Opening a Branch vs. a Subsidiary in Switzerland - 2021 Guide

Opening a Branch vs. a Subsidiary in Switzerland

Updated on Thursday 24th June 2021

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The Swiss business environment

When starting a business in Switzerland a foreign company can decide upon opening a branch office or a subsidiary. The most common type of company used so far has been the subsidiary, but the branch office is starting to gain popularity. When considering the type of structure the company wants to establish in Switzerland it must be kept in mind the purpose of doing business in Switzerland and the independency the new office will have.
Both types of structures are regulated under the Swiss commercial laws. However, there are several differences between these two business forms and the main ones are highlighted in this article, but further information regarding this subject can be provided by our team of lawyers in Switzerland




What is a branch office in Switzerland?

The branch office in Switzerland is a satellite of the foreign parent company with no legal and separate identity. The parent company will be accounted liable for the branch office’s liabilities and activities. The Swiss branch office is allowed to conduct any operation that would represent the parent company and within the parent company’s business purposes. Swiss branch offices are treated as any other company when it comes to income taxes, but no tax is applied to gains transferred to the parent company, in specific conditions. 
The Swiss branch office must be registered with the Swiss Commercial Register and requires at least one Swiss resident in the management board; it must also have a registered office and our team of lawyers in Switzerland can provide in-depth assistance on the main registration requirements imposed to this business structure. 
Swiss branches can be incorporated following the regulations prescribed by the Article 935 of the Swiss Code of Obligations, which stipulates that the business form has to be registered in the region in which it will be set up. It is important to know that the Swiss branch can be incorporated under several business forms, such as the limited liability company, general partnership or limited partnership. Our team of lawyers can help you open any types of company in order to incorporate you subsidiary and can also handle the entire process of Swiss bank account opening.

What are the advantages of a Swiss branch office?  

When deciding between a branch office and subsidiary in Switzerland, the company’s representatives should know that in the case of the branch office, there is no need to subscribe a minimum share capital and that this business structure generally benefits from a lower tax scheme compared to the subsidiary
If the parent company is a tax resident of a country that has signed a treaty for the avoidance of double taxation with Switzerland, the profits obtained through the operations of the Swiss branch can be exempted from taxation. At the same time, the branch office can be eligible for the exemption on the withholding tax applicable to payments made to its parent company (imposed at a rate of 35%).  

What are the main registration requirements applicable to a Swiss branch? 

When registering a Swiss branch, the representatives of the foreign company have to provide a set of corporate documents to the local authorities, that are compulsory for the registration. Our team of lawyers in Switzerland can assist with advice on the following documents: 
  • documents that show evidence regarding the registration of the parent company in its residency country;
  • an excerpt from the Commercial Register in the country in which the parent company is registered;
  • documents regarding the decision to establish a branch office in Switzerland – for example, the minutes of the meeting of the board of directors;
  • documents attesting that the branch office will have the same activities that are developed by the parent company


Furthermore, it is required to choose a suitable trading name, which has to be the same with the one of the parent company. At the same time, the trading name has to reflect the main business location of the parent company (the country in which it operates) and the Swiss city/region in which the branch will develop its operations. 

What is a  Swiss subsidiary?

Unlike the branch office, a Swiss subsidiary is a company with a separate legal personality. The subsidiary will be created respecting the Swiss legislation and it is considered an independent entity which makes the liabilities of its undertakings limited to its assets. The Swiss subsidiary can be regarded as an independent company with a majority of shareholders and management board in the parent company. A subsidiary is usually registered as a Swiss limited liability company. Opening a subsidiary in Switzerland does not require any business permits, only registration with the Commercial Register.
The following video offers a short presentation on the subsidiary and the branch office in Switzerland


What are the main requirements for setting up a Swiss subsidiary?

When deciding to start a subsidiary in Switzerland, the investors will need to provide a set of documents, which will be registered with the Swiss authorities. The below mentioned information will have to be deposited with the Commercial Register and it is important to know that such documents will have to be translated in the official language of the canton in which the subsidiary will operate:
  • information on the company’s share capital (if the subsidiary is set up as a corporation, the minimum share capital is of CHF 100,000, while for a limited liability company is necessary to provide CHF 20,000);
  • the articles of association of the new subsidiary – the main legal document attesting the incorporation of the business form;
  • a resolution of the founders regarding the incorporation of the subsidiary, completed in the form of a public deed;
  • a declaration of acceptance regarding the company’s board of directors and appointed auditors;
  • special forms provided by the Swiss Commercial Register (Declarations I and II). 


