively easy access to self-employment in Switzerland. All citizens of these states can, in principle, become self-employed. Notably, it is not even necessary to hold a permanent residence permit (C permit) – the five-year residence permit B is sufficient for self-employed activities.
Requirements for the B Residence Permit
When registering in Switzerland, applicants must provide proof of their planned self-employed activity. This can be done in various ways:
- Presenting a UID number or an entry in the Commercial Register
- Providing proof of registration in a professional register
- Showing registration with a social insurance fund as a self-employed individual
- Submitting a convincing business plan
- Presenting accounting records or comparable documents
The specific requirements can vary from canton to canton. It is therefore advisable to contact the cantonal migration authorities early on to clarify exactly what documentation is needed.
Short-Term Work Without a Permit
EU/EFTA nationals who work in Switzerland for a maximum of 90 days per calendar year do not need a special permit. There is only a notification requirement, which must be fulfilled no later than the day before the start of the activity. If the work exceeds this period, a residence permit is required.
Important Note: Loss of Residence Rights
If a self-employed venture fails and the individual becomes dependent on state or cantonal welfare, the right of residence may be revoked. However, in such cases, the person is still allowed to seek employment as a salaried worker in Switzerland.
Starting a Business as a Third-Country National
For individuals from countries outside the EU and EFTA, the situation is considerably more complex. In general, third-country nationals have no automatic right to residence and employment in Switzerland. They must submit a formal application, and the requirements are substantial.
Who Has a Legal Right to Self-Employment?
Only certain groups of people have a legal entitlement to pursue self-employed activities:
- Holders of a C settlement permit for third-country nationals
- Spouses of C permit holders
- Spouses of Swiss citizens
For all other third-country nationals, the path is more demanding. They must submit an application to the cantonal authorities and demonstrate that their business will have a positive and sustainable impact on the Swiss labor market.
What Do Third-Country Nationals Need to Prove?
The application requirements are extensive. Third-country nationals must demonstrate that their business will diversify the regional economy, create or preserve jobs for local residents, and involve significant investment. A convincing business plan is the most important foundation. Additionally, organizational connections to existing companies must be documented. The application must also include articles of incorporation or a Commercial Register excerpt.
If the application is approved, the entrepreneur receives either a short-term residence permit (L permit) or a residence permit (B permit). Both categories are subject to annual federal quotas. The B permit for third-country nationals is initially limited to one year but can be renewed annually.
Starting a Company Without Living in Switzerland – Is It Possible?
This is where it gets particularly interesting for many aspiring founders: Yes, it is fundamentally possible for a foreigner to establish a corporation in Switzerland without living there. An individual can own 100 percent of the capital of a Swiss LLC (GmbH) or stock corporation (AG) without being a Swiss resident.
However, the key legal requirement is this: At least one person with signatory authority must be domiciled in Switzerland. In concrete terms, this means:
- For a stock corporation (AG), at least one member of the board of directors with sole signatory authority must reside in Switzerland.
- For an LLC (GmbH), at least one managing director with sole signatory authority must be domiciled in Switzerland.
- In the case of joint signatory authority requiring two signatures, at least two persons must reside in Switzerland accordingly.
The authorized signatory does not necessarily have to hold a management position or serve on the board of directors. It is sufficient for them to be registered with sole signatory authority in the Commercial Register. This provision makes it possible, for example, to appoint a local fiduciary or business partner as the representative.
Special Case: Cross-Border Commuters Starting a Business
Cross-border commuters from EU and EFTA countries can establish a company in Switzerland and work as self-employed individuals. They are essentially subject to the same conditions as EU/EFTA citizens residing in Switzerland. The prerequisite is holding a cross-border commuter permit (G permit).
For third-country nationals, this route is far more limited. They can only obtain a cross-border commuter permit if they hold a permanent residence permit in a neighboring country of Switzerland and have been living in the foreign border zone for at least six months. They must also return to their foreign residence on a weekly basis.
Overview of Legal Structures: What Works for Foreign Founders?
The choice of legal structure has a decisive impact on the requirements placed on founders. Below are the most important legal forms and their specifics for foreign entrepreneurs:
Stock Corporation (AG)
The AG is a legal entity with its own capital. The minimum share capital is CHF 100,000, of which at least CHF 50,000 must be paid in at the time of formation. The nationality of the shareholders is irrelevant. What matters is that at least one person authorized to represent the company resides in Switzerland.
Limited Liability Company (GmbH)
The GmbH requires a minimum capital of CHF 20,000, which must be fully paid in. Here too, the domicile and nationality of the shareholders are not relevant. However, at least one managing director with sole signatory authority must reside in Switzerland.
Sole Proprietorship
A sole proprietorship is directly tied to the individual owner. Therefore, the labor market regulations that apply to individuals are relevant: a valid residence and work permit is mandatory. Registration in the Commercial Register becomes compulsory only once annual revenue exceeds CHF 100,000.
