The Swiss Code of Obligations distinguishes two types of partnerships: the general partnership and the limited partnership. Partnerships in Switzerland must be formed by at least two individuals conducting business operations under a joint company. Compared to other types of Swiss companies, partnerships may not have legal entities as partners. Swiss partnerships are considered legal entities and must be registered with the Companies Register if carrying out business activities.
General partnerships in Switzerland (Kollektivgesellschaft) are usually employed when carrying out small businesses. The formation of a partnership in Switzerland consists in signing the articles of partnership. The general partnership’s name consists of the family name of at least one of the partners and the suffix indicating the relation between the two founding members. The Swiss general partnership may also add the business activity to its corporate name. There are no minimum share capital requirements for Swiss general partnerships. When it comes to the liability of the founding member, all partners will be held individually and jointly responsible for the general partnership’s debts and obligations. A Swiss general partnership may extend its business activities and bring more partners or may change its legal status.
General partnerships in Switzerland are required to register for taxation purposes if their annual turnover is at least 500,000 CHF.
Partnerships in Switzerland are taxed depending on whether they are limited or general partnerships. For general partnerships tax liability in Switzerland is attributed to the partners and not to the partnerships as a legal entity. Partners will pay thier taxes based on the capital invested in the general partnership. Also, partners will be applied the personal income tax in Switzerland, but may deduct certian losses when calculating thier taxable base.
As mentioned above, general partnerships are suitable for small enterprisers and have the great advantage of no capital requirements or registration with the Swiss Companies Register if no business activity is carried out. Moreover, forming a general partnership is a quite straight and simple process. Foreign citizens may also establish a general partnership as long as they obtain a Swiss work permit.
If you want to set up a general partnership and need legal assistance please contact our attorneys in Switzerland.
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