Opening a Branch vs. a Subsidiary in Switzerland

Opening a Branch vs. a Subsidiary in Switzerland

Updated on Thursday 14th May 2020

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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.
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.