Branch or subsidiary: two ways for a foreign company to set up in Switzerland
A foreign company that wants to do business in Switzerland can choose between two structures: a subsidiary or a branch. The difference affects liability, tax and paperwork.
A company based abroad that plans a lasting activity in Switzerland needs to give it a legal form. There are two options: a subsidiary (filiale), which is a Swiss company in its own right, and a branch (succursale), which remains part of the foreign company.
What is the difference between a subsidiary and a branch?
A subsidiary is a new company, usually an SA (société anonyme) or a Sàrl (société à responsabilité limitée), set up in Switzerland and owned by the foreign company. It is a separate legal entity and follows the same rules as any Swiss company, including the requirement for a representative resident in Switzerland.
A branch is not a separate legal entity. It is a permanent establishment of the foreign company that runs its own business independently. A mere liaison office is not a branch.
Who is liable for commitments made in Switzerland?
With a subsidiary, commitments belong to the Swiss company: its own assets answer for its debts. With a branch, it is the foreign company itself that is bound, because the branch is simply an extension of it. This point often guides the choice.
How is each one taxed in Switzerland?
A subsidiary has its registered office in Switzerland and is taxed here on all its profit, like any Swiss company. A branch is a permanent establishment: the foreign company is taxed in Switzerland only on the profit attributable to the branch, which must therefore be clearly identifiable.
When a subsidiary pays dividends to its foreign parent company, Swiss anticipatory tax (impôt anticipé) is deducted. Depending on the double taxation agreement between Switzerland and the parent company’s country, it can be refunded in full or in part.
What do you need to register a branch?
The branch of a foreign company is entered in the commercial register (registre du commerce) of the canton where it is located. The application includes in particular:
- a recent extract from the parent company’s foreign register;
- its articles of association and the decision to open the branch;
- the appointment of a person resident in Switzerland with authority to represent the branch;
- translations of foreign-language documents, and an apostille or legalisation for signatures of foreign officials.
How we can help
We work out with you which structure suits your plans and prepare the commercial register file together. We then take care of the accounting and tax obligations of your Swiss operation.
Planning to set up in Switzerland? Call us to talk it through or arrange a meeting.
+41 26 303 36 69