OPENING COMPANY IN SWITZERLANDOPEN COMPANY IN SWITZERLAND BY A

NON-SWISS OR NON-RESIDENT.

IntroductionSwitzerland is certainly one of themost attractive countries in theworld in which to live, work, andrun a company. It offers acombination of political andeconomic stability, a clean and safeenvironment, and comparativelylow personal and company taxrates. However the tax regime,complicated by the various cantons,is quite complex. If you wantregister your company in thequickest possible timeframe, andensure your company is structuredin the most tax-efficient way, pleasecontact us today for further details.

Switzerland as an alternative locationThe marketing of particular locations is becoming more and more important forcompanies. Competition requires a mature European and international marketstrategy. The choice of a European location is a key element of this strategy. Bychoosing Switzerland or moving the head office or headquarters to Switzerland,there are clear advantages as far as the procurement of capital is concerned on theone hand and the well-known tax advantages on the other.

Company formations in Switzerland have for a long time been attractive to thebusiness community because of the liberal basic conditions. There are different legalforms and forms of company to choose from. The business and trading freedom ofthe Swiss Federal Constitution combined with low levels of regulation also createthe ideal conditions for foreigners to organise business activities in Switzerland on apermanent basis and in a successful way.

Zug is the strongest canton in Switzerland from a financial point of view with amodel tax policy for natural and legal persons.

The extensive infrastructure in the areas of banking, trusts, asset management, andlegal and tax advice is completely able to meet the requirements of internationalbusiness.

SWISS CANTONS

There are two major types of business entity for foreigninvestors, and they are as follows:

Limited Liability Company (Sàrl)Corporation (SA)What are the main features of an Sàrl?

Mainly used for small to medium sized businessesMinimum share capital is 20,000 Swiss Francs (€12,320)No restrictions on foreign ownershipMinimum of two people required to establish thecompanyOne of the directors must be a Swiss residentWhat are the main features of an SA?

Mainly used for medium to large sized businessesMinimum share capital is 100,000 Swiss Francs(€61,600)At least 50% of share capital to be paid upShareholders can remain completely anonymousMajority of board directors must be Swiss residentsIs it complicated to set up a company in Switzerland?

Swiss director required by Swiss laws (We can arange aNominee for you)Preparation of memorandum and articlesOpening a Swiss bank accountFile with the Registrar of CompaniesSwitzerland divided into 26 different Cantons, whichare member states of the federal state of Switzerland.Most popular for company registrations are Zugge,Zurich, Geneva, Fribourg, Lucerne.

What are the main types of companyin Switzerland?

How easy is it to recruit staff in Switzerland?

Even though Switzerland has one of the lowest unemployment rates in Europe,(3.9% in 2009) you will not have any problems recruiting the right people for yourbusiness. The workforce is well educated and highly skilled, with over 80% of thelabour pool in possession of a secondary diploma or vocational training.Switzerland has four official languages – French, German Italian and Romansh andEnglish is widely used. The country has an advanced recruitment sector andEuroCompanyFormations.com will be happy to help you if you require advice onthis.

What is the regulatoryenvironment like?

What about bankingfacilities?

To what extent areSwiss banks regulated?

Swiss authorities do their best to ensurethat business regulation is as light aspossible, but it should be noted thatcompanies are subject to canton (state) aswell as federal laws. Cantons haveregulatory and taxation powers of theirown and they differ from one canton toanother, so expert advice is essential. Wehave local specialists on standby to guideyou through everything you need toknow.

Swiss banks represent the last word inefficiency and discretion, managing abouta third of the world's private assets andmost international financial institutionshave a base here. So when it comes toselecting a bank for your newly-openedSwiss company, you will be spoiled forchoice.

Heavily regulated. In recent times, theSwiss authorities have introduced strictregulations to guard against moneylaundering and to ensure compliance andco-operation with international pressures.The banks here face heavy due diligencerequirements and are very cautious indealing with new clients. They prefer newclients to be introduced by people theyalready know and trust. This is one of thereasons why it makes sense to open abank account with the help of our localexperts, as well as incorporate a companyin Switzerland with us.

How can I get moreinformation?

All you need to do is contact us andEuroCompanyFormations.com willprovide you with all the help yourequire to open a Swiss company andbegin doing business as quickly andprofitably as possible. Our professionalsevice ensures you can register acompany in Switzerland in the quickestpossible timeframe!

Are there financialincentives available?

Not much support for investment isavailable at federal level. TheGovernment does, however, supportsome infrastructure investment, suchas tourism facilities, communicationsand training, with subsidised loans ofup to 25%. At cantonal level, it ispossible to qualify for other kinds ofsupport such as rent subsidies,waiving of work permit requirements,tax holidays up to 10 years, cheapenergy, etc.

The Swiss tax system is strongly influenced by the federal structure of the country.Emphasis is on direct taxes. By European standards, the tax burden in Switzerland ismoderate - both for companies and individuals. The Value Added Tax (VAT) andcustom duties are also moderate.

The federal structure leaves ample room for healthy competition between theCantons. Numerous bilateral conventions prevent double taxation internationally.Switzerland, as a business location, is therefore also attractive from a tax viewpoint.Efficient Legal Procedures

As a general rule, the freedom of trade and industry allows everyone, includingforeign nationals, to set up a business in Switzerland or to hold a financial interest inone. An overseas individual or foreign company may choose the business formwhich best meets their needs.

The general regulations on accounting in Switzerland are clear and concise.

In the event of a corporate restructuring, the rules governing employee layoffs andnotice periods are relatively uncomplicated.

Taxes

In general, no approval from the authorities, chambers of commerce or professionalassociations is required to establish a business. To conduct a business personally ona permanent basis, a work and residence permit is, however, required.

