Self-employment for expats in Switzerland
The online Cambridge Dictionary describe self-employed as “not working for an employer but finding work for yourself or having your own business”.
Self-employed people generally find their own work rather than being provided with work by an employer, earning income from a trade or business that they operate. Generally, tax authorities will view a person as self-employed if the person chooses to be recognized as such, or is generating income such that the person is required to file a tax return under legislation in the relevant jurisdiction.
According to the latest World Bank annual ratings “Doing Business”, Switzerland is ranked 38 among the 190 world’s economy. In other words, it’s a land of opportunity for entrepreneurs and self-employed.
Self-employment provides works primarily for the founders. Entrepreneurship refers all new businesses, including self-employment and businesses that never intend to grow big or become registered, but startups refer to new businesses that intend to grow beyond the founders, to have employees, and grow large.
Plan & Conceive
The first step should be related to how you plan to deliver value to your market. Here’s a checklist to help you keep your basic information on check:
What product/service will you provide?
Is your idea feasible?
How will you protect your idea?
Is there a market for your product/service?
What skills do you need?
Who are your competitors?
What difference will you bring to the market?
Do you have the financial capacity?
Choose a business structure
1. Single-owner company or sole proprietorship
This is most suitable for sole owners of a business or other professionals who work for themselves, such as freelancers, small businesses and individual entrepreneurs. They tend to refer to businesses run by one individual, who must be a Swiss resident….Registration with the Chamber of Commerce is mandatory if annual sales exceed CHF 100,000.
2. General partnership
A general partnership is an association of people operating a commercial business; it is similar to sole proprietorship but with more than one person involved. This category is used when two or more people jointly operate a company. No limited capital is required, all partners must be Swiss residents and the company must have a Swiss address. The name of one of the partners must appear in the business name of the company. All partners have unlimited liability and registration with the Chamber of Commerce and Commercial Registry is mandatory.
3. Limited partnership
This is a much less common version of the general partnership. In this type of company, general partners have unlimited liability, while limited partners may be liable up to an agreed amount. Registration with the Chamber of Commerce is mandatory.
4. Corporation/Joint-stock company (AG/SA)
The corporation is considered an independent legal entity. A member of the board or a director must be a resident of Switzerland, with sole signatory rights. This prerequisite can also be met if two members of the board or two directors have joint signatory rights and are residents of Switzerland. Liability is limited to the value of the company’s assets and the minimum amount of shareholders’ equity is CHF 100,000, of which CHF 50,000 must be fully paid for.
5. Limited liability company (GmbH/SARL)
This type of company requires a minimum shareholders’ equity of CHF 20,000, of which CHF 10,000 must be fully paid for. At least one managing director who is authorised to sign on behalf of the company must be resident in Switzerland.
This type of company is cheaper to start than a limited company, but – contrary to the AG/SA – the shareholders are publicly listed in the commercial register. Members are jointly liable for the company’s debts up to the registered capital amount.
A subsidiary is a legally independent company affiliated to a foreign entity, and tends to operate more as a ‘Swiss’ than a ‘branch’ company. It can take the form of a corporation or a limited liability company.
A branch is a legally dependent but financially independent wing of a head office that operates outside of its home country. In this type of company, the foreign parent company is liable and the branch is taxed in Switzerland as a Swiss company. One Swiss resident with legal authority is required.
The critical issue for the taxing authorities is not that the person is trading but is whether the person is profitable and hence potentially taxable. In other words, the activity of trading is likely to be ignored if no profit is present, so occasional and hobby- or enthusiast-based economic activity is generally ignored by authorities.
How about your business goal ?
An organization created with the primarily intention to give a job to the founders. self-employment.
All new organizations.
A temporary new organization created with the intention to be bigger (at least have employees).
Don’t loose your edge because of your expat status
You must be a Swiss resident to run a company as a self-employed person. Switzerland has a dual system for granting Swiss work permits to foreign workers. Employees from the EU/EFTA area can benefit from the Agreement on the Free Movement of Persons. Permits for people from countries outside the EU/EFTA area – so-called third states – are restricted to highly qualified workforce.
The Federal Administration’s SME portal provides further information on this topic.
Generally speaking, third-country nationals who are resident in Switzerland must obtain authorisation under the cantonal and federal authorisation procedures before doing any work on a self-employed basis.
Authorisation may be granted if justified on economic grounds, if certain personal, financial and business requirements are met, and if the possible limits on the number of foreign nationals permit. Foreign nationals who are married to Swiss citizens or to persons with a permanent resident permit do not require additional authorisation to become self-employed. For more information about regulations, click here https://www.sem.admin.ch/sem/en/home/themen/arbeit/nicht-eu_efta-angehoerige.html
Don’t forget to take care of your health insurance, It’s compulsory in Switzerland
Foreign nationals must take out insurance for themselves and for their families with a Swiss health insurance company no later than three months after arriving or beginning work in Switzerland. Cross-border commuters domiciled in certain EU states have the option of taking out insurance in their country of residence instead of Switzerland.
Don’t worry, you can find a broker to help you choose the right health insurance solution. It’s quick and easy to do. Check our method to find the best plan in just 20 minutes. https://www.youna-ihs.com/blog-youna/how-to-choose-the-right-health-insurance-in-less-than-20-minutes