A) Arriving in Switzerland – Finding the right location?
The following contribution is intended as a continuation of the first part and outlines further key aspects for market entry in Switzerland.
Switzerland is not a low-tax country per se. The decisive factor is the respective canton, which holds the tax authority. For example, Basel-Stadt is considered expensive (40.5%), while the Canton of Zug (22.2%) is seen as more favorable.
However, it should be noted: the deeper one moves into Switzerland, the more problematic the infrastructure becomes, and business trips to Germany or France become more cumbersome. Also, the cost of living (especially rent) is very high in places like Zug.
Border cities are particularly well-suited for cross-border collaboration. From Basel, for example, you can quickly get to Germany by tram.
The metropolitan areas of Zurich and Geneva are also especially popular. Zurich has made a name for itself in the field of banking, while Geneva is known for its large number of international organizations, including over 100 such as the United Nations (UNO).
Ultimately, it depends on your specific business which location may be most convincing. From the perspective of international business activity, border cities or Geneva are often the preferred choices.
B) Taxes and Social Contributions in Switzerland
Once you’ve established your location in Switzerland, the Swiss tax authorities won’t wait long. A comprehensive classification will follow, a company ID will be issued, and various online portals will be opened. Notably, the Swiss tax administration is significantly more digital and modern compared to its German counterpart.
In addition, self-employed entrepreneurs are also required to register with one of the compensation funds and pay monthly social contributions there. An example is the Compensation Fund Basel-Stadt.
In this context, it is advisable to seek expert advice. For instance, if you are a member of the Chamber of Commerce of both Basels, you have the option to join a compensation fund (ak40) through them, which may lead to cost savings.
Those who have their primary residence in Switzerland are also required to have health insurance there. Health insurance premiums are often higher than in Germany, but they are not income-dependent.
a) Compensation: Higher salaries and better business opportunities
In return, wages in Switzerland are generally higher. More is also typically spent on professional consulting services. In many ways, things still work in Switzerland that no longer work in Germany. Just think of Deutsche Bahn – in contrast, the Swiss “SBB” still runs on time.
Especially for doctors and lawyers, working conditions in Switzerland can be described as much more favorable. There is still a real opportunity to earn income based on performance.
b) Plan for higher tax advisory costs
Although tax matters are handled more flexibly in Switzerland than in Germany, taxes are of course still a topic. You generally have more time to submit tax documents – in other words, more breathing room. On the other hand, you should be aware that federally certified tax experts often charge higher fees.
Regular accounting can be handled in Switzerland by a so-called “fiduciary” (“Treuhänder”).
And often, the German tax authorities won’t completely go away either. If you continue to maintain business structures in Germany, tax matters in Germany remain relevant. Key terms here include “exit taxation”, “hidden reserve taxation”, or “limited tax liability”.
C) So, is it still worth setting up in Switzerland?
We believe this question can only be answered clearly: Yes, definitely!
While the German state and its social systems seem to be falling apart, Switzerland continues to function well. Authorities respond to inquiries quickly, courts do their jobs as they should, and there seems to be a sense of order that currently appears lost in Germany.
Precisely because of its role as an “alternative to the EU” in mainland Europe, Switzerland remains highly attractive for business ventures and relocations from the EU.
The Swiss seem to sense this too – judging by recent surveys, there appears to be little appetite for more EU integration or its bureaucratic machinery.
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by Dr. Stephan Ebner, Esq., LL. B, Mag. Jur, LL. M, LL. M
Attorney-at-Law (NYS, USA), EU-Attorney-at-Law (Switzerland, Advokatenliste Kanton Basel-Stadt), Foreign Legal Affairs Attorney (TAIWAN, R.O.C.), Attorney-at-Law (Germany), Notary Public (NYS, USA)
LANA AP.MA International Legal Services AG, Basel, Schweiz