A subsidiary in Switzerland is liable to value added tax (if applicable) and for other types of corporate taxes and it needs to be registered with the Federal Tax Administration. Just like any other company in Switzerland, this structure has to file annual tax returns and, if the value added tax is applicable, submit quarterly returns regarding this tax.  
When hiring employees, it will be compulsory to register with the social security system in Switzerland. Unlike the branch office, the subsidiary is allowed to register a trading name that differs from the one of the parent company, if the company’s representatives wish to do so. 

Comparison between a branch office and a subsidiary in Switzerland

The branch office is easier and cheaper to set up than the subsidiary, but when it comes to liability, the subsidiary will not be affected by changes in the parent company, considering its autonomy. From a taxation point of view, both types of companies are subject to the corporate tax on their income in Switzerland; however, in some cases the branch office may offer more advantages from the taxation point of view for the parent company.
When it comes to transferring earnings from a branch office to its headquarters, there are no withholding taxes, but for subsidiaries the withholding taxes on dividends can be sent to the parent company. The branch office can engage in any type of activity such as concluding contracts and transactions but when it  comes to liability, anything that happens to the parent company will extend to the branch office as well.

Taxation of branches and subsidiaries in Switzerland

There are several important differences between branch offices and subsidiaries in Switzerland, and one of them refers to taxation. From this point of view, the tax base is what makes the difference between the two business forms.
First of all, the following things need to be considered about taxation in Switzerland:
  • taxation is based on a 3-tier system applicable at federal, cantonal, and municipal levels;
  • at a federal level, the corporate tax ranges between 7.8% and 8.5%;
  • Switzerland is made of 26 cantons, each with its own tax rate;
  • at cantonal level, taxation ranges between 12% and 21%, on an average.
With respect to the taxes applied to Swiss branches and subsidiaries, it should be noted that subsidiaries are levied on their worldwide profits as they are considered domestic businesses. Then, there are the branch offices that are taxed on the income they generate in Switzerland only. However, in their case, there are also other aspects to consider such as the taxes that are paid by the parent companies and also if their origin countries have double tax treaties with Switzerland. In this last situation, the taxation level is lower, certain tax rebates and deductions applying on a case-to-case basis.
Another important aspect to consider when it comes to the taxation of branches and subsidiaries in Switzerland is that the country is not an European Union member state which means that for companies based in the EU certain directives do not apply. However, Switzerland has reached various agreements when it comes to specific sectors of activity, the financial one being representative.
If you want to expand your business activities and want to choose between the branch and the subsidiary, our Swiss lawyers can offer relevant information, so that you can make a good decision.

Licensing requirements when it comes to the activities of foreign companies

One of the main aspects that counts the most when having to decide between a branch and a subsidiary in Switzerland is licensing. It should be noted that branch offices are restricted from conducting other activities than the parent company’s, while subsidiaries have freedom in choosing the operations it wants to engage in, or better said, the parent company can align with the Swiss market demands and adapt its services and/or products to the local market.
When it comes to licensing, the parent company is required to apply for the necessary licenses on behalf of the branch office, while the Swiss subsidiary itself will be in charge of obtaining the authorizations for engaging in the activities it wants.
The licensing phase must be completed in Switzerland with the authorities of this country, no matter the country of origin of the parent company. The only exception can apply in the case of investment funds and investment management companies that can obtain passporting rights and will no longer need licensing in Switzerland, however, this can only occur in specific circumstances.
If you need information about the licensing phase of a business, our law firm in Switzerland can guide you, especially since you will need to pay attention to whether the license your company needs must be obtained with a federal or cantonal authority.

Activities suited to branches and subsidiaries in Switzerland


Choosing the appropriate business form when expanding one’s operations in Switzerland is important because of the activities it seeks to undertake. From this point of view, the branch office is more suitable for financial operations, among which:
  • banking activities;
  • insurance activities;
  • reinsurance operations.
The main reason behind the creation of a Swiss branch office for this purpose is the legislation which in this sector is broadly regulated and the licenses required are similar across European countries. Moreover, Switzerland and the EU have several agreements in terms of financial services that no longer need specific licenses requirements as they benefit from mutual recognition.
On the other side, there is the subsidiary which is suitable for trading, e-commerce and industrial activities, as these are not bound to meet specific requirements, and the business can adjust to the Swiss market requirements without depending on the parent company.
Choosing between setting up a branch office or subsidiary in Switzerland is not difficult when you rely on a good business plan and the assistance of our lawyers who can handle the incorporation procedure. Do not hesitate to reach out to our specialists and ask for tailored assistance, including notary services.
Our Swiss law firm can provide you with information about the incorporation process of any type of company. Please contact our attorneys in Switzerland for more details on this matter; they can also advise on the main documents that have to be submitted when setting up a branch office or a subsidiary in this country.