Practical Steps: How to Set Up Your Swiss Company
Regardless of nationality, the following steps are required when establishing a company in Switzerland:
1. Choose a legal structure: Decide on the appropriate corporate form – GmbH, AG, or sole proprietorship – based on your business model, planned investment level, and personal circumstances.
2. Establish a registered office: You will need a legitimate business address in Switzerland. This can be in rented office space, at the residence of an involved party, or at a fiduciary firm. Note that some authorities may reject purely virtual offices (c/o addresses).
3. Ensure local representation: Appoint a person residing in Switzerland with sole signatory authority. This can be a fiduciary, a board member, or a managing director.
4. Open a bank account: A Swiss bank account is required for corporations, into which the capital contribution must be deposited. This step can be particularly challenging for foreign founders. Companies whose owners all reside abroad often struggle to obtain an account – or face elevated fees.
5. Notarial certification: The formation of a GmbH or AG requires notarial certification of the articles of association.
6. Commercial Register entry: Register your company with the relevant Commercial Register office. With registration, the company officially gains legal capacity.
7. Social insurance and taxes: Register with the AHV compensation fund and clarify your VAT obligations (mandatory once annual revenue exceeds CHF 100,000).
Tax Considerations for Foreign Entrepreneurs
Switzerland’s tax landscape is among the most competitive in the world. The average corporate income tax rate is around 14.7 percent, though the actual tax burden varies significantly by canton. Cantons such as Zug and Nidwalden offer particularly favorable rates.
Foreign employees without a C settlement permit are generally subject to withholding tax, where taxes are deducted directly from their salary. For self-employed individuals, however, income must be declared through a tax return – just as it is for permanently settled foreigners or Swiss citizens.
When choosing the location for your company’s registered office, it is therefore advisable to compare the tax rates of different cantons and make this decision in close consultation with a tax advisor or fiduciary.
Common Challenges and How to Overcome Them
Opening a Bank Account
Opening a business bank account is the biggest hurdle for many foreign founders – often more difficult than the incorporation process itself. Banks typically require a business plan, proof of sufficient financial resources, and sometimes a local point of contact. It is recommended to address this issue early on with the help of a fiduciary.
Real Estate Acquisition
Be aware of the restrictions under the Lex Koller (Federal Act on the Acquisition of Real Estate by Persons Abroad). Companies with foreign-based stakeholders may not engage in real estate trading without special authorization. The company’s stated purpose must therefore not include real estate trading. However, acquiring land for commercial purposes by a foreign company is permitted without authorization, provided no residential properties are involved.
Cantonal Differences
Switzerland is organized federally, and many regulations vary from canton to canton. This affects tax rates, the acceptance of c/o addresses, processing times at migration offices, and in some cases even the requirements for proving self-employment. Make sure to research the specific regulations of the canton where you plan to establish your company’s registered office.
Conclusion: Starting a Company in Switzerland Is Possible – Even Without a Residence Permit
The answer to the title question is: Yes, under certain conditions, it is possible to start and run a company in Switzerland without holding your own residence permit. The key factors are choosing the right legal structure and ensuring local representation.
For EU and EFTA citizens, the path is relatively straightforward. The B residence permit enables self-employment, and for short-term activities of up to 90 days, a simple notification is sufficient. For third-country nationals, the barriers are higher but not insurmountable: holders of a C permit have a legal right to self-employment, and with a convincing business concept, other individuals can also obtain a permit.
The key to success lies in thorough preparation: Seek advice from an experienced fiduciary or attorney who is familiar with the specifics of business formation for foreign nationals. This will help you avoid costly mistakes and lay the foundation for a successful business operation in Switzerland.
Frequently Asked Questions (FAQ)
Can I start a company in Switzerland as a foreigner without living there?
Yes, as an EU citizen you can establish a GmbH or AG without residing in Switzerland. However, you will need a person domiciled in Switzerland with sole signatory authority who is registered in the Commercial Register. Many founders use the services of a Swiss fiduciary firm for this purpose.
What permit do I need as an EU citizen to become self-employed?
For long-term self-employment, the B residence permit is sufficient. It is issued for five years. For short-term activities of up to 90 days per year, only a notification is required – no separate permit is needed.
How much does it cost to set up a GmbH in Switzerland?
The minimum capital for a GmbH is CHF 20,000, which must be fully paid in. In addition, there are notary fees, Commercial Register fees, potential fiduciary costs, and the cost of a business address. In total, founders should budget for CHF 3,000 to CHF 8,000 in expenses beyond the share capital.
Can I manage the company entirely from abroad?
Day-to-day operations can largely be managed from abroad, as long as the legal representation requirements are met. However, keep in mind that a local presence or proxy is essential for managing the business bank account, interacting with authorities, and executing certain contracts. Additionally, you should consider the tax implications in your home country, as a permanent establishment abroad can give rise to double taxation issues.
Legal Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Legal provisions are subject to change. For advice tailored to your personal situation, please consult a qualified attorney or fiduciary.
