Although foreign investors, legal entities and entrepreneurs can opt for several business structures if they decide to incorporate in Switzerland, there are two types of companies that are the most popular, mainly due to the accessible legal requirements, relative short duration of the registration process and requirements regarding the minimum share capital. These are the AG, better known the Swiss corporation and the GmbH, which has the structure of a private limited liability company. There are certain similarities, but also important differences between these business structures, therefore it’s advisable to make a detailed comparison regarding AG vs. GmbH.
Generalities regarding AG vs. GmbH
When comparing an AG vs. GmbH, there are certain criteria that need to be taken into consideration, especially regarding the structure of these types of companies, governing bodies or their shareholders.
An AG has limited liability, which means that the shareholders are liable only to the extent of their contributions made to the capital. The shares of an AG can be transferred, as well as the company’s domicile to another Swiss canton, but taxation is based on the residency of its management. The governing bodies of the Swiss AG are the general meeting of shareholders, the board of directors and the auditors – the company must be audited on regular basis by an independent and certified auditor. The setting up procedure takes between one to two weeks.
The GmbH has limited liability, so the shareholders are also liable only to the extent of their contributions made to the capital. Company shares are transferable, but the process is not as simple. A GmbH can transfer its domicile from one canton to another, but taxation is based on the residency of the management. The governing bodies consist of the general meeting of shareholders/partners and the company’s management. Depending on the availability of the document, the setting up procedure takes between one to two weeks.
Thus, by comparing the AG vs. GmbH from this point of view, the main advantage of the AG is that transfer of shares is much simplified, but on the other hand, there are auditing requirements.
For an AG, the minimum share capital is 100,000 CHF, from which 20% – but at least 50,000 CHF – must be paid in upon incorporation. Bearer shares are allowed only if the share capital is fully paid in. The company must have at least one shareholder and one director, but one of the company’s directors must be a Swiss resident. The AG must have a registered office in Switzerland.
For the GmbH, the minimum share capital is lower, only 20,000 CHF and there is no minimum sum that must be paid in. However, bearer shares are not allowed. The company must have at least one shareholder and one director, with the provision that at least one of the company directors is a Swiss resident. The GmbH must also have a registered office in Switzerland.
The main difference between an AG vs. GmbH is the fact that the Swiss corporation requires a higher share capital, from which a minimum sum must be paid in, but bearer shares are allowed in the full capital is paid in.
Taxation of AG vs. GmbH
In terms of taxation, the two business structures are very similar. The corporate tax rate varies, depending on the Swiss canton where the company is registered, the worldwide income is used as an ordinary tax base and certain types of companies benefit from tax exemptions or tax privileges. The withholding tax rates on dividends and interest are refundable, depending on the provisions of applicable double tax treaties.
Reporting and disclosure requirements
The beneficial owner of an AG is disclosed only to the bank for money laundering checks. The directors are listed in the public register of directors, but the shareholders may remain anonymous. Annual reports are required, as well as ordinary audits for larger companies that meet certain criteria.
The same reporting and requirements apply to the GmbH, with the difference that the GmbH’s shareholders are also listed into the public register of shareholders.
To sum it up, when doing a comparison of the AG vs. GmbH, the two business structures share many common features, but they are suitable for different business purposes, especially for companies operating in various jurisdictions.