The exercise of certain professions or the establishment of specific businesses may,however, require special licenses or diplomas. Foreigners who do not have aresidence permit may have their business operated by Swiss nationals. All businesssectors are open to foreign investment. It is not necessary that Swiss persons hold acertain percentage of the equity.

Certain restrictions still exist with respect to government monopolies. However,liberalization is in full progress within the framework of the Bilateral Agreementsbetween Switzerland and the EU for traditional monopolies such as railway andpostal services.

For some professions and for certain businesses, the Federal government or theCantons impose rules. In such cases, a special license or permit is needed. Thisapplies to activities for which a recognized diploma is required, such as:

1. Banks, insurance companies and investment brokers

2. Hotels and restaurants (only in certain Cantons)

3. Physicians, dentists, pharmacists and attorneys

4. Certain mercantile and services businesses (e.g. wine merchants, privateemployment agencies, temporary employment services)

Setting up a Business

Swiss law recognizes the following types of business forms:1. Partnership or a joint stock company

2. Subsidiary or branch

3. Joint venture (partnership or joint stock company)

4. Strategic alliance with or without an equity investment

The most common forms of domicile for a foreign company inSwitzerland are the subsidiary and the branch. Swiss civil lawdistinguishes between partnerships and joint stock companies, whereastax law distinguishes between various business purposes.

Types of legal form of a company

The Confederation, the Cantons and municipalities impose direct taxes onthe profits and capital of businesses, and on the income and net worth ofindividual persons. Only the Confederation can levy indirect taxes andduties on consumption.

Therefore, for a company or an individual the effective tax burdendepends from the mix of direct and indirect taxes. It differs by tax type.

Taxpayers are required to submit an income and tax declaration everyyear (or two years, depending on the Canton of residence) to the local taxoffice. By European standards, the tax burden in Switzerland is moderate.The country's federal structure leaves ample latitude for healthycompetition between the Cantons.

Operating companies principally engagedin manufacturing, trading or the provisionof services benefit from traditionally lowtaxation on net income. In addition, varioustax-planning possibilities are available.

Both the Cantons and the Federalauthorities give preferential treatment toholding companies relieving them from allincome taxes, while extensive tax privilegesare granted by the Cantons to domiciliarycompanies without direct businessactivities in Switzerland.

Swiss branches of a corporation basedabroad are taxed only on earningsattributable to the operation in Switzerland.

Low Tax Burden for all Types of Companies

Operating Companies

An operating company is a business that isprincipally engaged in manufacturing, tradingor the provision of services. What is relevant fortax purposes is not whether the business is apartnership or a joint stock company accordingto Swiss civil law, but rather whether thebusiness is an operating company, a holdingcompany, or domiciliary company.

Partnerships are not considered legal entities fortax purposes. The profit or the net worth of apartnership is taxable to the partners asindividuals, in proportion to their equityparticipation. In order to be eligible for this taxtreatment, the partnership must have anoperating facility or business location inSwitzerland.

A Swiss company or operating facility is subjectto taxes on profits and capital. The business istaxed at its domicile or at the actual place of itseconomic activity. Corporations and limitedliability companies are taxed as legal entities.The tax law distinguishes between corporationsaccording to their purpose. The company'spurpose determines whether it will be taxednormally or preferentially.

On average, total taxes amount to approximately25% (Federal, Cantonal and municipal taxescombined), even though the nominal tax ratesare generally higher, because in Switzerland,taxes can be deducted as an expense.

Both the Cantons and the Federal authoritiesgive preferential treatment to holdingcompanies. Companies holding at least 20% orCHF 2 million of the nominal capital of othercompanies pay a reduced tax on the earneddividend. The reduction of the tax due is basedon the ratio of the (net) dividend income togross profit. The equity holding deduction isgranted at the Federal as well as Cantonallevel. The end result is that there is largely noFederal tax on pure holding companies.

The Cantons relieve holding companies fromall income taxes (holding privilege). Theholding company is, therefore, not dependenton an equity holding deduction. The net resultis that all dividends, and any profit from thesale thereof, and even interest income, etc. aretax-free. A holding situation exists if, as a rule,two-thirds of the assets are equity investmentsor two-thirds of the income is equityinvestment income.

Holding Companies

The cantons grant domiciliary companies extensive tax privileges. Profits(and capital) are taxed at a reduced rate, with the condition that thecompany must not have (direct) business activities in Switzerland. TheFederal Government gives domiciliary companies no relief on the netincome tax. At the Cantonal level, a domiciliary company pays a tax of upto 15% of the regular Cantonal net income tax. The domiciliary companymay be controlled by either Swiss or foreign nationals.

Domiciliary Companies

Lowest Value Added Tax in Europe

VAT rate is amaximum of only 7.6%, making it thelowest VAT burden in all of Europe.

As with other indirect taxes and duties on consumption, the VAT can belevied only by the Confederation. To reduce administrativerequirements, very small companies are exempt from VAT, and certaingoods and services are exempt as well.

As the emphasis is on direct taxes, the

Under the tax laws, a branch is a business entity belonging to an individual personor a corporation based abroad. Accordingly, tax liability for economic links toSwitzerland is limited. A branch of a foreign corporation or a foreign partnership istaxed in Switzerland as a joint stock company.

For a business entity to be subject to the tax laws, there must be a permanentbusiness facility that contributes to the profits of the company on its own account, oris important for the operation of the business. Swiss branches are taxed only onearnings attributable to the operation in Switzerland. The division of profit betweenthe parent company and the operating facility is based on the accounts of thebranch.

Branches

Grand-Rue 26 ,1260 Nyon,Switzerland

+41 (0)22 361 50 53+41 (0)22 361 50 54

Fax: +41 (0)22 361 50 55

Ph.:

www.ikalo.ch